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Thursday, June 18, 2009

Elliott Wave Update ~ 18 June

A bunch of zigzags that are struggling to gain altitude. 38% retrace has yet to be hit on the SPX. I favor one more zigzag up to finish off a wedge move and a proper Fibonacci retrace of at least 38%-50%. The market cannot seem to attain a price retrace so I have the 1 minute chart as a double zigzag so far and a triple is max.

If another zigzag up happened, it would be a good place to load shorts but the market may do one of 2 things: a) not make it up there for you to conveniently short (and reverse hard down and make you chase!) b) make it up there and squeeze the crap out of your position and make a bunch of weak hands choke and cover (this would be whats known as "overthrow" of the wedge on the final move).

I guess whatever the mood of the moment is.

PS - i am not sure of my degrees of wave labels. That'll work itself out though.


  1. Hi Dan,

    If S&P hits 930 tomorrow, do you have an approximate target for the next five waves down?


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  3. SRS look for at least a C = A type move.

    53 points for the first 5 down. So if the market hits 930, and if C = A then about 877 I suppose.

    That would be a zig zag. I big 5 wave move down will go below that

  4. Daneric, you know Prechter is calling a new bear mkt rally?

    what do you think?

    Keep in mind, he also said to close out shorts in late February...

  5. I agree with Dan. 875 is the target area

  6. 750 - 800 should be the end of 5 waves move down.

  7. IDWT...

    Sounds like Prechter expects the triple ZZ corrective, after all. Who knows?

    The best I can do is position for the next 5 down. Only then I'll look around and re-evaluate.

  8. drat... that was my post above.


  9. IDWT:
    On Friday Prechter's letter noted: "...strong potential for a short-term downside reversal."

    (1)I thought the triangle that ended at 12:26 EST ended with a very weak C-wave where C = 0.50 x A. So the mkt 'had its chance' to take out upside fibs but couldn't make it. Perhaps the 5 waves down from the top were so forceful we are not going to make it to the 38.2 retrace.
    (2)Also, the classical school may interpret 15:18 EST as being a 'double top'.

    I guess we'll see in the morning! Much thanks for the site. -pat

  10. Pat look at the nasdaq, I think it has one more corrective up move left in it.

  11. I'll be surprised if S&P goes to 930. Dow has big resistance in 8600 area so I'm not expecting 11+ pts move in S&P and dow only moves 45+ pts..

    Can DIA break 86? God is not on bulls side for right now.

  12. dan, you are an insane man for even attempting to count the 1m squiggles. that said, we love ya for it. keep it up

  13. Prechter's Bloomberg article suggests that P3 has begun and we are in 1/5/3. If this were the case I'd expect 750-800 to be achieved by mid-late July then the short rally he suggests prior to the 3/5/3 for the big move. We'll see. Prior year calnedar had a similar pattern.

  14. Dan.
    The Russell and Nasdaq are looking more 'sideways' in their structure than the Dow and the S&P. Just the thing to expect from ABC combinations. Today's highs failed to take out yesterday's. IMO these indices tend to lead and they are leading down. Their tops may already be in at Wed 14:30 EST. I do like your Triple Combination but I would give it a 33% probability. JMHO. The mkt will turn when traders resign themselves to the next 5er. I'll be back to eat crow tomorrow if I am wrong! LOL!Cheers. -pat

  15. To Dan and everyone here,

    Thanks for your answers!

  16. Hi Mark,

    I don't think that Prechter suggested that P3 has begun. I just read the Bloomberg article (Thanks "In Debt We Trust" for posting it!), and what he said was this:

    "Most bear market rallies occur in two steps. The first step is probably over. We'll probably have a reaction for a while, and then maybe later in the summer, a second leg up."

    He also said that the current signs (that is, the decline off 956) are suggestive of "a short to intermediate term peak" (at 956).

    I interpret Prechter's words to mean that we have not seen the FINAL peak of P2 at 956, but that after the current correction (down and sideways, but not back up over 956 for now), "maybe later in the summer" the bear market rally (which is P2) will have its SECOND leg up to its final peak (above 956).

    Remember, P3 is expected to be long in months and deep in its decline. Therefore, we CAN"T interpret Prechter's words to mean that P2 is over, then we'll have a short P3 this summer, and then P4 (the supposed 'second' leg of the bear rally) will start "later in the summer." Since that interpretation would make no sense, P2 is not over and P3 has not begun.

    Let me just add that Prechter's words don't indicate how long or how high the second leg of P2 will go...or when P3 will begin, how long P3 will last, and how deep P3 will decline.

    So, although I disagree, I appreciate the discussion. Cheers.

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  18. P.S. Most important for us now, Prechter also didn't say how deep the current "reaction" to the intermediate peak of 956 will decline.

    Good luck to everyone in trading this correction.

  19. Spx close below 935 (918.37)=(+7.66)

    Below 935 I expect [880,893] very short term.
    Below 957 I expect [790,820] medium term.
    If spx close hourly above 928 I have to reduce some short.

    Important tomorrow a close above today high but remember the resistance. Let see, market close today again above MOV (917.82), if tommorrow close above today high, confirm that will attack resistance 828,935
    See daily charts green line. Sometimes when we have a pullback the first close above MOV don`t garanties upside.

    Tomorrow suport Hourly 915. Bear will try to break that and change again MACD hourly.
    Sentiment - Vix try to not break 29.60 (gap/open monday and last high broken)

    Click to zoom in.

  20. Dan, I think you had the right count yesterday. Today it's just playing out.

    Fear Factor: Should manifest Friday. We should end at new lows. If we go UP Fri then something is wrong. We have the wrong count. But I don't think so. Again to repeat what I said yesterday, it's POSSIBLE this is P[3] but I don't think so. I doubt you do either. But, if it IS, Monday after a brief W2, is going to be a bloody Whoa Daddy!

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  22. GBT,

    Please explain why you think fear will jump tomorrow, and why Monday would be bloody. Is your view based on the expected wave structure, or something else?

  23. SRS,
    How you doing? Haven't seen you over at K's board during the day. Hope you are doing well. If you don't remember me, I am the "funny" (use the term loosely) guy. You were very kind, and helped me during my P2 rage and I appreciate it. Thanks again.

  24. Hi Matt,

    Thanks for your friendly greeting. Of course I remember you. Both for your great sense of humor and creative writing skills, and for your special situation that we discussed. I'm happy that my words were helpful to you...and I'm really glad to see that you are still an active participant in "the game" and on these boards. I wish you the best, bro!

  25. I have never seen any of Prechter's calls come true in time or size. He has been calling huge decline since 2005. Aside from that, we didn't have many squiggles until SPX hit over 750 on this site (not downplaying hard working Dan) and forget the decline downward (or wave 5 of 5 of long and painful decline by EWI) we (along with EWI's changed waves and counts) jumped in P2. Same thing now on the debate of P2 vs P3. It's like Alice's wonderland and one believes to be in it really until wonderland disappears! And all the while all firms' earnings decline like never seen...

  26. Seems like C peaked at 927 and now we're on wave 1 down (correcting at this point at 923). If this is wave one, we should see wave 3 take us down to 907. However, if 927 doesn't hold then is not wave 1.

  27. The charts suggest there may be one final push back to 930 before heading lower.

  28. That Weid guy named Mike is the leader of US open. That suggust anything could happen on Monday.