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Thursday, March 26, 2009

Elliott Wave Update ~ 26 March










Wave 1 appears to have topped today. Nice Fibonnaci relationships and an ending diagonal. Main Green Minute wave [iii], as I have my chart marked, expanded 1.682 of wave [i]. This is very near 1.618 Fib. Also today's high was where green Minute [v] = .639 x Minute wave [i]. Also Minute wave [i] and [v] connect on a channel along with [ii] and [iv], also a very satisfactory relationship.
These are very satisfactory relationships and the subwaves also work out very nicely in form and price structure. If there is any upside surprise I am looking at green [v] = green [i] at 856.5
But all in all the negative divergences, the very overboughtness, and now that the gap has finally closed at 827 and today appeared to trace an ending diagonal means that Minor wave 1 (blue) has finally reached its peak. (I think LOL)
What would the retrace look like? Well, my theme of late has been the market is trying to maintain support outside of some key Pirmary wave 1 trendlines. So perhaps the market manages to retrace a large expanding triangle. Metsrules of Stocktock social also played with this theme. http://social.stocktock.com/profiles/blogs/what-if-the-1938-rally-is
It is based off the 1938 market which follows this one in form very closely. Also I showed a recent chart of the 2002 low and how it traced complex expanding triangle to maintain support and key trendlines. But this is all just a guess. For everyone expecting a nice clean harsh bear leg deep back into the bowels of old Primary Wave 1 trendlines may be disappointed and find that the trendline *may* keep getting bought. So anyways, I am thinking out loud. But its something to look for. More violent swings may be the order of the day.
Finally the CPC (put call ratio) is definately turning back toward put heavy which is likely blowing a headwind into any further rally advance. Also the VIX feels its important to maintain above 40 although it closed for the second time under its 200DMA. Last time it spiked hard the next day. So we'll see what tomorrow brings. But there is no need for further upside that I can see in the waves although there may be some small unfinished waves finishing out the ending wedge move. Any break over 838 or so, is indicating something else is going on and perhaps heading to that 856 mark I was talking about. That would be another upside surprise.

23 comments:

  1. very comprehensive analysis - the best. lots of evidence provided. Esp. like the 1938 chart, what resemblance to today's market. Do you think we test the triangular support trendline that broke - basically the October to Jan timeframe before we retrace like it did in 1938. This would work out to be about 875. ALthough you sound pretty firm that wave 1 has topped. keep up the good work.

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  2. Volume and open interest of vix calls outnumbered puts today.

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  3. Nice work Dan, I went all in today no cash left. Sold most FAS today, i'm playing 30% FAS and 70% SKF, are you playing short or long tomorrow.
    BTW I very much like and following 1938 chart untill the pattern change.

    TD.

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  4. Dan: Great work. I had not considered that the ending diagonal could have already completed wave 5. I have placed my wave 1 end point where you place your wave 3 end point.

    Regardless, it does feel like we are topping out soon.

    Regards, Blue

    (I had to rename myself to "Tartan" on Kenny's blog, so I will likely change my name on your blog too)

    Cheers!

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  5. Daneric,

    Thanks for your work here.

    I am still clinging on to a bad series of trades started at SPX 795 or so waiting for wave 2 correction. Not hedged properly to boot. Starting to lose confidence but trying to remain neutral.

    Will be an interesting couple of days.

    Thanks again...very thorough.

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  6. Daneric, this just looks awful. Allow me to explain an Elliot wave rules/guidelines. Wave 4 should be at least the time span of 2 and most likely take longer. In your longer term count that is not the case within your wave 3.

    On your largest scale you believe we just ended Wave 1 of a huge 5 wave bear market. That is pretty ludicrous in my opinion, but for simplicity let us assume that we are. That being the case we still have no even finished wave 3 of this 5 wave move of 1. Wave 3 started 5/19/08 and we are now in wave 5 of that wave 3. And within that 5 wave we are about to start subwave 3 which will be an abc just like wave 1 before it because we are in an ending diagonal pattern.

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  7. built a small srs and tbt at close dano will look to make a scalp tomorrow....but cant see the upside to the upside here hehehhe....so small short.........kli

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  8. Buyallucan: I don't know how the market will play. I am just painting some possibilities to look for.

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  9. Daneric, great chart. Let me ask. How powerful might you consider the resistance created by the white vector on the attached chart?
    http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=2&mn=0&dy=0&id=p97868424317&listNum=7&a=163897159
    I have tons of symmetry, geometry and an alternate EW that would put the markets at a lower low on Armstrong's April 16, 2009 Pi date (page 25 "It's Just Time")
    Jim

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  10. Dan N Said:

    Sure. Just be sure to tell Elliott Wave International and Robert Prechter that the recent pair of 10:1 and 20:1 and 40:1 up days will shortly result in a massive selloff to new lows. And that it will do it after every other wave indicator such as volume, breadth, sentiment and past history is all wrong.

    And thats all because you don't think it *looks* right I suppose, ignored every other factor that goes into market analysis let alone EW theory all because you think a wave 4 doesn't look right?

    Are you high?

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  11. Someone posted this on Kennys blog. It is the 1938 chart w/ today's market...cool stuff.supports your analysis.

    http://api.ning.com/files/LG*2C0YMrtZ-xsoIFgRARtrCF927Wj-KNRwUzF0hDkHmNAZ-tWPyaQmjOOVfaQPrHYP*fXd*0DexZZSKTWqw4EqFrvyNZU5j/thingsToComeBig.jpg

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  12. Listen dip shit I was going to offer my long term count to you on a chart since you say your a student of elliot wave right at the top of your website. But since you know so much more than why don't you tell me your performance over the past six months. Because mine is right around 500%. Enjoy your followers sucking your dick on this site instead of getting a new look at EW.

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  13. dan, time to get some mod action going on here like kenny because you have to many yahoo finance type hacks like dan N above

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  14. Johnny Blue: yeah I'm too lazy though hehe.

    Ok Dan N said: I will humbly eat some pie if you are correct. And if you are dead wrong, you can do likewise.

    Look, I am a member of EWI so if I am wrong there are about a zillion others in the same boat including the guy who wrote the EW bible. So I dunno, it ain't worth arguing over at this moment.

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  15. Bookém Dano! Excellent analysis as always. Spooky 1938 chart!

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  16. Yeah I think that's the right attitude Daneric to have towards Dan N, let's be open to other's opinions. I am still learning myself and would like to hear everyones views.

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  17. To Dan N:

    Please "offer (your) long term count to (us) on a chart" like you say you originally planned to do -- so that all of us can consider your alternative interpretation of EW theory and your wave count at this point.

    Whether you do so or not, why are you so angry (even if Dan's self-described "speculations" turn out to be wrong?) Why not help your fellow investors, instead of attacking them?

    Peace.

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  18. Danl,
    This is Kevin. Newbie blogger and haven't taken the time to learn how to add a darn name. I posted last night my opinion about the wave count and not having software to put in the work you do. I'd trade you with you anyday seeing how you've just kept your cool. Thanks for sharing.

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  19. Just figured out how to add the name. :)

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  20. Dan, this is MetsRule...thanks for the shoutout...you are much more knowledgable about how to make charts than I am and I am not the first to do the 1938 comparrison, so you should run with it, man!

    I specially was wondering hwo to get MACD, RSI and other stats on the 1938 scenario to compare with the present...I can't figure out where to find that data for the 1930s as stockcharts.com doesn't go back that far...but you would know if anyone does...

    What i like about comparing to 1938 is that we will know very soon if it's wrong...because the market is so bullish...you can feel it in the air and if we go any higher, the 1938 resistance is broken, so that will make us doubt further correlations...

    Don't sleep, keep charting,
    MetsRule

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  21. Dan N,

    can you provide a chart of your alternative EW labeling?

    Remeber that none of us will truly know how it should have been labeled until this is all over...of will there be a point where one theory can be refuted earlier than that?

    -MetsRule

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  22. Metsrule:
    I was going to use MACD, etc for 938 charts but its probably not particularly useful. I'm just going with general form anyway.

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  23. I sent my chart to Daneric. If he wants to throw it on the site he can.

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