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Wednesday, June 3, 2009

Elliott Wave Update ~ 3 June



Its hard to say with 100% conviction that "YOU ARE HERE" with such-and such a degree wave etc. But so far I feel confident. I called for the pullback to 924-926 as a perfect spot for a B wave. It did not disappoint. It hit gap support, the 200DMA and the 38% retrace spot.

Are we in the exact wave as I have labeled and the exact level of degree? Maybe. There are other valid counts to be sure. However the beauty is that often the closest alternate count has the same basic targets. For instance suppose the 949 top was actually a wave [i] top of a final Minor C wave to P2 peak? Well, we would have our wave [ii] pullback and then of course a wave [iii] would power it up.

So thats the nice thing. I am calling for a simple Minor blue ABC zig zag up to peak out of the triangle breakout because of the way I have the red (W) and (X) marked. The market has traced out Minor wave "A" already at 949 peak. But if its a slightly different count it won't matter much because the target areas would be similar anyways. So don't sweat the count.
And why do I have the (W) and (X) marked there? Its just the way I like to do it. I always assume that a corrective has to actually perform a corrective and then the market determines if that is enough of a corrective. If not, it traces an (X) wave and then powers a bit higher in a second corrective until the corrective has done its job adequately. And make no mistake, P2 is a giant corrective wave. Thats the theory behind a combination corrective. In this case it would be a double zig zag connected with a triangle which is right on target. This goes no matter what wave size your talking about.

So the way I look at it is like this: The market traced an ABC zig zag to 930 peak. But that turned out to be not enough of a retrace for P2. So it traced an (X) wave, in this case a contracting triangle. Now the breakout means another ABC zig zag to peak. That is my reasoning for labeling it the way I do. I see no need to change it because it makes sense when you look at it from that perspective. Would the last zig zag up maybe look tiny compared to the rest of the corrective? Sure! But hey if the last ABC is small, thats ok! Because thats all the market required perhaps.

My upper target is around 986-988 for P2. One more 5 wave move by my calculations. And it appears the end of day move signalled the start of the final Minor C wave to peak.

Any solid break of 914 support to the downside means something else is happening.

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