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Wednesday, May 6, 2009

A Quick Look at the Daily SPX Chart




The SPX daily looks healthy. I see no negative divergences. Even the ROC broke sharply upwards.

Perhaps the market is getting a bit far ahead of its 50DMA but that will likely catch up when the market decides to put in a near term peak and correct/consolidate some more. How much correction? I really cannot say. This is a unique P2 after a unique P1. There is no very close comparison that I can find anymore.

EDIT: Removed the doubting comment and too much thinking out loud again. LOL. The main point of this post is that the market is not ready to collapse past 666.

The island top gap is coming up. That is an area of big resistance comparable to 865-875.
Overall though, big volume on the cash index. There was some bear chops in today's up move and the NASDAQ looks toppy for now. But does the market look like it will collapse completely back under 666 based on this chart? How can one say that this is some kind of B wave in an Intermediate wave (4)? Everything is going up. RSI, Moneyflow made a new high today, Accum..etc, etc.

Usually you'd think the market will eventually show some negative divergence of some kind in some key areas before it collapses. This chart does not show that. Indeed, the path of least resistance in the longer run seems very much higher. P2 certainly has the ability to surprise to the upside. I still hold my 401K longs. Based on this chart alone, I will hold them some more.

P2 will give clues when it is near over. And a big daily RSI negative divergence would be typical. And obviously we haven't even topped out on the initial RSI runup, so factor in a lot more trading up and down and up before that kind of indication can appear over time.

Weeks. Months.

13 comments:

  1. Turning points Elliott Wave Forkology May 6th update
    Everyone is looking for some sort of a top here. Have you noticed how people(traders) become nervous around turning points? It's probably because they already positioned themselves for a turn or not yet exited their previous positions. You can watch this phenomenon by increased number of posts/comments on many popular trading blogs - I guess you can even make sort of a turning days sentiment indicator out of it. lol :) Even Larry Pesavento is a bit nervous, today was saying if we not gonna top today or tomorrow the next turn is on May 19th. Today is actually a Puetz's TUCT cycle day as well. And as you may remember my calculator has May 9th as 123 calendar Lucas days from January 6th, 2009 top.

    Reviewing today's action on SPX you can see we gapped up in the morning to 915 area, when set abc correction down to 906 and again started corrective wave A up to 914 with nice fork guiding advance of wave c of A, when we corrected down again in B to 908 and started 5 wave impulsive wave C up to 920ish area ending the day on corrective down note at 912 but not before rising in probably wave B of ABC down. Overnight we should correct down more to 910ish area or lower with tomorrow's opening is anybody's guess.
    http://forkoholic.spaces.live.com

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  2. Hey Fork good to see ya bro.

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  3. I see the financials continuing...I was a skeptic but no longer.

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  4. if wave C is 50% of wave A, wave C would end around 937, that's just past the gap. 38.2% was around 916 which we exceeded today.

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  5. Dan, I buy your idea that P2 may take several months. And it will have several corrections in the meantime.

    Roxy

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  6. Dan,

    It would be great if you could recommend a book on EW analysis. I read (most of) the Prechter book, but could not find targets and relationship between A,B,C waves.

    Thanks.
    Crush

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  7. Daneric,

    Thank you (once again!) for this very clear chart and commentary.

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  8. Thanks Dan for your work,

    Here is a chart for you (not mine). Do you think you can count waves here, on the $BPSPX?

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808&cmd=show[s153926945]&disp=P

    It has two nice bear crosses from March lows.

    And I think the move down from January looks more corrective than impulse.

    Roxy

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  9. Daneric,

    If C wave peaks at 937 or 947, where do you think the pullback will bottom?

    Thanks.

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  10. Oops,

    I just read your bearish chart/comment that 897 is likely pullback after C top. If 897 support breaks, do you see 875, 800, or even 768?

    Thanks.

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  11. nice work daneric.
    thanks
    linus

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  12. Congrats on cracking the 100k count DE.

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  13. Perfect bulltrap all over the place including eur-usd. I think UsaCad made it with one pip error at 1.63 (thought it would hit 1.618) while eur-usd made it with tbearish riangle triple top as A-B-C-D-E movement to hit 23.6%

    So, we´re are the way now to 830 with minium as optimis scenario. If it was 4:th wave this party is over. Sell in may and go over.

    Not so much follwing SPX, but isn´t there been falling macd for ages allready ? I suppose it should be called as negative divergence.

    As someone asked relationship between ABC waves, most commonly they comes as similiar size. At least with EurUsd they did, approximately or exactly 400 pips each.

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