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Tuesday, April 21, 2009

Elliott Wave Update ~ 21 April




I don't have a good read on the intraday waves. It looks like a slam-dunk 5 wave move up which suggest more up moves to come. However the end of day has overlapping waves and one can make the argument that the wave down to 828 ended in a truncation early this morning which means todays rally *wasn't* a 5-wave up move but merely a bullish ABC correction. Very goofy day, only half the open chart gap filled in the 820's. Its not so much the correction back up that was surprising, afterall the market went from 875 to 826 in a very short time. And the correction back up is only now hitting the 50% retrace mark which is *normal* for a wave 2 or a B wave of some sort.

However, the market internals were solidly bullish. 6.92 advance/decline volume seems more than your typical "B" wave. Solid volume on both the SP500 cash index and e-minis. It appears, once again, they are buying the dip. But the DOW was a bit weak today and a 1.62% Dow up day is nice but nothing to call home about. The NASDAQ and S&P were 2.2 and 2.1%.

But all in all, there is no reason to change my primary count that a further correction will eventually shake out lower and that 875 is a near term top. We had what appears to be a clear ending C wave diagonal and those are supposed to retrace deeper than what it has so far. So until it proves otherwise, I won't try and outsmart the wave structure. However I won't fight the tape either.

The market may again be "buying time" to keep from getting trapped back into Primary Bear wave 1 parameters. So a sideways chop may ensue for some complicated corrective waves in the next day or so. I have my eye on the 62% retrace level which is 857. Any move higher than that will definately be catching my eye.

Disclosure: Sold all FAZ today for nice profits (I learn to take them when they come easy like that). Held onto my QID and still have my SDS in my long 401k account as a hedge against S&P indexed mutual fund longs. I have no strong urge to make further bets on downside moves at the moment other than what I have in play.

Can there be no doubt this is a Primary wave 2 and not some weird monster wave 4 flat still continuing from late 2008?


11 comments:

  1. Dan From Max Cherry
    take a look at the $Compq it looks like a 5 wave down with and ABC count for a 2 or B maybe the same for the S&P,

    http://stockcharts.com/h-sc/ui?s=$COMPQ&p=15&yr=0&mn=0&dy=6&id=p96036830850&a=165939288&listNum=12

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  2. here's how i counted it:
    http://social.stocktock.com/photo/intraday-waves-on-dow-futures

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  3. Could be Max. I thought of some things like you show but honestly there are too many possibilities at the moment to guess what it is or what it is morphingh into. Going to have to let it play out some more.

    845 resistance was taken and then backtested as support so...845 is the key again.

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  4. rb that was one of my counts. But your glossing over a 1-2 wave at the beginning today by using a big timeframe.

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  5. valid criticism - i'll add that disclaimer on stocktock - thanks

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  6. great work daneric, thanks... that faz money is sooooooo sweeeet..... bye now.....

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  7. Daneric, first I would like to thank you for all the hard work. I have finished the EWP book by Frost and Pretcher, I am a bit confused as to where we are in the whole grand scheme of of waves.

    I understand there 5 impulsive waves and 3 correctives. My question is in the 3 corrective waves we have an A-B-C correction. Within wave C, I understand there is 5 impulsive waves, but is there also an ABC correction within wave C or do we just begin the cycle again with another 5 wave impulse?

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  8. Look at the emini's it's much easier to see the 5 Wave structure down for Wave 1 or A. Wave 2 or B is in play it appears. A of Wave 2 went from 823 to 848 as a 5 Wave affair. B of Wave 2 is occurring in after hours trading so C of Wave 2 may complete tomorrow around 858 as that is an .618 Extension if the 843 low holds in overnight trading. Also in 1938 the Dow retraced 78.6% of the initial move down as it began Wave 2 of Primary 2.

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  9. Agree anon..........looks perfect......

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  10. DE - Did I understand your last sentence correctly - There is a possibility of us being in P1 at this time?

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  11. Further to your possible monster flat 4 could it be that 3 topped out at 1550 level in 2000/2001 & it was an extended 5th (rule - they often double retrace) & this could all have been a big A down to the 775 level then B up to 1500 level again & C down to 666 (maybe where the extension started back in 1996-7) - now that's a real "out there" alternative to blow away the bears

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