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Friday, March 27, 2009

Elliott Wave Update ~ 27 March

I agree with Kenny the market is tracing "threes" for the past few days. I called yesterday's intradays waves as an ending diagonal for green Minute [v]. Perhaps having minute [v] trace its entire wave in one day was kind of hasty (even though the market did indeed drop today). Looking at the larger picture, it could morph into a more proper ending diagonal. And that means a move up Monday to close the gap that the market failed to close on Friday. That would be about 1-2 more days of upward, actionary (impulsive in spots) waves to a peak somewhere north of 832.

End of month and end of quarter "window dressing" could account for keeping the market propped for a few days to fulfill the ending diagonal. Just speculation of course.

There are good Elliott Wave reasons to keep the market in an elevated (above 810+ or more) state for a few more days. I have discussed the apparent need for the market to want to prevent from getting trapped back into Primary 1 down trendlines. It can do this by price advance and/or time. Right now it is tracing upwards and sideways using time as an escape. The further in time, the more the market moves from the trappings of the old trendlines. Doesn't have to be this way, call it a hunch though.

There are plenty of reasons to be bearish. The market is overbought, there has not been a 38% retrace and resistance is bearing down. So it would be easy to just say the market is more than overdue for a pullback and indeed there are some wave possibilities for a deeper pullback but I have no great deal of confidence in it at this moment as the waves are not behaving in any kind of definite form on the shorter minute charts. But I will post alternatives this weekend on the more bearish possibilities derived from the wave structure and trendlines.

The other chart I have is an XLF chart. It is in either a bullish-type contracting or ascending triangle formation, both bullish types. The only problem I have is the upslope bottom line seems a bit steep. I have plenty of notes on that chart so need need to repeat them here.
So one key this week will be the financials and its triangle pattern. Its failure or success will very much determine market direction.


  1. I've been following your charts for awhile along with Oscar, Evil Speculator and Tim Knight. Thanks for all you do.

  2. Hi Dan. Where do you see FAZ going in this correction? (30-40?)



  3. Dan,

    Can you post GOOG, AAPL and GS on your list for me to examine. I am interested in it.

  4. Note how they are still holding well above 200MA! The simplest advice I heard is that this move keeps going so long as 50EMA or on your chart 200MA is not broken.

    Another thing that "bothers" me is that even pullback today was *VERY* light volume. The market had plenty of reasons (news) to sell on, yet selling just cannot pick up the pace.

    I am thinking it will hold up at least for March so that they can get their (ahem) well deserved bonuses ;) LOL

    Anyway as you pointed out before 850 is a major resistence so I am guessing they attack it at least once. Besides seems there are still a few bears left to squeeze.

    That being said you are 100% tight that this puppy is done. By the 2nd week of April as Q1 reports start coming in then we should some real selling.

  5. Daneric,

    I suggest you to check VIX. It is trapped inside a bearish continuation triangle and ready to drop hard after SP next pullback. I think that it confirms what you found at XLF. This rally has legs and we might see a recover in the next months

  6. Hi Dan,

    When Wave 1 of P2 finally tops, do you think the most likely Wave 2 structure will be a zig-zag ABC down?

    If so, do you think C will be lower than A?

    Lastly, do you think Wave 2 will most likely take a few days or a few weeks to complete?

    Thanks very much.

  7. Dan,

    Thanks for the excellent work!

    I'm only on my first read of Prechter, and only on p. 47, but is there a chance that P2 is playin out in the form of an inverted expanded flat like the one pictured from 1973 on p. 47?

    If so, then could we be nearing the end of the A leg possibly at the top of the channel from Nov. then head to the bottom of the channel of B, then the bear rally starts??

    I'm sure there are many reasons to the contrary, but would appreciate your thoughts.

    thanks again.

  8. sorry that should have read, for B, not of B still early here

  9. After this blue 1 ends, what do you think the chances are that this W1 is the extended wave in this up move?

  10. Sorry I couldn't asnwer all your questions, no time really and I don't think it would give justice to give a quick answer because right now I have no quick answers.