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Wednesday, November 11, 2009

Elliott Wave Update ~ 11 November

Looking at things objectively, the big sideways action for the last 6-8 weeks interprets very well as an intermediate wave flat (which accounts for the 5 waves down of recent). A second (X) wave if you will in a larger triple zigzag pattern of which I have contemplated off and on ever since the rally started in March.

I'll put all the usual "technicals" aside for now. I'll just say this: You know when the shoeshine boy (and hey thats probably me) is quoting negative divergences and "non confirmations", then it probably ain't gonna work.

However I am not on the bullish side per se, just that I can now see a final, perhaps muted, zigzag to some god-awful peak in the not-too-distant future. I think this bears out when you can see there are simply lack of sellers to drive the market down.

I come to this conclusion by the wave and market internal technicals behavior. It is not an unsound interpretation. After all, a perfect .618/.382 time relationship for P2 is 1-2 week of January 2010. P1 = .618. P2 = .382.

The controlling factor in this count is the gap up the other day. If my count is correct, we will not see that gap close until P3 is truly here. If it closes then my suggestive triple ZZ count is likely wrong.

I realize this will not be popular with many readers but what can one do? It printed an 18-1 up day and had follow through. Yes it could be finally "done" but I suspect it isn't. Not until they break us and take so much money that we'll have nothing left to play for P3. Not until the shoeshine boys are quiet. Not until every last waver is spat on and laughed at. Thats what P2's goal is -- to simply convince us not to fight the market. And to covert us in the end.

The "wall of worry" takes time to erode and the VIX is a testament to that. It is doggedly fighting the last stage (dropping and staying below 20 for a while) but it seems destined to lose that battle.

The dollar? The dollar should bottom on an extreme bearish sentiment and not a half-bearish sentiment. It seems destined to grind on until they break this (mini) bullishness for good.

At the end of the day, I am still a waver first and foremost, not a technican. And the waves agree very much with this.

If I am wrong? It won't be because of unsound wave theory application which is first and foremost what this blog is. Afterall we had 5 down and now a new high. The only way I can reconcile that is a final ABC zigzag higher.
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