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Wednesday, June 24, 2009

Elliott Wave Update ~ 24 June


UPDATE 5:15: I updated my 1 minute chart (comment and a trendline)

Wave evidence since 956 top: Impulsing down in 5 wave structures and correcting back in 3 wave structures. That is very bearish and supports further decline is coming. Today's squiggles still supports that view. Until that trend changes, the Primary count will have to remain bearish.

Tomorrow is a key day. There will soon be the "third of a third" wave moment if the Primary count holds true. These are whats known as "points of recognition" as EWI likes to say. These are the moments that usually occur in the "third of a third" wave down in which the market realizes that its in trouble. Movement is swift and powerful. A 90% down day is typical.

This will be occurring right near an upper channel trendline. If the market can break out of this trendline to the upside, that would signal something else is happening likely a further correction higher and it indicates the severe downtrend will have been stopped and 888 will hold for a bit as the low. A break out of the channel allows the market to form more corrective structures (sideways) to allow an eventual move higher than 956.

So its come down to a decision point for the market: It either breaks out of the larger bear down channel or succumbs to a nasty wave [iii] move lower. Strictly looking at the wave evidence, the primary count is that the down move will happen.

If ever the market requires upside surprise to save the bear rally from being potentially ripped to shreds, the moment is now.

35 comments:

  1. Thanks muchly Dan,
    FWIW - I had the exact same wave count.
    -pat

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  2. Dan,
    I don't know if fundamentals are a nono but the fed coming out all but saying that deflation is there biggest worry by keeping rates the same and stating that the economy is not recovering. I think 888 will not hold. so the question is assuming it does't do we get strong support at 875-880 to turn back up for a move up or not?

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  3. Good work Dan, We could have a fake break out of the channel in the morning and then come the nasty III.

    TD.

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  4. Good work Dan, everything you write makes sense.

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  5. Dan good job.
    Overseas market will be surprise by this moves lower after Fed decision today. I think the good old days finally comes. Most trader I talk to have the same bearish view.

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  6. Dan, I think the ii finish already. If u draw a trendline on top on today's 5 waves.

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  7. This setup is very similar to last Friday. Retest the downtrend at the end of the day and gap down on the next day.

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  8. IF the market finish the C wave down yesterday, then most trader will not hesitate to pump up the market on Fed date, so there's only one option left... this down moves will take the market down to mid 700( thats the area most trader are expecting).

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  9. i think you've got it dan. good work

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  10. Market is oversold and I think the possibilities are that it will break out of the channel. This wave might be an inverted C wave ending in the 927-940 area. I have an alternate view of 927 to 888 as a B wave and C being 1.618 of A (903 to 927) would be 927. Obviously, I could be totally off. So I got out completely and now I am planning on shorting or going long with very tight stops at key levels tomorrow.

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  11. Rick that is my concern is that the market tick is very low average and near a typical turning point.

    So thats the real reason why it has a decent chance of upside surprise.

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  12. Dan, thanks a lot for your hard work!

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  13. Watching those 5-3-5-3 waves in the last several days was amazing. Thanks to you and Kenny it makes so much sense now. The market is dancing a very clean text-book dance. I only wonder how is that possible?

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  14. Dan, can you think of a bullish count if we really get an upside surprise?

    Thanks

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  15. Impuse without a doubt. The Bear is set to "roar" again into a Wave 3/5 downtrend that began (MONDAY-May 19th 2008)...

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  16. Dan,

    Thanks again for your smart charts and comments.

    Since the June 11 top at 956, we have had 10 trading days in which the trend has been 5 strong waves down and 3 usually weak waves up.

    There may be some limited counter-trend bounces in the days ahead, but this strong downtrend does not seem fully played out.

    Question: since EWI says the decline will remain intact as long as 917 isn't exceeded, couldn't the bulls break above the channel as hgh as 917, and still resume a deep decline?

    Thanks for all your hard work and generous sharing.

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  17. The more I look at the chart, the more I think this is a C wave. If this was wave 3 and 3=A x 1.618, you would get an 85 point drop. If we took the same ratios for wave 4 and 5 as 1 and 2, then target would be 797 by the end of this wave. I think that would be too abrupt of a downslide from this level. It would make more sense if we had the ABC correction and then go down gradually given the oversold conditions and the lack of a panic factor.

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  18. S&P futures + 9 to 907 at 12:45 am. I guess it's out of the channel and another short squeeze is coming. The funny part is that there are people still asking for the uptick rule to be reinstated. LOL...
    I guess my question would be where is your upside target if this is a C wave as Rick suggests?

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  19. S&P futures coming back down.
    903.75 at 2:24 am (ET).

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  20. my take. futures are up big(not as big as they were) one more bull trap. we open very high to put the screws to the bear but it won't hold. there just hasn't been enough volume. I bet we close even or much lower setting in motion the test at 875. question is if it plays out this way will the momentum carry it right through 875.

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  21. S&P E-Mini futures have now fallen to 891.0! 8:48 am (ET).

    A nice, free website to check E-Mini futures (with only a 1 or 2 minute delay) is futuresource.com.

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  22. Here's the exact link to the e-mini chart:


    http://futuresource.quote.com/charts/charts.jsp?s=ES%20U9&o=&a=V:5&z=610x300&d=medium&b=bar&st=

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  23. it seems that the futures "spiked" last night all in about 15 min. It was very strange. But nothing shocks me anymore.

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  24. Thanks and credit go to Frank in the comments thread over on Tony Caldaro's "The Elliott Wave Lives On" blog for posting the link to the free e-mini futures chart that I just posted here.

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  25. matt,

    Last night's spike in the futures was apparently a reaction to this news release:

    http://www.cnbc.com/id/31535138

    Thanks go to Rick in the comments thread on StockTock.com for this explanation.

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  26. I went long this morning at 900, taking my chances with a ultra tight stop.

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  27. Point of recognition seems to be breaking just about right now.

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  28. Interesting: S&P up about +.6%, but financial indexes all down about -.4%.

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  29. Bears need to step up soon or this is gonna get outta control. Oil up, Dollar up, Treasuries up, Gold up, SPY up.

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  30. If this is sub wave 4 (after s 3 peaked at 921), it should bottom around 913 and then have a sub wave 5 take us to 927.

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  31. EWT. what happens at 927 in your opinion?

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  32. Sub 5 will extend or stop there and do whatever 5 sub waves come next. I think is hard to say after that. But given that this ABC pattern was corrective maybe we resume the down slide.

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  33. Rick,

    Good calls on going long at 900, and on ABC (not 5 wave) corrective.

    May I ask you, from what height are you going short, and what is your target for a S&P slide?

    Thanks.

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  34. SRS, I think there is a sub wave 5 ending around the 927 area (as Dan points out in today's chart) but it might extend into 930-940 area or work itself up to the 940 level to backtest that trendline. I will watch the market very carefully tomorrow. I am hoping to start closing my long position depending on how the market behaves tomorrow but hopefully in the 927+ area. And I would be ready to short depending on whether 927/940 levels hold.

    As far as the SP slide, I don't dare to guess at this point. But if we use textbook EW, we should get a correction at least to 845 and possibly all the way down to 777 assuming 956 was a peak. I try to trade these shorter term waves and hold a neutral view on intermediate term waves.

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  35. Rick,

    Thanks a lot for your detailed answer.

    Good luck in your trading.

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