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Friday, June 19, 2009

Elliott Wave Update ~ 19 June






Well, the market did a nice little 3 day retrace back to the previous 4th wave subwave at 928. That's what was called for and it complied with it. The waves look obviously corrective since the 903 low and I cannot find a bullish alternative at this moment.


So....Monday *should* be a decent down day. That's according to the wave structure. I'm not going to try and outguess the wave structure, I'll play it straight here. The TA supports a down move come Monday. Either its the beginning of a C wave or a wave 3. Both can be powerful. However I favor it being a C wave.


The 50/200 crossover I talked about the other night will happen early next week. I suppose the market will drop down and meet both. I show an updated daily of the chart I posted the other night.
http://2.bp.blogspot.com/_TwUS3GyHKsQ/SjgqsOAjd9I/AAAAAAAAA54/35hr6plWCt0/s1600-h/daily.png

So in review, the market will probably head down a bit and visit the 50/200DMA area. What it does when it meets them is anyone's guess. For instance a C wave is sometimes only .618 times the length of A. That would put a down move C wave to 894 using today's high as a B wave. And that would be a break below the 50/200 DMA. Maybe it does that and bounces.

30 comments:

  1. Thanks again, Dan.

    What makes you favor a C wave rather than a wave 3?

    And how soon will you be able to tell us which kind of decline is underway?

    Thanks for all you do.

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  2. Great call last night Dan. Corrective structures can be so confusing! -pat

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  3. Monday will give us a clue. Why C? Because I want to see how the 50/200 crossover gets resolved first so I favor a weaker move.

    Remember this technical situation hasn;t happened since Sep 2006.

    Also $SPXBP has corrected downward quite a bit, most since rally started.

    Granted, the 200DMA is sloping down but...still.

    Also a lot of support exists between 875 and 900.

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  4. I bought some UUP calls towards the close.

    http://www.stockstop.org/
    viewtopic.php?f=2&t=1606&p=8989#p8989

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  5. This comment has been removed by the author.

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  6. I bought SSO and SDS towards the close

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  7. Dan, Prechter was making the rounds on the news channels today and and once again I find the public face of EWI doesn't match the private subscriber face. Remember early March when Prechter said to cover all short positions but the STU didn't? Seems like the same thing is happening now. Do you have a read? Or maybe I should ask do you even care?

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  8. The NAZ looking too bullish

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  9. Thanks Dan. Good answer. Lots of valid reasons.

    Have a great weekend!

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  10. GBT,

    What are the major differences between what Prechter and STU are saying currently? Thanks.

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  11. SRS, today he said the bear market rally is about to resume, and also there's a lot more bear market to go?!? Seems like CYA to me. No matter what happens he can say see I told you so.

    http://www.bloomberg.com/avp/avp.htm?N=av&T=Robert%20Prechter%20Sees%20a%20%60Lot%20More'%20Bear%20Market%2C%20Deflation&clipSRC=mms://media2.bloomberg.com/cache/vjP_4O1wOz_0.asf

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  12. GBT,

    Thanks for your reply and the link you provided.

    I don't think that Prechter is contradicting himself. He's saying that the bear market rally (P2) probably hit an intermediate high at 956, is currently having a brief correction, after which the P2 rally will resume maybe later this summer...but that after the P2 rally hits a final peak (back above 956), that "there's a lot more bear market to go" (in the huge decline of P3, back down below 667).

    This is also what STU is saying -- so where do you see Prechter and STU saying different things?

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  13. SRS, that's an interpretation of what Prechter is saying, but it's not what the STU is saying. Hochberg has implied for several runs now that a significant top is in or could be in, possibly P[2]. Kendall said the same thing on Wed => "indicative of a top that should last for a while". This is the same confusion that occured in Mar.

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  14. STU = Short Term Update

    Elliott Wave International issues market updates on Mon, Wed and Fri evenings. Subscription service.

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  15. I must admit as someone who tries to parse words carefully, a slip is easy to do.

    STU favors a rally to new highs, they are just not sure where the turn will come from.

    I favor a turn at a relatively high price level...i.e.- 875 or above only because a big price damage may be hard to recoverr from.

    I just don't think P2 has retraced enough in price. Time I am not sure about.

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  16. OK, I'll consider the STU issue settled. Now for an entirely new hot button issue! Neally calls market top: SPX to drop below 500 in six months!

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  17. GBT,

    I just don't see any contradiction between Prechter's, Hochberg's, and Kendall's statements.

    I interpret "an intermediate top" to mean "a significant top" that "should last a while."

    More specifically, I interpret all three EWI spokesmen to be suggesting that P2 topped for now at 956, that it will correct "substantially" over the next month or two, and that "probably in late summer" the P2 bear market rally will resume and gradually reach a final peak above 956.

    Lastly, Hochberg has repeatedly said that he thinks the most likely outlook is for P2 to resume its rally after this substantial correction -- BUT -- if the wave structure makes it appear that P3 has (surprisingly) begun, that his STU will discuss it with subscribers as soon as possible.

    Whether EWI's projections are confirmed by actual events, I do not know (although I think they sound very reasonable). But based on what I see so far, EWI's projections do not seem contradictory or confusing.

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  18. I was typing and posting just as you declared the STU issue over. I agree and will say no more on the topic.

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  19. Dan, great analysis as usual!

    I see your point on C wave touching the 50/200 DMA area. However, I'm curious why would you use C = .618 * A instead of C = A, which is referenced in the EWP book as being typical. However, I couldn't find any reference to C is sometimes .618 of A. Could you point me to that reference in the EWP book? Thanks,

    Richard

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  20. Great analysis DE. Generally TA is solidly on the fence. The bears think this thing is going higher. What do the bulls think? Its possible the other side of the room is empty

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  21. Richard, I am only saying that "for instance" sometimes C = .618 x A. Not saying thats gonna happen just something to keep in mind and is always a possibility particularly on a P2 wave up.

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  22. Richard page 137 of EWP states:

    "In a zigzag, the length of C is usually equal to that of wave A, although it is not uncommonly 1.618 or .618 times the length of wave A."

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  23. Dan, thanks for your reply. I've seen that paragraph before but I totally missed it today.

    What do you think of the odds for the C wave to retest the 880 support and then rebound to a new bear market rally high? You mentioned that scenario a few days ago.

    Thanks again,

    Richard

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  24. Odds are pretty decent I suppose. 880 is rock-solid support for P2. Its a key marker. For a triple zigzag to play out to P2 peak (if thats whats gonna happen) I'd say 875-880 would be a logical place to buy the big dip.

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  25. Dan, thanks again for your reply and for all your great work. According to my calculation, C = 874.64 if C = A! Have a great weekend! Richard

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  26. Market is going to gap up on Monday.

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  27. Dan,
    I'd appreciate any comment on the rifin you might be able to give. the banks finished strong friday and it seems they have a chance to not go down with the SP. any thoughts appreciated. thanks.

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  28. Re: Aaron
    Not only the banks are strong, the Naz as well. Plus the commodities already make their moves. Just wonder what will go down with S&P next week...

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  29. Neil,
    I think a lot of the action in the banks Friday was opex. JPM need to close at 35 for max pain factor. since it's heavily weighted in the RIFIN it pull many of the other banks up. I expect it to drop this week.

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