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Friday, April 17, 2009

Ending Diagonal to End the Ending Diagonal

I've been trying to get a decent read on the intraday waves for this final subwave 5 move from the 835 low. Its kind of difficult. If this is an ending diagonal from 779, then each leg should be a "three" preferably a zig zag. That's a guideline of Elliott Waves. So I am trying to count a "three" from the 835 low and it dawned on me that this may be an ending diagonal playing out within the larger ending diagonal. And that means we have another top coming shortly on Monday. But it shouldn't be much higher than 875. Maybe we do get some overthrow to 880. Its certainly gonna push my stop loss limit to the max although I am not really down in my trade so I will place my stop loss at 887 to allow for "wiggle room".
I think the key is that tiny expanding triangle that showed up. I thought it was some kind of wave 4 and the market kept going higher. So now it only makes sense as a B wave.
That silly little expanding triangle is in almost every index so it is an eye catcher. At it just may have betrayed the last death throes of this move up. I think its a B wave. And that means an ending diagonal within the last tiny C wave within the larger ending diagonal.
It would only make sense.
I'll sure look silly if this doesn't pan out. But no worries mate! Keep counting!


  1. Thanks DE. You have been all over it. 875 call was really good. The VIX was not ready this week and looking at it, maybe the gap fill was what it wanted and it may not be ready yet. your new gap up scenario in the same spot is kind of freaky. Thanks for all you do.

  2. Thanks Dan. Maybe we should call it the Never Ending Diagonal. After this last move up, how do you think it plays out? Do we drop hard or is it a battle to bring it down?

    Also, if it breaks your 887, how do you plan to play it? Go long immediately? Thanks.

  3. Honestly, I feel 878-880 as a possible real top. The 875 top might be a temporary top in order to bring in more bulls. I think we might have a retracement to 845-850. If we hold this level, I feel that the bulls will push it to 878-880. If we break the supporting line at 845-850 right now, I think it will roll over.

    If you look at the candesticks for the past two weeks, a three day up of about 40-50 pts is usually followed by a 15-20 pts retracement.

  4. Shanky the VIX looks dead but I don;t like how far its away from its 20 DMA. Its gap is filled and it is free to go where ity may. It has been known to reverse on a dime.

    Anon, hehe good one.

    I am already long in my 401K (S&P indexed fund) from sub-700 so I don't plan on doing anything with that because the rules screw me if I transfer. Its up about 20%.

    But my trading account? Yeah I'll have to cover my shorts I recently opened.

    I suppose I would go long a small trade nothing too big since I already am covered in my crappy 401K...

    But honestly, I don;t see the up move happening. I just cannot fathom it.....yet I must consider the upside surprise....

  5. Well, that´s a diagonal, but be aware if it´s going go 3-3-3 wave structure instead impulse as daniel carefull noticed allready, it would skew all shorts some day and be bullish some to blow up. QQQQ had a same kind of diagonal in 2006 in much bigger perspective, many market participants shorted it out just to be found as stop very quickly.

    Perfect "contra wedge" appears to end a lot of waves and appears mostly with W5 position meaning there have to be 5 wave structure inside of there, not with ZigZag´s.

    3rd wave have to be the longest one.