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Wednesday, May 13, 2009

Elliott Wave Update ~ 13 May

Primary Count: A zig zag from 930 SPX is tracing out and either the low has been achieved today or will be early tomorrow. 930 was the near term high for a C wave up.

A zig zag down means a "three". When subwaves are combined together to make bigger waves (thats what EW theory is all about) it can give a clue sometimes as to what may be happening over the longer term.

A 5-3-5 zig zag is considered a 3 wave pattern and its subwave pattern consists of a 5 wave - 3 wave - 5 wave pattern. Since Zig zags are a "3" they often form a typical "A" wave of a larger wave pattern such as a 3-3-5 wave flat or expanded flat. So what am I getting at?

Well the market seems to be settling on support. If this zig zag is an "A" wave of a large flat corrective pattern, then the next moves will get bullish and head back above 900.

A flat can expand beyond the previous peak and still be considered a "corrective" wave. Of course if a B wave peak formed, a nasty C wave following would occur. See my 60 minute chart.

So in this sense the market can still hit that darn 200DMA I have been harping about and still be in corrective mode of an X wave. Again see my 60 minute chart here.

This is all highly speculative but hey, wave interpretation always is somewhat. A "three" down means the corrective is 1) over 2) The first corrective pattern in a larger "double" three 3) the "A" wave of a flat pattern of some kind.

In all three cases above, it all implies the same thing: A bounce back upwards. How far and how high it bounces will determine what comes after that.

The 4th possibility is that I am completely wrong in my counting and the market will remain bearish. Watch down volume and how it handles this key support zones at 865-880.


  1. Thanks always have great insight.

  2. Great work as always by you and Kenny!

  3. To Dan From Max Cherry,
    We're on the same page with the "A" down, I'm wondering if we'll have a missing fifth wave with the futures selling off overnight then rallying before the open. By the way Elliot Wave International is having a free week for those interested

  4. dan, this is an ewave 101 point i get jumbled on a lot but thought i'd run it by a pro. i thought an ewave basic is that in the direction of a trend, in this case your current ABC (the trend is down), the waves in the direction of that trend must be impulsive i.e. we need 5 waves down in the A (instead of your abc with c coming to completion). Then in B we would have a sub abc as it's corrective and not in the direction of the trend (down). Let me know if I'm off. Otherwise looks good

  5. dammit, nevermind. missed the point about it being a flat 3-3-5. my bad :p looks good

  6. appreciate your work. But I really don't understand how one can trade off this stuff. The waves constantly change length, and are only really known after the fact (like u saying yesterday was probably the end of a 4 before a move up to 930-50, did you go long based on that?). Probably just me, but my .02