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Tuesday, March 2, 2010

Elliott Wave Update ~ 2 March [Update 9PM]

[Update 9PM: Australia.Real Estate. Bubble? (like Canada) Anyone care to comment? I know we have some Aussie, Canadien readers.]
[Update 8:40PM: Really for the first time in BIDU's existence there is a big price performance divergence with Google.  I wandered in the desert while listening to some Doors and seen the snake.]
[Update 8:11PM: When things get a little questionable on the longer term, its best to switch views and concentrate on the squiggles sometimes.  To achieve a new market high for the Wilshire, the (v) is going to have to do a bit of an extension. However (iii) has already expanded at least 1.5 times (i), so for (v) to make a new market high above 11941 (Jan high), then (v) is going to have to extend yet another 1.5 times (i) which is asking for a lot and not typical. (unless we get a massive blowoff top)

So based on this squiggle count, I estimate the Wilshire will fail to make a new high. But the NASDAQ probably will if this count is correct. The DJIA will not and the SPX will not.

So that would be all the non-confirmations in a nutshell for P2.

However today ended above 1000 tick as Cobra pointed out and tomorrow could be much like today, flat or up by not huge. More to drive the bears crazy.  Wave i and ii of (v) of [v] type day unless this sucker proves ripe for a turn down.

The overall count for the markets is when this WILSHIRE 5000 finishes its count on this squiggle structure up, then the market up moves will be over. P3 can then commence in proper or wave 3 down for those indexes that do not reach highs. Just thinking out loud here folks...
[Update 6:45 PM: I have been singing a song at work that goes: "Bee-dooooo, bee-doo-bee-doo-bee-doo, Bee-doooo, bee-doo-bee-doo-bee-doo".  Keeps me sane that a Chinese internet company, operating under a thoroughly communist government that values heavy censorship, is selling for $525 a share.  INSANE! BOOYAH! how bout that?

Well, this sucker is so far corralled inside my magneto target box (that I hastily had to put together when the ED pattern was a bust) and is sporting a potential bearish engulfing candle.  But volume is light.  However did anyone notice that Google finally caught a bid? Is the day of wreck-on-ing finally arriving at BEE_DOO's doorstep?   Lets go to the squiggle counts below this chart:
The squiggle don't look too bad.The target range for that ascending triangle is $525 and some change.  So far, it counts well as a 5 wave move starting from the $406 spot.  Key support lies at $515, some support at $505 (likely just above $500) and then key pivot support at $495.

Using the base, acceleration and deceleration channeling method, the whole thing looks pretty decent.

[Update 5:10PM:  The VIX , and indeed this market is seemingly at a critical juncture. Although the rally is impressive from the 1044 low and much technical damage has been repaired in the process, the VIX is at long term support.  It almost seems as if the market cannot afford to "pause" in its mission to keep painting ever-upward tape.

The VIX is due a bounce. The total lack of fear back into the market is impressive.  To get the market to challenge the 1150 high, its likely going to have to wipe out 5 months of positive divergence on the VIX daily RSI and take out long term support once again. In other words, if there was to occur a final market "melt-up", we are getting close to that happening.  And the VIX is likely to have to have a melt-down to do it.

Indeed you have to be truly fearless to buy at this stage in my opinion. As SAB said in comments, the MM's aren't dumb.  They may be supporting the market but sooner or later they too need an out.

As I said the market has retraced P2 in sufficient time back in January. If there is a P3 still to come, then its on "borrowed" time so to speak and it seems to almost know that. The window for hiding the coming depression is growing smaller and smaller. QE by the FED is almost done.  Interest rates are creeping.  By summer 2010, we'll likely see signs of economic contraction or a big stall (I actually think thats happening now) again in the economy signalling a double dip.  Thats what they'll call it, but most Americans will silently suffer and know it to be a Depression.

Already this week they are goosing "expectations" for the coming bad employment numbers and blaming snow as if that kept companies from hiring! Total bulls___! And if they are not bad who is to believe the numbers anyway? Its all a lie. But you cannot hide a Depression forever. I think the market knows this. Social mood is not getting better and we are no where near riot stage.  So the bear market should have a LONG way to go.

So hence we are getting unclosed gaps because seemingly the market cannot handle closing them.

I don't like the Wilshire tracing above 78.6% Fib so I feel largely defeated here short term. The e-minis traced a large flat from premarket through the low today. So its doesn't yet look done to the upside. At least not at this moment.

So back to the VIX:  It has a potential reversal candle. But again needs the follow through.

The Russell 2000 achieved a new high today. Wilshire retraced from its Feb low above 78.6% which is generally a bad sign for bears.  However there are a few potential shooting star candles if we get any kind of selling.

The RUT makes a nice 5 waves up from B. I showed the squiggle count here  Its possible/probable it has only topped at (iii) of [v].
The SPX and DJIA painted potential shooting stars. 4 unclosed gaps since the 1044 low suggests this market is on a mission, and that mission is limited in scope. There are no downside squiggle counts from today's high that I can make out that look impulsive. It was "walked" down from the high. We'll see tomorrow. 

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