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Sentiment Speaks: Amazon Killed The Market On Friday

Elliot Wave Technical Analyst & author @ Elliott Wave Trader
November 1, 2022

It really is entertaining watching people. Whether I am sitting outside in a public area and "people-watching" with my wife, whether I watch how people react to the market in the articles on Seeking Alpha (and that includes the writers and commenters), or whether I watch how people react even within the virtual walls of my own services, people are very interesting and their emotional responses are even more so.

We had a very interesting week this past week. And, it again outlined for me that people simply cannot overcome their emotions, especially when it comes to the stock market. So many of you are following the CPI, unemployment, GDP, etc. Yet, none of that has helped you on this rally. If anything, it has made you miss this 12% rally over the last two weeks. And, when the Amazon earnings came out, many of you were sure the market would surely drop.

Yet, as the market was developing a near term topping structure on Wednesday and Thursday, my primary analysis to the members of ElliottWaveTrader was suggesting the strong potential for a pullback before we continued higher to the 3900+ region, which was my next target for the SPX.

And, when the market declined in the afterhours session following the Amazon earnings announcement on Thursday, many were certain we were starting another larger leg to the downside. Most were quite sure that Amazon was going to bring the market down again.

Yet, in the analysis I provided to our members that evening, I noted the following:

Interesting scenario we have on our hands. ES and SPX have patterns that are a bit different. What is really interesting is how the market seems to fill both patterns at the same time even though they differ.

For example, tonight, we came back to the pivot on ES, which is lower than the one on the SPX, since the ES had a lower 2nd wave relative to the SPX. It is quite possible that we will complete this pattern tonight - if it has not already completed- in ES. There is potential that the spike up we saw earlier was the wave iv of the c-wave, and the lower low was the 5th wave of the c-wave. If this holds, then we will not likely see any evidence of the decline in the SPX tomorrow.

While the technical wave jargon may seem a bit foreign to you, focus on what the wave structure told me about what I expected the next day: "If this holds, then we will not likely see any evidence of the decline in the SPX tomorrow."

Not only was I outlining the specific support the futures had to hold in order for us to continue higher towards the 3900+SPX target I presented to you in my article last week, I was specifically saying that if we held that support overnight, we would not even see any evidence of that decline when the market opens the next day. And, as we now know, the market opened EXACTLY where we closed on Thursday, and continued higher to our next target.

And these members' posts summarized what many of my members said on Friday:

"Thoroughly impressed, I would've never called the market going up this morning after AH action yesterday on my own."

"In the first year I had the service, I might have been foolish enough to wonder whether you were crazy. Those days are long gone..."

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Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net, a live Trading Room featuring his intraday market analysis (including emini S&P500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education. You can contact Avi at: [email protected].


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