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Monday, August 17, 2009

Elliott Wave Update ~ 17 August

I showed what appears to be a flat on the e-minis.

The cash index only retraced 80% of its [b] wave so perhaps we are looking at a zigzag for the cash index. In both cases, the patterns look fairly complete.

The down volume ratio was pretty intense and ended at a paltry .066.

Here is what we know so far and can deduce:
1) The market has retraced .26% of the rally from 869 so far. Is that enough for a B wave low? Probably not. If not it would have to trace some kind of "double three" pattern with a connecting "X" wave. B waves typically retrace 38%-50% so maybe another corrective pattern will be required (double three - look it up in EWP).

2) The e-minis forms a very nice 3-3-5 flat with a falling wedge C wave. That suggests an X wave bounce is right around the corner.

3) A huge gap down today - 6 points. You got to think thats a bull target sooner or later. Perhaps an "X" wave up will challenge it.

My primary count so far is that an [a][b][c] downward flat (or zigzag) has formed on the indexes for the Minor B. I do not know if it requires further correcting but I suspect it will. So I am looking for an "X" wave up at the least, perhaps to challenge and close the gap down from today. Then another "three" pattern down (or sideways) either a zigzag, flat or triangle will follow. After the X wave, the final "three" pattern will likely take the market to lower low. Look for the 38% Fib retrace or 961.

But that is all conjecture. But finally the patterns are starting to make a little more sense.

The alternate count is that a much deeper correction is occuring and that today was only "wave [iii] down" of much larger pattern perhaps a 5-3-5 zigzag. But this count doesn't square well with the e-minis. So it is secondary for now.

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