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Friday, February 5, 2010

Elliott Wave Update ~ 5 February [Update 8:15 PM]

[Update: 8:15 PM. Obviously comparing P1's waves to the current waves down from peak is somewhat useful in certain areas. One area was the McClellan's Oscillator in that I theorized that it should be near or above zero line for a Minute [iii] to launch as it was in P1. If the count is correct, then it only made it back to -21. Close I guess. P3 may have its own "signature" that is decidedly more bearish which of course it is supposed to be.

Another area that may be useful in comparing is the CPC chart as long as we take into account the long-term skew that has taken place.   I think I came up with a clever way of doing that. Simple channel lines.

The current count fits well with what the CPC may be telling us.]

[Update 7:30 PM: The $DJUSFN is one of the indexes to always keep an eye on. This is a key index that must rally or at least slog around or the entire market will follow it down. It has been the bear market leader since October 2007 and likely will remain so. The financials are right around key long term support as shown in the second chart.  

The squiggles don't really support the expanded flat (ii) scenario.  It looks like a wave iv triangle traced out. Also if the recent drop took 3 days, then about a day+ or day and a half retrace would be a good time ratio.

A loss of long term support would not be good for the markets.  After all the entire system depends on the health of the banks which are the root of the problems as they are the focal point of worldwide debt. So as the banks go, goes the markets.

[Update 5:20 PM: Here is what I am thinking off the top of my head.  Perhaps back to the top of the channel to challenge the blue box area. Lower 1080's.  I only say this because I saw 5 waves up today which should be followed up by another 5 waves somewhere along the way (to form a 5-3-5, a-b-c zigzag Also potential inverse H&S going on.

This would be a logical spot to test the strength of the "dip buyers".  After all we had arguably an "ABC" correction in the bulls eyes that looks just like the 2007 August drop-off in form. Also the big fat hammer candle and a piercing of the lower daily BB. We'll see.  I say its (ii) of [iii].   However to reach 1080's there is some other resistance to deal with first.

Of course they could gun it and gap over near term resistances with the futures. Thats been known to happen on Mondays.

Primary count is shown. A Minuette (ii) of [iii] is bouncing. The hard rebound has brought a moment of doubt to the bears.  Admittedly this pattern from the top looks exactly like the drop in August 2007 and the smaller one before that in March 2007.  Big hammer candlestick suggests this countrend bounce will last at least through Monday probably part of Tuesday.  For this count to be correct, the market is free to retrace as high as 1100 SPX. Although if that happened, I would suspect something else is going on.

We have resistance at the 1068-1071 range and again in the lower 1080's.

Also note how the market bottomed at the post-2007 crash bounce high of 1044.
Here is the count on the hourly chart.  

I don;t even need to label the move up from the low as you can see its a textbook five wave move.  The primary count is that it is an "a" wave of a 5-3-5, potentially sharp zigzag up.  a of (ii) of [iii].

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