Markets Setting Up For 5th Wave Buying Frenzy

By All About Trends

After last week one can't help but to ask that question here. We all know we are overbought and the charts below show numerous reasons for an imminent pullback. But that's not all bad you know either, doing so relieves some of the late to the party Greedy Gus froth.

• RSI in big time overbought territory
• Full Stochastics in big time overbought territory
• Trend channel resistance (Yellow Brick road) tagged
• Short Seller Capitulation which is the opposite of a market falling out of bed on the longside where Nervous Nellie throws in the towel.

So you see just all of the above alone ought to be enough to make you step away from the indexes here till we see some sort of pullback, backing and filling whatever you want to call it.

As for you advanced chartists who subscribe to Elliott Wave Theory?

See the move off the end of July lows? There is structure to it, look at the little red letters. ABCDE which is 5 waves up. That ABCDE COULD have just been the third wave. IF true and this is the correct count then? We still have a bit more to go after some sort of pullback, consolidation etc. perhaps to the yellow brick road support?

At the least this wave count also corresponds with what the basic chartist is seeing here too which is pullback time or to an E-Waver its a Wave 4 being imminent. Then what? The 5th and final wave higher which leads us to?

A final suck in the little guy climax run to end the whole bull market off the financial crisis lows. Anyone remember the climax run of 2000? of 2007? Great while running, it had a lot of people thinking about quitting their day jobs only to end badly said another way? Never confuse brains with a bull market.

To continue reading this premium weekend update by All About Trends and access our long side watchlist today, click on the links below.

Subscribers receive daily commentary and a weekend wrap-up. Experience our accurate market analysis, trading methodology, and stock selection to raise your equity curve.  Those in the zentrader network readers receive a 33% discount with no time commitment. See the many subscribers testionials below. Lock in the $20/month rate as that is going away near the end of September.

“I have learned to find Pullback Off Highs in a stock's chart and that is a great tactic.  I like it much better than IBD breakouts,” Kent — Stillwater, OK

“I've been a client for almost a year now and I want to thank you for your spot on calls and remaining true to your disciplines,” Ken — St. Petersburg, FL

“Not only do I learn from your newsletter but you're a coach to remind me daily on how to stay disciplined.  The constant reminder to not chase the bus in invaluable.  I also like the fact you sell into momentum instead of selling on weakness.  Please keep up the good work.” Paul — San Jose, CA

Related Posts

Focus On Recent IPO's For Fresh Breakouts

Stock Selection Is Very Key Right Now

Follow The Yellow Brick Road To Profits