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Wednesday, May 20, 2009

Elliott Wave Update ~ 20 May

SPX retraced .891% back from 878 to 930 peak. 90% is the rule. So....I'd call it a minimum requirement for a flat. The DOW was actually 100% retrace and the NASDAQ above 90%. So there is no divergence between the 3.

There is an obvious, what appears a clearcut ABC zig zag down from peak today. That implies a move back up to finish the B wave at a higher spot. It could happen of course but support at 896-900 must hold. But I think the zig zag is a false pattern likely to be only a part of a bigger down pattern. Maybe I'm wrong, we'll see tomorrow.
What makes me think the up move is over: 1) clear shooting star on The SPX 2) Big volume today producing that candle 3) Flat minimums were met (DOW WAS 100%) and I count a valid ABC from 878. 4) Banks checked out early yesterday and diverged from the SPX today.

5) DOW made a new high today and had big time negative RSI divergence.

So I'm trying to keep this simple and not lose sight of the forest. If it heads up again tomorrow, then it will have overrun a big fat shooting star with volume. So be it. Then I'll be wrong.

There will no doubt be more bouncing a bit between 875 and wherever. However the bears slapped the market down in good fashion today after a 15:1 open advance/decline volume ratio at 10:15 A.M. they managed to close the market red with a final advance/decline line down to .96....under 1.

B of [X] (or whatver it turns out to be) wave appears to be over. Bulls must hold support near 900 to get another crack above.


  1. dan, i'll play the opposite this time and say we go up tomorrow. don't you think your minutes bc are a tad skimpy compared to the work of your a within your minor B? also we wore intraday indicators out on the move down today. i won't be so quick to dismiss your flat and 200ma - we're already so close bulls can taste it. the move down zigzag ratios also look might good and my larger scope indicators so no confirmation yet of trend change

  2. Thanks Dan. I agree with your take on things. It seems that momentum is definately shifting into the bear camp. We haven't had two up days in a row since the last day of April/first day of May and the market seem to be pulling back from gaps up rather than moving up from gaps down. I could be wrong, but it wouldn't surprise me if we test 875 tomorrow.

  3. It's a confusing market...a lot of head fakes.

  4. Do you think there is a possibility of this being the early stages of P3 or do you see another bounce higher later on?

  5. Not sure its the start of P3, but the market will plunge in the next couple of days for sure...

  6. Longs are going to get kill tomorrow...

  7. Today is a backtest of previous highs...
    Now its going downhill from here...

  8. I think the market will gap lower tomorrow...
    target 891 for S&P

  9. We are in Wave 3 of C (down)...

  10. Long-term investorMay 20, 2009 at 5:54 PM

    This "BIG FAT SHOOTING STAR" is just too bearish to hold any long positions...
    I'm out of this market until it drops to mid 700...

  11. Wow, lots of comments here today. You are developing quite a following Dan.

  12. Daneric, your charts are great. Even clearer than EWI. If I make some $ this year you'll get a bonus.