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Monday, April 27, 2009

Elliott Wave Update ~ 27 April




I am not particularly enamored with my Primary Count. I haven't changed it yet to something better but the market is not behaving in a way that suggests that an ending diagonal has played out.
The QQQQ's keep making higher highs. Indeed, the QQQQ's seem on a mission to be the first index to hit its 200DMA on this rally. Remember the last time the 200 DMA was hit, your talking a LONG time ago back in summer of 2008. One more push and it will hit.
The DOW is also still trapped under an important Primary wave 1 bear trendline. It seems to be contracting underneath that trendline and could very well be ready to burst over and run up to 8400 DOW or so. I think this is an important theme: Don't get wrapped back into P1 bearish trendlines.
The wave structures seem to be tracing what I like to call "triangle" waves. Although there is no standout obvious triangle pattern, there never usually is.
So I stick with my primary SPX count until proven otherwise. But I am not particularly enthused about it. As far as the psychology of the market it seems everyone has bearish doubts including the media. They keep plastering bearish slants (swine flu scaring the markets? - c'mon!) I have been on the lookout for stories that tell how this rally has strength, but all I still find is mostly stories that try and convey a message of doubt. I encourage any readers of this to search for stories that suggest unbridled enthusiasm, not just extreme caution with a jaded outlook that it is all doomed to failure.
So bottom line: The SPX pattern suggests a drop back toward at least 815- 824. If this is some kind of triangle, then there is a chance that higher supports will hold and it does not pull back that far.


13 comments:

  1. Why wouldn't the unbridled enthusiasm you seek mark the end of P2?
    This is just the end of the first leg. Doesn't the market need more skepticism to power higher? A nice pullback would provide that. Most people will miss the final move up and get "religion" near the top.

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  2. I think the sell in may and go away will come into play some form or another.

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  3. Anon, I am only suggesting that perhaps there needs to be more enthusiasm for a bear term top to set in. Just look at the QQQQ's. They keep chuggin higher and higher.

    The more doubt about the rally, the more they buy the dips.

    Perhaps when there is less doubt about the rally, then it can sell off some.

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  4. the qqqqqqqs messin with my shorts..... kill the qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqq

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  5. That 200 Day Moving Average is like a magnet tugging at the S&P.

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  6. "I have been on the lookout for stories that tell how this rally has strength, but all I still find is mostly stories that try and convey a message of doubt. I encourage any readers of this to search for stories that suggest unbridled enthusiasm, not just extreme caution with a jaded outlook that it is all doomed to failure."

    Have you read/seen CNBC lately?

    http://www.cnbc.com/id/30435481

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  7. Maybe this one ?
    He says he is historically a bear ....

    Hugh Johnson of Johnson Illington Advisors told CNBC that it's time to start buying stocks again.
    He pointed to what he calls a key indicator of a market recovery: small caps are now outperforming large caps.
    "You can't sit on the sidelines. You've got to be involved" in the markets, Johnson declared.
    "Financial markets are sending a very clear signal: 'We've seen the worst, we're starting a bull market and all the right sectors are performing well.'"

    Now for some old hippie guys musings...

    A trend line from about 766 up thru about 826 has worked well for trading, not EW I know but it has made money, the real point here.

    In our old style physical world, we had Newton rule the roost for some time before we got Einstein*. Newton's equations got us to the moon with almost no CPU power. I really do not know EW(struggling to learn, thanks for your help) but do know fractal geometry does describe complex systems behavior. I know EW must work for the market ! With so many Ellioticians scratching their heads perhaps we need a market Einstein to complement the work of our market Newton (Elliot). Perhaps you ( or someone) will discover a new pattern or set of pattens that describes this unique market behavior. This is the first to be so manipulated and driven in the days of interconnected minds via interconnected computers. New complex behavior may require new complex pattern descriptions. Its a quantum world out there folks, its time to harness the quantum jitter and move on.
    Do it Daneric !

    *OK Eintein is old hat but he is a good example. Next we got Neils Bohr then John Bell and Steven Hawkins, now its all about Super String Theory, Causal Dynamic Triangulation and quantum jitter (dark or zero point energy).

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  8. sorry that should read
    This is the first market crisis to be so manipulated and driven in the days of interconnected minds via interconnected computers.

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  9. Those are good examples.

    And good comments on Einstein. The market is fascinating indeed

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  10. charts are brilliant dan. gaps are awesome.
    i say, we take out the 830 gap by end of the day today.
    i like kenny's business model of online chat during the day. since you have a day job, perhaps you can set aside say an hour a day when you are on your blog answering queries. this will generate good traffic at your site and you can buy the adsense product to monetize your time spent answering questions, in addition to the pay per analysis of a particular stock that kenny does.
    good luck. love your work.
    linus

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  11. To add to the concept of new patterns, has anyone attempted to use a computer to do pattern recognition ? Using EW rules and guidelines to generate charts along with ranking them in terms of probabilities ? I cannot help but wonder if that would improve EWs predictive value. We would not go back the the moon with the same techniques used in 1969, we have a lot more CPU power these days.
    Thanks for the educational resource.

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  12. dan, are you still expecting the market has a huge sell off by Friday this week?

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  13. Stocker yes I am leaning selloff on 1st of the month.

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