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Remember that last Friday ended with a selloff that took everyone by surprise, and had many screaming the top was in, again. It wasn’t easy posting a chart that afternoon showing only a w2 low. But, that’s what I saw and truly believed, so I went with it and seasoned members bought what turned out to be a head-fake low. In last week’s update we stated the following: That position is already in the green, but if we rollover on Monday morning and confirm a top was in, we’ll be ready to put on the bear suit. But, baring any news timebombs next week, we don’t think that’ll be the case. Looking at a chart of Monday morning’s S&P open, you can clearly see that the trade was never in jeopardy. We gapped up Monday and basically trended up into Fridays close. Between the summer doldrums and the Fourth of July holiday, traders, and myself, were becoming restless watching and waiting for trades. The week basically drifted up like a hot air balloon. This typical summer trading might be something we need to get used to from here, but then again there’s the strong possibility we’re at an important juncture. The Nasdaq faired even better this week, actually leading the markets and making a 6 ½ year high on Friday. The chart below is from last weeks update, as I was arguing the fact that this market was telling you additional highs were to be seen while most of the trading community only saw a top already in place. You should remember, and have profited very well, if you looked into last week’s trade setup. 
As expected, we achieved our low for wave 4, just where we thought it would be, and from there we did a moon shot of 90 points! Now the advance is to powerful to continue to label it as an ending diagonal, but that’s okay, since we’re on the correct side of that move. As I stated last week, if you had fallen into the trap of believing the markets had topped, you have no one to blame but yourself. This market was screaming at traders, but not many saw it or bothered to listen. Every one of our members were presented with this analysis and that’s how even the newbies were able to be on the correct side of the trend for the last two weeks. 
Now that we have reached our target in the Nasdaq, what will be in front of us? Well, we don’t have the same situation in the Dow and S&P, but highs were made in both the Nasdaq and NYSE. With that, I feel that we are at a point where we can either get that blowoff/capitulation move, or buck the trend like we’ve been doing all along and finally this time take seriously the possibility of an important turn ahead of us while many others stay bullish. But that decision won’t happen before next week as this week’s volume was too light to give much credit to the advance. We do respect these levels, but I must say---It is time to SHOW ME THE MONEY! Otherwise, I might need to slip into my bear suit and you know there’s plenty of dust on it. Another sign of a possible top looming is the run in momentum stocks. As seen in the chart below names like Apple, Research in Motion, Baidu, and Google bring back the feeling of 1999, especially seeing them rise in a parabolic move, like there’s no tomorrow. 
Speaking of Google, readers should remember this particular stock has been discussed many times in these updates. A year ago it was forming a contracting triangle which we showed a 125 point reward trade while only risking 3 points. Sure enough, Google never went under those 3 points and proved our analysis correct as it went to its target above $500. At that point, I made the statement that while Elliot Wave theory said the move was over, I had a problem believing that its proprietary Fibonacci target of $541.62 would not be hit. Since then it had traded down, as to be expected, but I continued to believe there would be another swing up to achieve that target. Without any good Elliot Wave reason, this stock climbed its way back and Thursday nights close was one penny above the $541.62 target! Thursday was a big affirmation of what a friend told me many years ago, that the markets might be trading around the influences of Fibonacci levels and that we may be counting the waves price action leaves behind as it vibrates around these ratio projections. What Google does from here will tell me much more about the stock and in essence maybe what the Nasdaq might have in mind as well. 
Over the past few months I’ve also continued to stress the importance of sentiment and that also, as of this week, has proven to be effective confirmation of important inflection points. As the chart below of Thursday’s ISEE close shows, if we can continue to break out it will signal another important piece of what we are looking for. 
Finally, we’ve also be curiously awaiting an important cycle in the market that goes back decades and comes due the week of July 23rd. A couple other cycles are due at or about July 15th, offering a roughly two week period where the market could be susceptible to a trend reversal. Considering these cycles and several other factors as a warning, we’re ready to aggressively look for a top in the near future without sacrificing the willingness to stay long a market possibly approaching a blowoff top.
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analysts are always welcome to contribute to the Forum or newsletter. Ideas from this update are provided as general information and are not investment recommendations. TTC accepts no liability whatsoever for any losses resulting from action you may take based on the contents of its charts, commentaries, or price data. Each person must do his or her own research to determine the appropriateness of taking a position in any financial or commodity market. If you are uncertain, please check with your licensed financial advisor or broker prior to taking any action. Securities and commodities markets inherently involve risk. CONTACT
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