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Thursday, April 30, 2009

Elliott Wave Update ~ 30 April

First, all that stuff about ending diagonals and leading diagonals, both big and small, and all the targets and discussion based on it is completely out the window. Today's up move constituted a sub wave 5 so that eliminates all the diagonal talk.

And there has been a breakout. The breakout has backtested the trendline once and is close to testing it a second time. My 5 minute chart shows the apex very well. In the old bear market of last year, moves above like this would have been a fakeout move and then the market comes crashing back down through the tip of the apex and to the lower side. It has a very good chance of this happening tomorrow.

So wipe the slate clean a bit. There is now some more key pieces to the EW puzzle. A big chunk of April has been one big sideways hack and slash and every time the patterns show a potential move, it has done the opposite almost. Ending diagonal? Nah, market will just wipe it out! zig zag? Nah how about another move up! Gaps up uncovered. Tomorrow is the 1st of May.

What we have are 2 potential patterns as the top counts. EWI has the running triangle pattern and that matches what I was showing on the DOW the other night.

So don't let it be said I am using their stuff (which I never try to do). But the breakout did happen and how it is handled from here is what matters. This running triangle count basically started at the recent 847 low and you can clearly count 5 waves to 888 peak from that spot. If this count is correct the next move, after the retrace wave [ii] - which occurred today - is a bullish wave [iii] that powers the market to 900 and more.

The other count is pure mine and it allows the market to be both bullish and bearish for now. Its an expanding triangle X wave and either the [d] leg has peaked today at 888 or will peak at a higher spot that hits the upper trendline. So this count is more ambiguous. Triangles always are. If the market crashes down through the apex Friday and breaks the lower trendline, then 888 was the peak of a [d] wave. If the market powers up and hits the upper trendline, then THAT could be the peak of a [d] wave. This is a rare pattern so....I am not convinced yet it does fit into the structure nicely. But overall, if the market flops big time tomorrow and Monday, this expanding triangle is the only explanation I have for the wave action.

So that's it in a nutshell. The market has given us several key trendlines and important wave markers to determine what may be happening. The EWI count has the market impulsing upwards in bullish waves from a triangle breakout. Today's pullback would have just been a wave [ii] retrace. My expanding triangle count still has us in a triangle and therefore the counts and moves can be more ambiguous as triangle waves can zig and zag all over the place. However my count would account for some bad down days to happen soon. So how you want to play it is up to you.

I held my doubled up QID through some pain today and almost let myself get stopped out but I figure I'll wait to see what the 1st of May brings. It paid off so far, as the QQQQ's backed off from their high. I of course am holding long funds in my 401K until the 200DMA is hit at least. I have a 15% hedge in my 401K with SDS for now. I am looking to cover that, as I hate hedging anyways.


  1. dan are you sure you and hoeberg or whatever the hell his name is just aren't complicating things. what the hell happened to your wave count from 4/29 with the big X pullback? i'm seeing all sorts of topping signs in the shape of the larger wave, the candle from today, the upper bb hit - it all looks like early jan 09 before we tanked a bit. that and my primary count actually has us ending (A) maybe today - it's based on an extended minor 1 during the first few wks of march, and we just wrapped up 5 nice waves of a minor 5. too many people are declaring intermediate waves over far too quickly (they should be at least weeks to months long)

  2. btw scratch the (X) count comment - just saw you posted a new one today :p

  3. Yeah I have that chart up there. See the X down in the lower right corner? I am just posting the 2 possibilities.

    The first is EWI's count that a triangle breakout has occurred.

    The second is my expanding triangle taht allows the markets to tank tomorrow if need be.

    If I wanted to simply things, I would just post a faily chart and say, "Sell at the 200DMA".

    I count waves. Thats what I do. April 2nd the market was 845 SPX. On April 29th the market was 847. So yeah, I was trying to get aahead of things when the whole time they went nowhere.

    But now there are finally going somehwere.

    So do not be weary, I surely am not. Its been a long sideways slog.

    There have been topping signs and bad candles ever since that early April date.

    I'm am simplifying things in one respect - I expect a selloff on May 1st.

  4. Um sorry for the sloppy spelling!

    P2 is full of surprises. A march onward to 900 and beyond would not surprise me...well ok a little bit it would I guess or I woulda dumped all my QID

  5. thanks bro, good luck to ya and good work as always

  6. Nice work Dan, looking at my chart i see that we are lock in a trading range (845 to 890)then it will be (875 to 922)the first Res was 890 and it failed to slice it for now, so i bought some more FAZ (it paid off good so far), like you said it could go both way to test those sup and res. but i will not bailed out on my short unless 845 hold.


  7. good evening daneric..... great work and thanks for the awesome charts..... made a couple nice scalps but I chose to close shorts.... retest will be key for me.....

    see ya....

  8. Hi Daneric,

    Thanks again for your great chart work, analysis, and alternatives to watch for.

    (On bottom chart, big blue note should read "after green [ii] bottoms" not [iii].)


  9. Good catch SRS. I spell badly

  10. i am by far not an EWT expert; i appreciate yours and kenny's daily take and input.

    however, i think EWI's target is too simplistic. if a third grader knew EWT, they would draw it to go back up and test the upside resistance line before concluding with (e).

    we've played pokey enough w/ that line in the past that i see no reason to test it again... your (a), (i) and (iv) didn't play with the resistance lines; no reason (d) HAS to either.

  11. MT I agree. Thats why I made another post saying 888 is the top for now.