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Monday, July 6, 2009

S&P 500 Bullish Percent Chart

One reason I am slightly in favor of another rally to P2 peak this summer is that this $BPSPX chart has corrected nicely and, all told, prices have not been damaged too too much. Afterall, the SPX peaked at 956 and still today we trade at 898. The 886 low is a total 24% pullback which is a Fib number more or less. The next Fib is 38% (or 845) .

The lowest price I can see happening, and still maintain that a triple ZZ to P2 peak, is a Y = W move which would be about an 864 SPX low for the red Intermediate (X) wave. But that would leave the massive H&S pattern only partially finished on the downside (which of course doesn't matter to me - I track EW's after all).

15 comments:

  1. DE,
    Have you seen the potential IHS forming that suggests a coming low of 777 in early aug to form the rt. shoulder. This supports your late summer rally!
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808

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  2. Daneric - So far this correction has respected the Fib retracement of Wave 3 of P2. Everyone expected us to sell off to 870-880 a couple weeks ago, but low was 888.8 which is exactly 38.2% retracement of Wave 3 of P2. If we are to assume this retracement will be respected, I expect us to find support at around 868.2 before we start Wave 5 of P2.

    Thoughts anyone? Daneric, is it possible for this Wave 4 of P2 to retrace into Wave 1 territory of under 834 for theory of new summer high to be in tact? Thanks.

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  3. If 878 gets taken out then you would have a complete H and S, thus the potential to test whatever low TA is calling for. As someone that trades mostly on EWT, I would call for at least a .382 retracement to 845 before the next leg up. However, taking into account that it is P2 and P1 was a strong one, a retracement to .50 to .612 would be more reasonable. I don't trade based on these longer term projections, but this is what the orthodox EWT would call for. And btw, Wave 4 is not supposed to touch Wave 1 territory, if it did then it would not be a regular 5 wave structure.

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  4. Darth Fluffy,

    Primary 2 will not have a subdivision of Intermediate Waves 1-5. Primary 2 will have a intermediate subdivision of ABC Zig Zag and Flat, ABCDE Triangle, or a WXY, WXYXZ for complex combinations.

    Do you have a chart on how you have charted Intermediate Waves 1-5? If you have it charted this way it indicates bullishness and you have a Primary 1 scenario possibly.

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  5. Elliot Wave Trader,

    I think in an leading and ending diagonal we can have a Wave 4 entering territory of Wave 1 even though it is classified as a Impulse.

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  6. That is correct, it would be a motive wave and it would no longer have the traditional 5 wave structure. And if I'm not mistaken it can only happen in the 5th leg of a 5 wave structure. So actually yes, we could have an ending diagonal for the 5th leg.

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  7. Rick,
    do you think we break the 878 level today ?

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  8. sorry rick just read you comments you will not see lower than yesterday's lows. does that mean you play it long waiting for the rebound ?
    thks again your great comments

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  9. Yes because then the structure changes. I think this looks like a potential expanded flat, which means a big move up from resistance which was at 882 but now at 875-880.

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  10. thks Rick
    everything looks so bearish that i struggle to see a move back to 910 level

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  11. I know and I am sure most people feel fearful right now. I'm just following EWT..

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  12. so you think we are in for a rebound tomorrow ?

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  13. A quick question: assuming P2 is not over and that it will be a triple zig zag, is it necessary for the peak of the triple zig zag to exceed 956? Could we have an "orthodox high" less than 956?

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  14. Kevin, I would think the triple makes a new high.

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