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Friday, November 6, 2009

Elliott Wave Update ~ 6 November

Well none of the options I listed last night panned out. Instead we went sideways on light volume. I am usually a day early with things anyways.

I have a triangle tracing out today as the waves just looked like triangle waves. A triangle implies the next move up should be the final move of Minute [ii].

Everything seems "lined up" for a fall. The dollar has maintained a Minute [ii] pullback and held its ground. Gold likely peaked or will shortly on Monday. Oil seemed to selloff a bit early today, maybe its leading. Many stocks I track now seem to be hitting their targets like Amazon which finished its wave 4 and traced to new highs today.

Stocks are no longer of course oversold. In fact if they thrust up on Monday, they will be closer to overbought on the hourly. The e-minis will sport negative divergence on the next pop higher. McClellans is not yet back to zero, but its no longer oversold either.

The VIX is getting hammered but its nearly oversold on the hourly even though it only retraced a little over half of its breakout.

The indexes had a nice bounce this week. But they didn't hardly match what the bears pulled off the week before. The DOW may make what can be called a double top as this often happens at DOW turns as I have shown before , and it even has a shot at making a new high if Monday opens with enough bullish fervor. A new DOW high would be absolutely a bearish development as I doubt the SPX or NASDAQ would confirm. And that's not considering the myriad of sub indexes that are still in terrible shape (financials). So just one index making a new high would be serious intra-market divergence.

Time-wise, a 4-5 day correction after an 8-9 day fall is a pretty good ratio. Can it go longer? Sure. Maybe it rounds off a bit as MM's unload more longs.

But all in all, Monday is setting up for a bang out the gate and then possible reversal lower for Minute [iii].

Remember I warned bears that its likely too early to jump on things?

Its amazing how things can work out. The tell tale signs this is likely a counter-trend rally is the overlapping wave structure as shown on my 5 minute chart. There are no "clean" spots or breakaways upward really. Everything overlaps.

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