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Thursday, March 19, 2009

Elliott Wave Update ~ 19 March

Primary count: Continued bullishness until at least the 819-826 gap is closed.

Alternate count: A 5 wave pattern completed today and a distribution pattern is playing out and the market is rolling over.


Primary count: The 1 minute chart today appears to be 3's which implies correctives and consolidation (although it has an outside shot of forming a bearish leading diagonal in a first wave postion down - but its way too soon to say that) From afar it also appears to be a falling wedge or a classic bull flag forming (with the 749 low as the base).

The waves can be counted as "finished" afterall everyone can see a nice 5 wave structure. But to a wave-guy like me it just doesn't seem quite right to count 803 as the peak at this stage. The wave appears to have classive extension signs of its 3rd wave which is normal for a bullish wave such as this. The bullish spike to 800 Wednesday *appears* to be part of a third wave push. Volume declined today on the pullback which is a sign of consolidation.

Yes the market is really insane, but this is no ordinary bear rally. If this is a Primary wave 2 which I think it is, it tends to crush all bears on the first push. Indeed it already has. Each day brings little pieces of the puzzle and I don't feel too silly projecting this up structure because it is based on sound wave counting. As a wave counter, I am taught to start trying to identify extended structures as early as possible. My green [iii] spot is a 1.618 expansion of my green [1] which would be 819 which is just under the gap lip. A green [v] would close the gap to the 830's or a bit beyond.

Yes it seems insane to get more relentless bull but its at least sound reasoning based on accepted EW principles and counting techniques.

Alternate Count: I can count a 5 wave structure. It may be rolling over in a distribution pattern. The key is if 775 gets smashed through to the downside I think.


  1. hi daneric, link to second picture is not working.

  2. Daneric, sorry to keep bringing this up. But can you post a chart of (5)[1] again. I can't seem to find the 5 waves down in (5)[1]. I count ended at 4(5) and I don't see a 5(5).


  3. "...but this is no ordinary bear rally. If this is a Primary wave 2 which I think it is, it tends to crush all bears on the first push. Indeed it already has."

    this is my sense as well, we are very overbought but market can easily push right up to into the 825 gap on short covering and fumes alone

    my plan is to short into 825-840, and cover and go long at may have other plans

  4. dan, what makes you think we only hit the 38.2 on a retrace of 1 of A of P2 in your alternate count? TA's are showing super max overbought levels and don't we typically see a 50 or 61.8 retrace on a 2 corrective?

  5. JohnnyBlue, yes I know it is overbought. I don;t think we only hit the 38% on any retrace. I just point the general direction on my charts and pick some nice starting downside spots.

  6. Dan, do you still think the Bank Index will hit new low to 5 since it is already passed 27.98?

  7. No I should change that chart...

  8. Dan, I'm not sold on the P2 debate yet, check out this chart and tell me why this is interpreted as P2, rather than 4.

  9. True Ice, the volume and breadth and sheer amount of buying to produce very overbought conditions suggests a trend change. How ould you label the NASDAQ?

    Also the 50/200 is ready for 2009's first bullish crossover. It will seek support at its 200DMA. ANd unless the bulls can bury it, it should pop back up.

    And Springtime is generally a time of buying. Sentiment change. Its part of Elliott Waves.

  10. Here the Nasdaq, it a little different setup, I have A for 1, B for 2, and C for 3:

    And I totally hear you on the point, which is why I would just rather believe we are in P2. This W4 of P1 thing just doesn't die.

  11. Also, check out the McClellan Oscillator:

    At the peak levels it's at, we seem to trend down hard.