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Tuesday, September 22, 2009

Elliott Wave Update ~ 22 September

The NASDAQ is the first index to have finally arrived at its "breakdown" gap down from 2008. The gap down exists from 2152.69 - 2183.34. Looking at the weekly you can see that this zone goes back for 5 years. At many times it was resistance, then it became support. Then it was exactly where the "breakdown" gap down occurred in 2008.

The NASDAQ looks, on the surface, to be tracing an intraday ascending triangle. And that triangle would be right under major resistance zone spanning 2150-2187 so it has potential. However I also have it charted as an intraday ending diagonal potential. But be aware of both patterns. The open tomorrow will determine which one it is.

The NASDAQ may be finishing up Minute [iii] and perhaps the SPX and DOW are working on making a new Minute [iii] high and we have yet to see the Minute [iv] of C.

However looking at certain secondary indexes such as banking and real estsate, I have posted these charts showing that both indexes are likely heading up for their Minute [v] tops. And that is ok, we can suppose that all indexes will not top at the same time that wouldn't be normal.

Lastly the curious gap up today remains uncovered. Which of course leaves the most confused which is what the market is wont to do.

The NASDAQ again making a new recovery high and the other indexes do not for 2 days in a row is sometimes considered a bearish development by EWI because it shows intra-market divergence. But these divergences haven;t been working out too well lately. However I still have to mention it.

And here is a curious fact from the 1929 drop of the DOW: It also had a weekly gap down or "breakaway" gap. The 1930 rally only partially filled that gap. It wasn't completely filled until 1954.
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