In my last post, I discussed how the value of the Euro in relation to the US Dollar was bouncing off support and how this coincided with the major market averages and the Elliott Wave patterns observed within.

Since then the Dow moved up 516 points over three days. If this is the correction phase of an Elliott Wave pattern, then we should at some point reach a new high in the Dow lower than 11,205. At the writing of this post, the Dow and the S&P 500 appear to be forming a bearish harami candlestick pattern. This could be the signal of the reversal for the next down leg of the correction. I am a little more interested in the NASDAQ right now, however.

NASDAQ If you look at the last candlestick pattern on the chart, there is a tail that formed, penetrating the 30-day moving average. Then the price moved below it's open. If this pattern holds throughout the day, we could look for confirmation tomorrow of this reversal signal.

Further down the road, remember that this may be leading to the end of the correction before moving into another upward trend. However, a while back I wrote about the wave pattern exhibited by the 2-year Dow chart with week-long periods. Looking back at that chart, we may be approaching the end of a larger Elliott Wave ascent. In this case, the next weekly low would just be the A portion of a longer corrective phase. In this case we could be looking at a more prolonged overall bearish market. This is another reason why many fund managers have been saying they've been looking for the safer plays and to protect their capital. Some are even moving temporarily into the bond market.