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Wednesday, May 6, 2009

Elliott Wave Update ~ 6 May


I have reconsidered the subwaves of this last advance to a peak. Looking back at the other day, a 19.2 Advance/decline ratio seems to be the "third of a third". This is also the only area on the wave structure in both the cash index SPX and e-minis, all-hours futures, where there is no overlap. So it seems to me that is a key "marker".
In addition, the waves are clearly struggling. Lots of overlap and the resistance doesn't get any easier as the market chugs higher. Lots of profit taking from below and lots of "breakeveners" cashing out. But overall the market is getting overextended. The SPX finished 9 points over the upper BB on the daily chart. And there was indeed good volume the most since early March when the rally was in the early stages.
So either Minute wave [iii] has topped out today or will shortly tomorrow in the 920's somewhere. From there it is free to retrace as far back as 898 without breaking my wave structure. Minute wave [iv] *should* remain above the previous wave 4 spot and that was 897 on the SPX.
As a side note, e-minis in afterhours DID retrace back toward 891 level as I suggested in last night's post. However this did not translate to the SPX during normal trading hours. In fact the e-minis suggests a large expanding triangle which indicates a subwave 4 of some kind and that is also why I reconsidered the subwave count.
So Minute [iv] should start to retrace back soon if not today then tomorrow if Minute [iii] peaks one more time. And 898 should be maintained as the maximum Minute [iv] as its low. It could very well maintain a higher mark like 905-907. After Minute wave [iv] is finished retracing, Minute [v] *should* carry the SPX to a new high and close the January island top gap from 927.45-934.7 area (if it hasn't beeen closed by tomorrow). And it might push higher in a blowoff top and reach the 200DMA if it can close that island gap. Perhaps this last few moves will take a bit to play out and that gives the 200DMA more time to drop down.
The 200DMA currently resides at 958.2 and drops about 2-3 points a day. In 5 trading days it should be at around 947?
The 200DMA indeed seems to be the target for this wave C.

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