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Monday, March 22, 2010

Elliott Wave Update ~ 22 March [Update 9:15PM]

[Update 9:15 PM: Apple looks good in this count.  A Minor 4 is perhaps in play and then Minor 5 to a triumphant peak. Again, gap support at $215 is key I believe.]

[Update 9:07PM: Bidu is maintaining gap support. I will assume for now its a wave 4 of (5).  Since wave 3 was such a quick moonshot, I think there is an excellent chance that any wave 5 higher (if it comes) could wind up truncated.
Squiggles supports the view that a complex sideways correction is perhaps occurring.

[Update 7:50PM: I kind of have a theory that the SPX has already traced a triple intermediate zigzag.  But sentiment demanded more waves and asset mania will not die so easily. I suppose the January high was a nice enough market top. Sentiment had reached some significant extremes, etc. The only thing we were missing really was full participation of the public - i.e. "mom and pops" retailers deciding to get back in because they once again feel safe in investing and feel they may have to. I have personally observed anecdotal evidence that they are back in the game and feeling ok chasing stocks once again.

The "experts" (economists), and the government have been saying we are on the road to recovery. Not one economist no longer thinks we can do the double dip. Ok fine. They win for now and they will likely help lure more in.

So upon the selloff in February, sentiment went way negative too fast.  So the market did the only thing it could after having traced a triple ZZ: turn the last ZZ into part of a massive corrective running triangle and start yet another ZZ to higher prices. Yeah it sounds goofy, but hey, I haven't seen any better explanation.

The new start point for the final ZZ: 1086.Yes this running triangle is not perfect, but all the subwaves are there and fit as zigzags. This last ZZ would allow a negative divergence in RSI, etc.

What bothers me is that Jim Cramer of all people is calling for a market decline based on health care and so I suppose the opposite will happen, at least for a few weeks until he changes his tune.

Also I outlined some things back in this post a while back:

Some of those predictions have happened (IYR filling gap) but others have not.
1) The dollar needs a wave (1) peak to correspond with an SPX B wave pullback.  Then a dollar wave (2) retrace results in the SPX C wave to P2 peak.

2) I would still like to see oil get to above $86 based on seasonality and the summer driving season kickoff.

3) And thus Exxon Mobil fill their gap down in the lower $70's which would help power the SPX in a C wave higher.

4) Gold could go to $1300 on a wave (2) pullback of dollar.

5) Natural gas rebounds. It is oversold at the moment.
The key to this formation is that a B wave is coming or perhaps has already been in the works.  The 13:1 day should hold (or may not even be directly challenged) and then the final dip buy would occur.  How high a subsequent C wave goes is up to the market.  Could be just enough for a new squeaker high or take it into the lower 1200's. This final ZZ should last about 7-8-9 weeks I suppose. If we use 1086 as the start point, we are already 4 weeks almost into the last ZZ and likely near an A wave peak.  Sell in May and go away and all that. Maybe in mid-April.

In 1930, the DJIA topped out in a bear rally on April 16th.  Thats 4 more weeks.

Seasonality favors the market perhaps for a while longer.  I am not married to this count, but I find myself continuously gravitating back to it.  I expect a B wave decline and the 13:1 up day to hold. If that falls, all bets on this count are off.   Its not much different count that a Minute [iv] playing out, but it allows more freedom of movement. And perhaps in some other indexes, we'll wind up calling it a Minute [iv].
And yes, EWI is obviously leaning toward a final ZZ to P2 peak but do not have the same count as I do.  But in essence it doesn't much matter at this stage.
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