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Thursday, September 3, 2009

Elliott Wave Update ~ 3 September

I am still bearish overall and have the 1039 top as P2 peak as my primary count.

Tomorrow and/or next Tuesday after the holiday may be "make-or-break" days.

Since the waves are trying their best to hide their next set of moves, I present some market options that are floating through my brain:

Option 1) Today's low is a Minuette (pink) wave (i) low. This is how EWI likely has it labeled. I use the DOW to express this as it helps eliminate certain problems in the SPX such as truncation at today's low or a series of 1's and 2's at the beginning of the decline from 1039. The DOW has neither of those problems. This count implies a potential bullish count for Friday to form a Minuette (ii) peak and a potential test of resistance at 1016.

NOTE 1: Be aware that Option 1) count also supports a very bullish Friday open that hits resistance quickly (or sometime during the midday) and market reverses and drops like a stone in a Minuette (iii) downward move that may carry through to Tuesday. A "point of recognition" moment.

NOTE 2: The lower rising wedgeline shown on my daily chart is getting "close". A break of this lower line would likely be a "mini" (there are bigger ones coming) "point of recognition" moment. Therefore a "third of a third" would make a nice smash through this line.

Option 2) Today's low was part of a continuing wave iv or (iv) correction and wave iv is almost peaked (or did at the end of day). That would imply that once wave iv finds its peak (it may have already) then Friday brings a bearish move to new lows in all the indexes. SPX target would be in the mid to low 980's. If the end of day high was the "peak" of wave iv, then Friday may gap down and run lower.

Option 3) Today's low was Minute [ii] of Minor C of Primary wave [2] up. This is the bullish count for those that asked me for a bullish count that would take the market above 1039. In my estimation, it would take a 10-1 volume ratio up day to occur either on Friday or Tuesday next week to confirm this count. It would take that kind of ratio to regain major resistance at 1016 and up. I don't see the technicals supporting this count nor sentiment (its still too bullish!).

The NASDAQ and DOW both made new lows today as compared to yesterday and the SPX did not. That may be bullish non-confirmation so I have adjusted my count slightly based on this and the fact that the market may have formed a temp bottom - Minuette wave (i) down - by maintaining 992 support for many trading hours running. The divergence between the indexes support a move higher for Friday (I think).

So why did I alter my degree markings? Because I estimate that Minute wave [i] low should drop the market at least 5.5%. That is 982 minimum. So if today marked a 5 wave structure low, then I feel its best labeled at Minuette degree rather than Minute.

And yes the market has yet to break above 1003.53, but yet we didn't have a sell-off to the 980 range so doesn't it just like to keep us all hanging in suspense from day to day?

The bottom line is this: It will take another few days of trading, post-holiday and post summer vacation "light volume" to truly see what the market's intentions are.

1039 makes such a very nice P2 peak (it hit in the middle of my 1032-1044 P2 range) . I'm sticking with that until the market forces me to change my count. And that would take a 10-1 volume ratio up day to do that. Its that simple.

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