Tags: Gilburt | S&P500 | market | position

Elliott Wave Analyst Gilburt: S&P 500 Set to Fall to 1,800 in Next Few Weeks

By    |   Tuesday, 01 April 2014 02:41 PM

Although the stock market may continue to rise, bearish signs outnumber bullish indicators, writes chartist Avi Gilburt in an article for MarketWatch, advising traders to remain cautious until patterns reveal the market's direction.

Some observers believe a triangle pattern is emerging in stock trading as daily highs and lows compress. While those patterns can point to either a market surge or decline, "quite often, these triangles break down and open a trap door which most will not be expecting," warns Gilbert, author of ElliottWaveTrader.net, an online member forum.

Gilbert sees three possible patterns — two bearish and one moderately bearish. However, emerging patterns should soon show traders where the market is heading.

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Gilbert expects the S&P 500 to retreat to the low 1,800s or even the mid 1,700s during the next couple weeks.

Positions of different trader groups diverged recently, he observes. The Commitment of Traders (COT) report shows commercial traders significantly reduced their short positions this past week, while speculative traders significantly cut their long positions.

Overall, traders are neutral about the market's direction.

"But make no mistake about it, anyone who is truly bullish must recognize the potentially bearish potential within our market at this time," he writes.

"Due to the COT report this past week, I am going to be very open to the triangle-pattern potential, which will still take at least another week to complete, and should provide a very nice, low-risk, bullish set up if it should play out, and finally set us up to attack the 1,900 region. Until then, I am looking down."

Stocks were looking up at the start of the second quarter following dovish comments from Federal Reserve Chairman Janet Yellen, according to The Associated Press. Yellen eased concerns that the Fed would increase short-term rates by the middle of next year, which would have been earlier than expected.

"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely held by my fellow policymakers at the Fed," Yellen said in her first major speech as Fed chairman.

"Chair Yellen pulled out just about every dovish tool in the box as she highlighted that the economy needs extraordinary support for some time," BNP Paribas economist Bricklin Dwyer told the AP, adding that he doesn't expect a rate hike until early 2016.

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InvestingAnalysis
Although the stock market may continue to rise, bearish signs outnumber bullish indicators, writes chartist Avi Gilburt in an article for MarketWatch, advising traders to remain cautious until patterns reveal the market's direction.
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2014-41-01
Tuesday, 01 April 2014 02:41 PM
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