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Wednesday, May 27, 2009

Elliott Wave Update ~ 27 May







Primary Count: SPX is tracing out an X wave flat. The alternate is that the X wave peaked today.

Secondary Count: SPX is tracing out a bullish contracting triangle and a move down to "E" will produce a thrust rally up and begin the next ABC Minor moves to a higher mark and finally breakout of the trading range the market has been in.

The bouncing between 878 and 920's will soon likely come to an end one way or the other. Either a final bounce off near 878-880 support will produce a breakout move higher above 930 SPX or the bounce will be "false" and turn down on a dime and break thru 878 support lower.

To be honest I slightly favor the latter because I don't think bullishness has been shaken out enough just yet according to my $BPSPX chart I provided. In addition, the whole pattern looks "descending" more than anything on the SPX, at least at this moment in time. And that would be a distribution pattern more than anything. The bullish triangle could be just a big red herring for the bulls. They buy the "E" spot bounce , see a 5 wave move up to X (3-3-5 X wave flat) and then a hard reversal sends the market crashing through 878 support and catches bulls completely with their pants down.

In either case, we'll just have to let the market decide if it has corrected enough to support a volume move higher above 930SPX and rally above the 200DMA. My gut feeling is that it will sport a second corrective pattern (after a blue X wave), maybe a zig zag down to Y.

13 comments:

  1. Wave 3 of 3 again ...

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  2. Dan;

    Do you have a primary count of P2? I like the updates but it's the big picture of this entire structure that I think is most interesting (to me, anyways).

    Thank you!!

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  3. MarkyMark, Daneric keeps a lot of charts here. The link to it isn't overly obvious on the left side beneath MY BLOG LIST.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3271025

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  4. Ah yeah, there it is. Not knowing a lot about w-x-y (or a-b-c for that matter), is there a typical target for y, is there a reason it's not on the chart?

    TIA!!

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  5. Stupid people always ask stupid questions!

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  6. Mark, the target for an Intermediate wave (Y) would be somewhere north of 950 most likely toward perhaps 1000 SPX. But that is a guess based on Fib retrace of the entire bear market to date.

    P2 may be actually over for all we know, however things don't yet point that as being the case, namely sentiment. When a plurality of investors turn undeniably bullish, P2 would be topping.

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  7. I agree, I happen to think of it this way;

    If someone told you to go long on March 5th, you'd call him crazy. Seems like that's what it should feel like before P3 begins, no?

    Can P2 be a 5 wave move up or do you see it as a 3 wave type of move? Can wave 2 up be this flat that is tracing out? Sorry about my jargon; I ordered the book but it's not here yet. :)

    Anon-thanks for the kind words, tough guy.

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  8. my 2c, you're nailing it right on the head. i'm leaning towards your primary as well but looking for some trend breaks and wave counts beore going in. good work as always broham

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  9. truly awesome charts today...Dan u make the grooviest waves...so the mkt might move above 930 or it may break 878...we'll just have to see what the mkt decides....that and $2 will get me on the subway...THIS SH!T REMAINS SO FREAKIN' USELESS !!!!!!

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  10. the bond market has told you where it is going.

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  11. I don't see how it could NOT break 878 with GM going bankrupt. People are a bit dilusional right now, smelling the green s..t from Obama. But the fact remains that we are still on a downhill and to top it off oil is going up thus creating an additional tax like burden called gas prices.

    Common sense should make this a correction down to SP700. But emotions are impossible to predict when you have a good cheerleader chief.

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  12. jacob rubensteinMay 27, 2009 at 10:26 PM

    Wave four triangle anyone? The count sure makes a lot more sense if we thrust out of this formation to at least the 950 area. And that thrust will mark at least a tradeable short term top, possibly more.

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  13. Hi,
    what do you think of oil. here is my take on crude oil -

    http://sahilkaps.blogspot.com/2009/05/elliott-wave-analysis-crude-oil-nearing.html

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