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Monday, June 1, 2009

Elliott Wave Update ~ 1 June

Primary Count: Market broke out of an Intermediate (X) wave triangle. The bullishness was just too much to consider anything else at the moment.

It is hard to say where to start the count and at what degree to label the subwaves.


The move up today achieved many things:

1.) Closed all those old huge gaps.

2.) Rallied above the 200DMA for the first time since May 2007. And that was just a "kiss goodbye". This is a "Hello! I'm here to play".

3.) Erased the stigma that the market couldn't break over January highs. Effectively wiping out resistance zones and setting the bar higher.

4.) Sets the market up for an assault over 950 SPX and onto 1000.

5.) Squeezed the shorts even more. Bearishness is washing out...still...more.

The bears were shorting the moves between 875 and 930. Now the bears will find themsleves shorting between 915 and 950 likely perhaps for a few days or so.

A backtest is normal for a triangle breakout. When and/or if that comes is a guess. I would think breakout support (914) would hold in any bear wave [ii] retrace back. At the very least the 200 DMA should be backtested sooner rather than later.

VIX was postive divergence against the market today and held up. Financials also are weak. Perhaps they are just badly lagging. But it could signal a wave [ii] pullback very soon if it hasn't started already.

Bottom line is the bulls pulled off the triangle breakout and the bears are very much on the defensive yet again in this relentless P2 wave.

If this proves to be an Intermediate-sized triangle (X) wave, the next ABC pattern should point the way toward the top. I still have a 1007-1044 potential upside range but its a guess. But its hard to say at what wave degree the breakout occurred. I'll get that resolved soon enough. But I am trying to nail that down because the market may already be approaching a Minor A top very soon of the next ABC to P2 peak.


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