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Wednesday, March 24, 2010

Elliott Wave Update ~ 24 March [Update 8:12PM]

[Update 8:12 PM:  Potential Ending Diagonal and near term wave options:

Some were asking about a possible ending diagonal in the works.  It could very well be possible on the squiggles. I show the Wilshire which is the entire market and its does show signs of pushing on prices and overlap. These are signs of a potential ED just as the DOW did back in January. But back in January it was only the DJIA that was arguably in an ED pattern. This time it would be the entire market in an ED move.

This pattern is in play if for instance, the market exhibits a higher bias tomorrow rather than more down moves to fulfill a Minute [c] of a Minor B triangle or expanded flat as shown in the beginning of this post.  So if it moves up tomorrow and "overthrows" eventually (say 1178 on the SPX)  I would have to assume its an ED move and to short it expecting a very nice price collapse as shown in red pathing.  Thats the nice thing when the market "pushes" prices continuously in non-impulse patterns. An ED is one of the great opportunities in the market with momo trading Skybots controlling the action.  Due diligence of course.

Of course the market likes to cause maximum frustration in both bulls and bears. An ED move to 1178 could be the outright top of P2 and we wouldn't suspect it for sure until 1115 is closed under (thats my opinion). And even then bears will refuse we did not hit that magic 1200 or magic 11,000 DOW.

So tomorrow is a key day in the squiggles for the near term outlook.

So yes we have options depending on what the market does:
1. More complex wave structures that bias downward could be a continuing [c] wave in a Minor B wave triangle of (Z). 1152 cannot be breached.

2. A harder down waves tomorrow could be a bearish [c] wave in a Minor B expanded flat. Prices will go under 1152 in the near term in this case but perhaps not close under 1150.

3. If the market pushes up tomorrow in an a-b-c type move so as the Minor B triangle doesn't look like its panning out, then we could have an ED pattern in play. Perhaps an ED for Minor A of (Z) or something much more significant (P2 itself). In either case, prices should move down rapidly after it peaks to under 1141 on the SPX.
We'll probably know a lot more by morning as the e-minis will help show whats happening.
And this would approximate an ED on the SPX. Of course its going to be arguable if its a (bullish) triangle or not! NUANCE REQUIRED LOL Why do I show this stuff? Cause this is the kind of wave computations I make on a constant basis when looking at squiggles real time. I don't daytrade generally, but sometimes a pattern or price action is worth playing.

The thing that stands out I think is the market still has an open gap down from today and they can close it by forming an inverted H&S on the intra-day.

[Update 7:14PM:  The VIX daily looks like a bullish setup (market bearish). The RSI finally had a positive break over the long down trend line.

The Rate of Change (ROC) is in an uptrend showing positive divergence. Its getting ready to cross the zero line which could propel it in an upward trend as crossing the zero line often can indicate a short term trend change.  We can see in late 2010 the ROC crossed the zero line several times but it only resulted in short term selling.  The setup this time around however is more solid looking.

The Ultimate Oscillator is also ready to cross a downtrend line which would likely be a good VIX "buy" signal.

So based on the VIX's potential bullish setup, we could see some selling and the expanded flat B scenario would look more likely than the Minor B triangle.
Apple is looking pretty decent in its overall wave count.  I'm looking at $233. It could be only blue Minor 3 of (5) of [5] but on the daily chart it looks better to have the (4) placed over to the right where I have it.
We'll have to stick with the ABC to P2 peak count as the primary and this is shown best on the SPX.
Zooming in a bit, so far over the last 5 days + it appears a bunch of corrective waves are playing out. The top corrective so far is a triangle because of the nature of today's complex squiggles, but that will not be known until tomorrow.
And here is the squiggles so far. No impulses up, nor down for that matter, at least not today.

So far, it aligns with a "B" wave count and I'm am guessing triangle or complex correction at this stage. An expanded flat is still on the table too  On some indexes it may be better to call it a wave [iv] or 4 count.  In any event, it implies the last major consolidation period of P2 prior to final move higher.

A close under 1150 would get some bearish attention for sure so I am not married to this count. But alas, the waves do not yet portray that happening.
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