Squawk Morning Briefing: Topping Chatter

It seems that everywhere one looks in Elliott Wave circles people are looking for the top to be in for equity markets.  Indeed it may be since it has met minimum expectations as we cited a few days ago.  Despite minor new highs in the DJIA we continue to have a wave count which support the notion of a completed correction.  However, it’s important to note that the count does not yet rule out the possibility of the turn down coming from higher levels.

We are going to resist the temptation to jump on board and call the top in.  There have been other points in this advance where the move up has met the necessary conditions for a turn without turning.  Therefore, we believe it’s important to wait for confirmation before being confident in assertions of a top.

Note that this is not a warning against taking short positions.  A completed five-wave movement up should see some down move for at least a retracement.  If your trading plan calls for taking these moves, then five waves into a peak can be a good short opportunity.  Nevertheless, one shouldn’t be comfortable hanging onto the position without confirmation.

It is entirely possible that the top is in.  The many folks who are calling it as already decided are pointing to sentiment and/or breadth measures that are at long-time or all-time extremes.  These supporting measures make a compelling case and combined with the weak push that has carried us to new highs is a good reason to consider the possibility and to incorporate the possibility into our trades.  Certainty can only come later.

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Elliott Squawk delivers thorough market preparation every morning in time to take action during the trading day. By combining up-to-the-minute futures activity with traditional end-of-day analysis from cash indices, you receive analysis based on the latest conditions as the trading day sets to open. Each issue of Elliott Squawk goes beyond traditional Elliott Wave analysis because we recognize that trading Elliott Waves is much more than just looking at the most likely current count. Squawk will prepare traders to assess the market action as it unfolds by answering questions that any Elliott Wave trader should consider:

• What price levels and wave motions would confirm an expected move?
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Kevin McEwen and David Starr are best known to First Wave chat room participants as Kevy99 and Managematics and by their reputation for their Elliott Wave counts that have predicted market turning points. Kevin has been counting Elliott Waves for 28 years, successfully forecasting market moves in virtually every financial environment. David brings together talents in financial market analysis and software development to his wave counting. He has authored many of the studies used by First Wave Traders as well as a number of proprietary studies to aid in counting waves.

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