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Tuesday, July 28, 2009

Elliott Wave Update ~ 28 July

Nothing too insightful to add to the mix tonight, just ramblings as usual. The triangle is intact and lots of zigzags up and down. No clear 5 wave moves either way (other than the subwaves of a lot of 5-3-5 zigzags). It looks and acts a bit on the weak side but I cannot say whats going to happen. I thought an early pump and dump would happen today and indeed it did spike and then sold off a bit, but still nothing too awful and buyers kept on buying the dips.

Triangles like these are a bit unpredictable as they happen so high up in the rally that they signal the final actionary pattern of the move. This one is not a tight one either. Its more on the distributive side of things to describe it in a way. So in any case, the move is almost over. B wave should be coming in some form or fashion. Whats not clear is how much buying power and squeeze power do the bulls have left in them. Its not even clear yet that the triangle will prove itself to be a triangle.

A 980 break to the upside will take some volume. Volume picked up today indeed yet it only managed to produce a "hanging man"-type candlestick pattern. Longer-term technicals are indeed bullish, but bull market this is not just yet. Its just the sharpest rally yet of P2 and VIX, in case you haven't noticed is still mid-20's not sub 17! So a down move can come out of the blue once all the buyers have been exhausted. And believe me the MM's will rip your face off in a slick 30 - 35 point move down if they can get away with it. There are stops to the underside of 969 that are growing too comfortable. 950 - 956 support has yet to be tested.

Even if the SPX makes a break above 980 and tests higher targets, I don't see 1000 taken out or held prior to a pullback. It may be tested, and if it does, I look at it as a tremendous opportunity to go seriously short this thing and look for a move back to 956 at least. But 10 points shy of the obvious seems to be the way the market works and 1000-10 = Kenny's 989 target.

Also there is a H&S in play on the SPX after all. We'll know more by morning. The e-minis don't make a good triangle they actually topped early on at 984 overnight a few nights back. They are actually more in a H and S mode more than a triangle mode.


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