STMicroelectronics NV (STM) - Double-Bottom

Having halved in value within a 12-month period, semiconductor manufacturer STMicroelectronics is consolidating into a Double-Bottom formation. A recent 5-wave impulse Elliott formation has seen price action find resistance at the second peak of the Double-Bottom formation at $13.50 approx. The 5-wave Elliott formation may complete with a usual a-b-c correction forming a Head & Shoulders pattern before resuming the Double-Bottom formation. A price target can be calculated by appending the distance from the trough lows to the resistance peaks projected beyond the peaks.

J. Crew Group, Inc. (JCG)

Having declined 100% within the last 4-month period, US apparel and accessories retailer is seemingly finding support at the $25 level; a level last seen since July-September 2006 during the IPO. An entrance into a buy position with stop on close below $25 may serve as low-risk trade. Cramer Likes J. Crew

QQQQ Bull Flag ?

The Nasdaq 100 Trust ETF is listed on the Nasdaq providing broad exposure to the technology sector by tracking the Nasdaq 100 Index. Current price action is consolidating into a Bull Flag formation. The Bull Flag is continuation pattern and usually a price objective can be derived by projecting the magnitude of the previous motive wave (i.e. Flagpole) using an a-b-c corrective measured move. Exit buy position on close below the 50-day moving average.

Predicting the Market

Inherently, it is challenging to forecast the direction of the market purely based on Technical Analysis. Even more complex is predicting market timing. Rarely do both attributes of direction and timing develop as anticipated. However, on this occasion, using classical analysis of trendlines, Fibonacci projections and basic Elliot Wave analysis, occasionally the probable scenario transpires; an infrequent example below:

Original post 19th April 2008: http://stevepuri.blogspot.com/2008/04/bull-or-bear.html
According to the projected path, price action of the Dow may be completing the fourth wave of a 5-wave Elliot decline beginning 19th May. The fourth wave of rising equity prices may complete by the second week of September. At which point, the final fifth wave of declining prices may ensue towards the year end in time for a possible trend-reversal driven by an Election Rally and the seasonal Santa Claus rally into 2009.

Diminishing Volume; Upside Resistance?

At second attempt, the Dow has again found resistance at the underside of the broken trendline of the rally that began on July 15th. The previous attempt 3 trading sessions ago saw a sell-off of over 200 points. Resistance at this level coincides with the 38.2% Fibonacci extension level from the May 19th to July 15th sell-off low. Diminishing volume over the summer months tends to favour upside price action; however the divergence may result in a trend reversal. A short position with stop on a weekly close above 38.2% Fibonacci extension level may serve as a low-risk trade.

Conversely, the S&P500 has broken and closed above the 38.2% Fibonacci extension level from the May 19th to July 15th sell-off low. An upside target at approx 1310 at a gain of 0.77% will bring price action toward the underside of the of the broken trendline of the rally that began on July 15th.

Microsoft Corp. (MSFT)

Microsoft forming a possible bullish Bull Flag pattern. Enter long with a stop on close below $27; price target approx $30.

Big Lots, Inc (BIG)

Having rallied 190% within an 8-month period since Jan 2008, US retailer Big Lots, is currently consolidating into a bearish Double-Top formation with a negative volume and RSI divergence against price action. An entrance into a short position with stop on close above $35 may serve as a low risk trade for an initial price target towards the 38.2% Fibonacci retracement level of the rally.

Dow - Weakening Trend ?

The Dow has rallied 6.6% since the year's low on July 15th. During this rally, a price/volume divergence has developed in terms of rising prices on diminishing volume. The ADX (Average Directional Index) oscillator, a measure of a trend's strength, has been declining against the rising price action signalling a weakening trend. Today's price action saw resistance beneath the underside of the broken trendline of the rally; support has become resistance. An entrance into a short position with stop on close above the 38.2% Fibonacci extension level of the previous sell-off (from May 19th to July 15th) at 11,709 may serve as a low-risk trade.

American International Group, Inc. (AIG) - Double-Bottom ?

AIG possible Double-Bottom formation; enter buy position with a stop-loss on close below July 15 low.

Oil oversold at $110 ?

Having rallied 188% to all-time highs since Jan 2007; oil has retraced a third in value within the last month and is currently finding support at the 38.2% Fibonacci retracement level, coinciding with the 200-day moving average. With stochastics and RSI indicating oversold conditions, an entrance into a buy position may serve as a low-risk trade with a stop-loss on close below $110.

The UltraShort Oil & Gas ETF (DUG) is equivalent to twice the inverse performance of the Dow Jones U.S. Oil & Gas Index. An entrance into a short postion with a stop-loss on close above $40 may serve as a low-risk trade on speculation of rising oil prices.

Dow - Symmetrical Triangle

After a 21% decline between May 19 and July 14, the Dow is consolidating into a Symmetrical Triangle formation. An Elliot Wave a-b-c-d-e triangle forming in a prior downtrend with a base range of approx 900 favours a downside break targetting 10,600 approx. Trade in the direction of the breakout from the triangle apex for a low-risk position.

FTSE, 50% Fibonacci Retracement

Since October 2007, the FTSE has declined 35% in corrective A-B-C formation where wave C is currently progressing to complete a measured move equal to wave A; i.e. A=C. Completion of wave C also coincides with the 50% Fibonacci retracement of 5-year bull market rally which commenced in March 2003. This may establish an area of support at 5015 in the cash market. An entrance into a long position with a stop on a weekly close below 5000 may serve as low-risk trade.

DAX, 6200 Level

Short below 6200; long above.

Eurasian Natural (UK:ENRC)

Eurasian Natural having rallied over 110% within a 7-month period has now broken support of the main trendline and is currently finding support at the 50% Fibonacci retracement of the rally. An entrance into a long position with stop-loss on close below the 50% Fibonacci retracement level at 1048 may serve as low-risk bounce trade from oversold conditions towards an initial target gain of 10% at 1168.

UBS AG (UBS)

The unravelling of the subprime mortgage events and credit crunch has seen UBS decline 225% within a 12-month period. The decline in price action has traced a 5-wave Elliot pattern and is currently finding support at the $20 level which has served as strong support between 2001 and 2003. The ROC momentum oscillator that measures the percentage change in price from one period to the next is retesting the lows achieved during the climax of 3rd wave of the Elliot formation and is seemingly finding support. An entry into a long position with a stop-loss on a weekly close below $20 may serve as a low-risk trade. UBS is scheduled to report earnings on 12th August 2008.

Paragon Shipping Inc. (PRGN)

PRGN has retraced 61.8% of the rally since March lows. At this point, price action may find support with an expectation of a rebound. However, RSI is not completely and oversold, and oversold stochastics have not yet crossed over to indicate a buy signal. An entry into a buy position at this point may serve as a low-risk trade with a stop-loss placed below the 61.8% Fibonacci retracement level.

CKE Restaurants Inc. (CKR)

CKE Restaurants franchises quick-service restaurants in the United States operating primarily under the Carl's Jr. and Hardee's names. During the past 12-month period, stock price has declined 160% with price action bounded by the 50-day MA. A recent breakout from the declining trendline should see price action targeting Fibonacci extension levels. Stop-loss: close below 50-day MA. Fast food shares mostly rise after McDonald's reports strong same-store sales for May: http://biz.yahoo.com/ap/080609/fast_food_sector_snap.htm

Aluminum

Having rallied over 40%, the last three month period has seen aluminum prices consolidating into a bullish Symmetrical Triangle formation as part of an Elliot Wave pattern. The Elliott Wave Triangle approach designates five sub-waves of a triangle as A, B, C, D and E developing in sequence as a tightening coil pattern. Sub-wave E marks the completion of a fourth wave of an overall five-wave impulsive Elliot pattern; at which point, the final fifth wave of the formation should see price action breakout to new highs. Stop-loss close below sub-wave E. The ETFS Aluminium Exchange-Traded Commodity (ETC) tracks the DJ-AIG Aluminum Sub-Index and is listed on the London Stock Exchange as ALUM.

Dow aluminum component, Alcoa (AA), is currently completing a b-wave of an impulsive a-b-c wave formation which may see wave-c target YTD highs:

Why Aluminum May Glow Like Gold

Lehman Brothers Holdings Inc. (LEH)

Within a 15 month period, Lehman has declined 180% in a seemingly truncated 5-wave Elliot formation. A fifth-wave in an impulsive pattern that fails to exceed the price extreme of the third-wave implies a weakening trend signalling a reversal; comparable to a bullish double-bottom formation. Put activity is resembling the trading in Bear Stearns options on March 14, the last trading day before being acquired by JPMorgan: http://www.reuters.com/article/fundsFundsNews/idUSN0338720920080603

Nikkei Elliot Wave ?

In an 8-month period between July 2007 and March 2008, global stock markets saw steep declines in realisation of an unfolding subprime mortgage crisis leading to the dispersion of credit risk causing a credit crunch. The sell-off in the Nikkei has portrayed itself in a seemingly Elliot five-wave decline. Current price action is finding resistance at the 38.2% Fibonacci extension projected from the bottom of the five-wave decline where a b-wave of a a-b-c corrective three-wave bullish formation may be commencing.