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Friday, May 22, 2009

Elliott Wave Update ~ 22 May

The Bears are in control. Today was more a consolidation day for the bears than a rebound attempt by the bulls. I have an interesting 1 minute chart that kind of explains today's action.

The market basically pushed to under resistance at 896 and triangulated all day. Then it tried for the breakout move but was slapped down rather easily at the 38% retrace Fib mark at 896 which is also major resistance now.

Even if the bulls manage once last bum rush up the mountain come Monday, I think it is largely doomed to failure.

The 60 Minute chart is also starting to falter.

The price action can be summed simply: 875-878 support zone has now been backtested twice. The first backtest resulted in a short-lived, yet spirited, rally that failed rather decisively at Big Gap resistance. The second backtest resulted in a bounce of only 38% (so far) of the previous bounce. The next backtest may not survive much of a bounce at all.

Once 875 breaks, pessimism may come into the market in sufficient amounts to allow this (X) wave to correct. How much it corrects is anyone's guess, but my best guess right now is my count on the 30 minute chart that I show.


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