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Tuesday, February 16, 2010

Elliott Wave Update ~ 16 February [Update 7:52 PM]

[Update 7:52 PM:  Yes, market internals were very bullish, but I don't believe it was a 90% up day. The market should (could) experience a monster reversal down for a wave [iii] (or 3 if your count has changed) as soon as this upswing peters out which may be sooner than we think.  There are very good reasons to think this.

Blue box targets are close to being met on the RUT, COMP, NDX100.  Arguably the DJIA and SPX and WILSHIRE met their blue box targets on the previous rally of 7 trading days ago.

Overhead resistance is again coming into play.

One mega-up day does not guarantee the market is on to bigger and better things.  It needs to follow through and hold the gains and stage for the next leg(s) up.  But look at this Wilshire chart below.  Upon reaching this level in November, it required a large consolidation.  It is overbought on the hourly just to get here.  A wave [ii] (or 2) peak does not necessarily need big rollover. Look at the October peak, that sucker rolled over rather quickly.

The SPX has big gaps at 1056.74 - 1059.34 and then again at 1075.64 - 1079.13. That is over 6 points of gap up in the last week.  Those are bear targets and they have not been forgotten.

The SPY gap was a huge gap down and a big bull target.  It perfectly covered it by the end of day.
The NDX100 has no obvious upper range target other than the immediate gap down lurking right over head.]
3 different charts, 3 slightly differing counts. All pretty much imply the same thing.

When the SPX was floundering at 1100 and topped at 1104 a little over a week ago prior to the plunge, at the time, there were some subindexes that were pretty lame and did not retrace high enough to call a solid wave [ii].   More importantly, both the RUT and NASDAQ did not challenge the blue box area that wave two's seem to retrace to as a minimum.  Now they are close to painting a recovery high inside their blue boxes.

The NASDAQ actually makes a nice expanded flat with a (b) wave low at 2100.  There was no subwave two from the pink (a) down to where  the 2100 low resides so that leg probably counts best as an ABC down.
The RUT looks pretty darn extended. Also not shown is the double top from September and October 2009 at around 624-625 which is where I have the red resistance line. This should act as stiff resistance.
I am too lazy to relabel the SPX and DOW and besides I did say that (ii) of [iii] could retrace as high as 1104 yes?  Well there ya go. It has yet to retrace that high!
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