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Friday, July 24, 2009

Elliott Wave Update ~ 24 July

Minor "A" wave looks complete or pretty darn close. In Minute [v] subwave pink (v) almost equals pink (i) at 982.56.

Then entire move up is very countable. All the subwaves work pretty decent. The channeling works very well. It appears 980 is resistance.

A nice down draft come Monday would work well and a break of the up channel line signals B wave is in play.

39 comments:

  1. FYI, S&P Futures hit 979.00 (S&P Cash ~ 982.5) in after hours before closing.

    Thanks for the charts Dan, have a good weekend!

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  2. hope you are right about monday downdraft

    sds down 10 straight days, i bought today

    this has to end soon

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  3. Kenny master say the market will pop higher on Monday. What do think Dan?

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  4. Then my count would likely be wrong if it pops more than a couple points.

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  5. Dan, So you are looking S&P to top around 986.51

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  6. Kenny's top is 887 - 889 so think likely close enough.

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  7. Fellas:

    I am beginning to seriously doubt the predictive powers of EW analysis.

    Judging from EWI's (let's call them the professional arm of EW vs. Dan & Kenny's amateur, yet perhaps more competent manifestation) all over the place targets, we have the ultimate revolving door in forecasting.

    There is always a "half a dozen of these vs. six of the other" element in the targets given which allows easy revision and non-commitment.

    After the fact, the discovery of patterns is obvious and self-evident. Yet most of the folks who frequent these blogs are seeking directional certainty, of which I am sad to report there is none.

    Without offending the volunteering effort, I believe that EW theory offers interesting pattern recognition, however, its usefulness as a predictive tool has been greatly exaggerated.

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  8. This comment has been removed by the author.

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  9. Phoevos, that's why you MUST couple EWT with TA, neither excluded from the other. For me EWT supplements TA, for dan and others, maybe the other way around. In tandem, they work quite well ask me. Another point to make is your sentiment. It is a common tone I hear close or at trend changes, sort the "I give up" or ewt or TA is not what they're made up to be

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  10. Speaking of sentiment, it's over dan :p I agree we go down asap but we don't stop until maybe 830 at least. see you there :) will keep in mind your pov along the way of course

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  11. Phoevos... I couldn't begin to AGREE with you more, especially with your fourth paragraph in which you elude to an amazing amount of people that are seeking a decisive "roadmap" to directional certainty.

    In my opinion, EWT should be only one of several tools in one's technical analysis "toolbox". To single this tool out as one's primary predictive device exclusive to everything else is quite dangerous to one's financial and mental health.

    I haven't been exposed to EWT in the blogosphere all that much, but when I have I've been quite surprised to see so many people looking and calling for THE TOP, even though the market continues to gather strength and make new highs with solid rotation the entire time.

    I've read comments posted about "conspiracy theories" and various forms of market manipulation, how it's a done deal that the upcoming Treasury auction next week will fail, and a whole host of other highly tenuous and unsupported claims. Meanwhile, the market continues to make new highs.

    Even when Dan has expressed that this "A" wave is about to come to an end, but admits that the market has been acting much more powerful than the initial run-up into early June and believes that the resulting "B" wave will not be all that significant in terms of price decline, I've noticed a number of posters have chimed in strongly with their "disappointment" over such a prediction of a shallow decline. At the end of the day, the psychology and sentiment shown on these boards sure has been eye-opening.

    Again, I'm not trying to be highly critical of using EWT. I'm simply pointing out how dangerous it can be ( as "Johnny Blue" has pointed out in a previous post ) if one uses it as the ONLY took in his toolbox.

    Have a great weekend everyone!

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  12. speaking of that - you seen the August SPX 80 put OI - huge!

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  13. you guys seriously think we hit 800's? how fast? we came up here in 10 days. I assume it could move down even more quickly?

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  14. personally I would be very surprised but I know a very good EW technician who thinks we are completing iv and we head to new lows in v from here.

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  15. I agree with Wags here. I only call the top if I see one, but really, its not critical.

    I actually was looking at e-mini squiggles and it appears there is indeed more upside because the wave iii squiggle is too short so it could be a series of 1's and 2's today.

    Which means Monday is indeed a pop over 980 and a continuous run.

    When I said/saw that a close over 950 will mean a run to 1007, it appears that was indeed the truth. There is not a lot of resistance between here and 1000.

    So I dunno. P2 ain;t peaked yet, and that is really all that matters.

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  16. Johnny Blue and Wags:

    Here is an excerpt form today's EWI update (an ultimate 50/50 statement):

    "Market’s are probabilistic and sometimes lower probability outcomes are the ones that develop. It’s a fact of market life that one simply has to acknowledge and account for when fashioning a stance. For the past several Updates, we presented a series of charts depicting the building evidence that a near-term market pullback was imminent, which we described as likely representing a partial retracement of the rise from July 8. The evidence continues to build, but, so far, the pullback has yet to start. Once wave (v) of v (circle) of A is complete, the wave structure indicates that the main stock indexes should turn lower in a “partial retracement.” We’ll continue to keep up apprised of any new developments. "

    My reaction to such is: And I am paying you money to hear this from you guys?

    Now, let's move on to something practical. Johnny says we go lower, Wags says higher and Kenny and Dan seem to agree that we are close to a high (forgive me if I left any little details out).

    We would all be surprised then to hear this opinion from Carl Swenlin (a TA analyst with some accolades mind you):

    http://www.decisionpoint.com/ChartSpotliteFiles/090724_bt.html

    The follow thinks we are going to SPX 1200.

    My point is that there is opinion galore out there for every taste. How can we be certain of the truth?

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  17. Good points Phoevos. A potential solution to your conclusion

    1) trust no analysis more than your own. make yours so good as to be able to trust
    2) trust others’ opinions only when theirs is proven by objective data. if dan is wrong 78% of the time, read someone else better than dan. accrue the stats do the homework etc. you will ultimately have a system based on only accurate people's (or no people’s) perspectives and your own reliable methods. this is the ever fine tuning process for me - weeding out those that aren't accurate and refining my tool set until i'm a billionaire

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  18. Phoevos: Have you tracked Carl? What was he saying all the way up from March 8th?

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  19. Phoevos, all I can do is follow the waves and make the best interpretations based on the theory.

    All in all if you step back and stop being critical of the noise, you will see the call for a major rally from 666 to at least 1000 was indeed very accurate.

    Most Elliott wavers that have a true objective outlook, have made this call.

    So you could have gone long under 700 and held until near 1000 and been golden.

    All based on EW theory.

    I have always had a high 900's target, as a minimal rule. I thought it would be achieved in June but that was a stinky call on my part based on nothing.

    I learned since.

    Can 1200 be reached? I don't think you will here me say "No way!" but I have very sound reasons for not calling at this time. Its just that my count doesn't see it, at least at this time.

    The theory calls for a wave 2 to head back toward a previous subwave 4 price peak of which 1044 is an extreme spot.

    The technical resistance between 1044 and 1100 is like a tremendous weight of lead bricks. Not to mention that both Fear (vix) will be very low and sentiment will be very high, that you can make a good call for a top.

    The onset of fall/winter generally brings a shift in mood.

    There are lots of theory, technical and other reasons (yes fundamental) that will likely cap this P2 top at 1044 peak (not saying thats going to be teh top but at this rate, I wouldn't be surprise the C wave peaks there)

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  20. we can't see 1200. we are still so screwed and to get w/in 300 some odd points of the peak is just insane. even longs would have to say what the F.

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  21. all you dudes, never mind technical analysis/ew...you better have good risk control

    personally i dont see how we can go up to 1000 when msft and amzn seem to have put in 5 waves up or im just plain dead wrong?

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  22. Phoevos...

    "Johnny Blue" makes yet another great point with his #1.

    The reason being is that if you have developed your very own methodology (and you know what "weight" you have prescribed to various indicators and how they have reacted during various kinds of markets) it is far easier for you to determine what it was that missed out on providing you with an accurate forecast and where you might have been lead astray.

    If you have simply relied on "other people's" analysis, you are totally out in the cold and don't have a clue as to what happened. At the end of the day, I want to be able to make money ( or LOSE money ) based on my own work. There's nothing like the feeling of losing money based on someone else's analysis. Trust me. Been there, done that!

    Quite simply, being lazy and investing or trading your hard-earned capital based on other people's analysis is a FOOLS game. Again, EWT is only one "tool" in a technician's "toolbox". You seem pretty disappointed with Prechter's latest summary and update . . . yet, I can recall pretty similar language used back in 1993 by EWT as the market continued to head higher. No real surprise there.

    I think that Dan provides a pretty valuable blog and service. If you exclude the "noise" and refrain from buying into a lot of the "perma-bear" type comments made by some of the posters here, I think that his charts are pretty valuable, not too mention self-explanatory.

    At the end of the day, I've been a pretty big advocate of incorporating the KISS method and really keeping things pretty simple using only a couple of well-honed moving averages that I have observed over the years of being quite statistically significant. Sure, there may be "reactions" along the way of a strong uptrend back towards those MA's, but we have yet to see any technical "damage" whatsoever to EVEN BEGIN to make me think that we are on the verge of a big decline.

    In fact, at this point I wouldn't be surprised if any decline (initially) bounces off several MA's that are currently rising up fairly sharply. That would be quite normal market behavior. But I cannot even begin to think that way because we aren't even "there" yet - - - that would certainly be putting the "cart before the horse". Besides, there is a TON of momentum built into this move. It's not going to crack and give back 100 handles all at once. There's simply too many money managers that have underperformed and missed out on this move, who still need to increase their equity exposure. There are also a TON of hedgies that are short and are dying for a "dip" to cover.

    Corporate America has gotten pretty lean during the first half of this year. They have done a great job of cutting their costs. Sure, sales are down year over year, but that's to be expected when you are 19 months into a Recession that started way back in December of 2007. Can you imagine what will happen if the Economy picks up just a little bit? Earnings will rise, and so will analyst estimates. That is what the market is already starting to discount.

    In any event, do yourself a favor and develop your own investing/trading methodology. And when doing so, make sure that EWT is not the ONLY tool in your "toolbox".

    :)

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  23. did i hear EWI???

    listen, one week ago they were shouting about ccoa surprise...maybe you still see that add on this blog.

    on the first forecast they said it was hell plumetting. Vrey next day after skyrocketed (10%)

    two days after this mistake they apoligised "to put it simple i was wrong" so here they proposed 3 more scenarios. put it simple LOL like to go into the casino with a bag full of 100€ token and ask the croupier man cover every single number on the table with one token... roulette stops...ball hits a hole...and here you are ewi magic!!! it wasnt non of the numbers on the table....non of those 3+1 scenarios have trigered,
    of course not to mention when the famous hsh on the spx they forecasted a move right to 800 ( yes to 800... where did they took that number from?? who knows? EWI magic) so from 869 again skyrocketed till tonight.
    just unsuscribed from them.
    I think that kenny's and dan's intuition work better than ewi.
    At least they are nice. Not like the customer's ass kicking ewi service...

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  24. Dan et al:

    Thanks for your matter of fact explanations. Obviously I am venting out today.

    My own technical analysis shows SPX at upper Bollinger band limits and ripe for a pull back.

    But since I have breached the blog's tranquility today let me leave you with an enticing thought. Since there is universal agreement that SPX circa 1050 is the target, could it be from a purely contrarian POV that it will not happen ?

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  25. Dan if A makes it to 1007 what would your target be for your B wave correction?

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  26. dan. Ewi's overall count is wrong.
    no devastating C wave leading us to ... where?
    -150??? lol.
    end of the world is not at hand yet.
    Fundamentals (I know you just dont care about them) are far from pointing to a depression, and look, maybe you laugh at me, but they point right opposite to deflation. Inflation/deflation is a matter of printing/draining monetary base, no matter what mr pretcher says. post your charts and i will explain you about different liquidity approaches...milton, austrians, etc.

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  27. Dan, if I have you $2 million, can you double it for me in 6 months?

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  28. Tushar:

    There you go:

    http://www.decisionpoint.com/ChartSpotliteFiles/ChartSpotMenu.html

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  29. Phoevos wrote the smartest observation I have seen in weeks... I noticed in the past 2-3 that Elliott wave followers are very frustrated, since many of them were predicting 800 and even much lower on the S&P500 by now. Some EW followers are even switching to fundamental analysis or accusing the markets of being manipulated.

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  30. dan, on your chart blog you said 980 resistance and A likely complete

    then later you said monday is indeed a pop over 980 and a continuous run

    can you please explain what you mean

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  31. white mule, I'm just reevaluating the squiggles. I'll post some more in a bit.

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  32. Phoevos:

    //There you go:

    http://www.decisionpoint.com/ChartSpotliteFiles/ChartSpotMenu.html
    //

    I understand. You have followed the guy for too long. If he is a go getter, he will definitely get you SPX 1200.

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  33. Everyone has a 50% chance of being right or wrong. All these tools we use are to better our odds along with risk controls. But for all intent and purposes, EW theory serves well more often than not. Just looking at the chart Dan posted yesterday should tell you something. We ended up hitting 965 exactly and bounced again exactly to where the chart pointed. If you're into statistics, the odds of calling the down move and then the up move is 25%, the odds of calling the exact range are probably less than 5%. So if one were to be random, you only would have a 1% chance of making the call Dan did yesterday and that's proof to me that EW is not simply a theory but a fact of how waves do behave in certain patterns.

    One can disagree on the structure of the waves but not on the actual existence of them.

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  34. >certain of the truth?

    You picked the wrong hobby if you really think like that. Being a good forecaster doesn't make you a good trader. Being right doesn't get you far, either...all of my biggest mistakes have involved not getting out of losing positions because I thought I'd be 'right' if I waited.

    As non-commercial traders the only thing we need to do is figure out what the institutions and 'smart money' is doing so that we can ride on their shirt tails. Right now they are all frightened about "missing the rally". Being short isn't something that I'd entertain right now...I'll wait for a nice dip (maybe all of B) and then buy.

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  35. Eva S your humble correspondent largely refrained from getting too bearish on the move down from 956 to 869.

    I was expecting a turn north and the H&S to be a red herring. The very hard nature of the turn was surprising but yet not, because we always said this P2 wave will eventually rip your face off (if your short)

    And now it is proving to do that indeed.

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  36. Second that Dan and I think we are finally reaching a point that everyone is starting to second guess themselves. All the people i speak too at work are finally piling in and letting their guard down. This rally has finally made sentiment shift.

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  37. EWT - - - I have no doubt that the market moves in "waves". But the real issue (as you pointed out) lies in clearly identifying the STRUCTURE, which more often than not is nearly impossible to do with 100% accuracy until AFTER THE FACT.

    For me, the most IMPORTANT thing that I must do as a trader is identify the TREND. Once that is done, the success of one's trades goes up exponentially.

    I agree with "Malomker".
    Far too many shorts in this market with FAR TOO many people still looking down.

    As Eva pointed out, you can see the sentiment ( reading about all of the "conspiracy" theories ) on one EWT blog after another. So many people trying to play "pick the top" and only knowing how to position themselves ONE way.

    It makes me truly wonder if the people posting this kind of stuff actually trade for a living, and are seeing the same kind of BULL moves the last several weeks that I've seen.

    Denial can be a real problem.
    And I'm not talking about a river in Egypt!

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