Stock market

Elliott Wave Options: Fed Confident They’re Right

Markets tend to make notable jumps on small events. For instance, this week, stocks jumped higher on Tuesday as Federal Reserve Chairman Jerome Powell started a major speech. Stocks then dropped lower, before finally rising to close the day for a gain.

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  • On a shorter timeframe, traders could have been potentially whipsawed by the move. Over the longer-term, however, there may be a shorter-term drop ahead.

    That’s because stocks have already had a strong run in recent weeks thanks in large part to the Fed. And those following an Elliott Wave analysis can see that the move may have marked the end of a Wave 3.

    That could lead to a small downturn, before a longer-term uptrend plays out. Those would be Wave 4 and Wave 5 of the Elliott Wave. Should that happen, stocks may enter into a longer-term uptrend.

    The move is reversed for interest rates, which also suggest that the rate hike cycle may be nearly complete. However, as with stocks, the start of a new trend won’t mean a straight-line move.

    Interest rates seem to be locked in a range. This could be a “just right” sign, as it means there’s not too much money going into or out of the bond market.

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  • Overall, the latest technical indicators from the Elliott Wave theory suggest that the Fed may be performing exactly as needed for the economy.

     

     

    To watch the full analysis, click here.

  • Special: Every Time the Government Releases Jobs Data... Make This Trade the Night Before!