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Tuesday, December 22, 2009

Elliott Wave Update ~ 22 December

The first chart shows what last end-of year looked like in the NASDAQ.  The same ascending-type pattern. A triangle can produce a "thrust" move and counting it can sometimes throw you for a loop.  In this instance, the low volume thrust had a tight channel up and eventually produced an island top and a small overlapping wedge formation. Big negative divergence occurred warning of the move down.

Also note where the meatiest portion and the biggest candle of the up move occurred in breaking resistance to the upside over the triangle top line.

The next chart shows the current NASDAQ. Its a 30 minute chart not a 60. But same tight channel.  Also notice the meatiest portion of the up move. It occurred also in breaking top line resistance. It also may mark the approximate "middle" of this thrust move.

Now here is the mini-NASDAQ 100, all-hours.  It is showing continuing negative divergence on the stochs and MACD and this is the hourly chart mind you.  It also shows a mini-wedge.

Now here is the weekly NASDAQ.  Hit the 61.8% Fib nicely. This is Fib resistance.  The market doesn't always just blow through these key markers, in fact is a good pause point usually (in this case I think its a potential stopping point).  Also notice there is still a lot of overhead resistance.

Key note is the On-balance volume. It is showing decreasing strength and signalling weakness!

Here is the A/D up move from the March low.  Very tight move.  I superimposed the EW count onto it to show that we may be further along than we realize.  The breakout of the A/D which occurred first was signalling that the NASDAQ (and Wilshire) would breakout also. They did.  Now its a matter of how high they go.

Its a fun chart either way. By the way thats all-time highs on this chart.

The VIX chart arguably had a descending triangle and a thrust move down has occurred out of it.  How far it continues down?  No telling but the width of the triangle is a rule of thumb. It also has a giant falling wedge look going for it. That is an ending pattern.

And finally this is my ongoing "market internals" chart the combines a lot of indicators. You can see how the Up volume ratio has been waning throughout this 11 month rally.

Take note the CPC close numbers. The bet is one sided at the end of day...betting heavy to the upside for a majority of market players. The herd has arrived.

Make no mistake, this is a bullshit rally in low volume mode. Stocks being fed to the public at a frenetic pace. (just watch how they pump on CNBC, etc.). When market volume comes back in January, there will be some "profit removed from the table". It may happen before then as my charts seem to indictate. Nothing ever repeats exactly the same way.

Last year, the market sunk down right before Christmas and rallied for 5 days after through the first day(s) of the New Year.

This year, the market is rallying prior to Christmas.  Will it next week too?

I cannot rule it out, but I wouldnt count in it.  The SPX has barely scraped 50% Fib mark after trying for months for those last points. So that is "fulfilled" so to speak.

There are a lot of gaps up they haven't bothered to close.  They will in due time.
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