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Thursday, March 25, 2010

Elliott Wave Update ~ 25 March [Update 8:45PM]

[Update 8:45PM: Here is a crack at the squiggles on the Wilshire. Remember, this is like 5000 stocks tumbling here all at once. Well anyways, I painted it with the most extreme bearish contempt for the market. (what'd you expect?) A series of ones and twos and tomorrow may be an opening that gaps down that doesn't close in a while. (anywhere between less than 1 hour and 25 years)

In other words, a very nice day of selling. And that only makes sense because at 1180, you had no permabears wanting to ever short again (yes I bought SPY puts at 1178 - I do play some of my pattern setups particularly potential ED's which can have large rapid price moves) and the rocket move down caught em off guard. Now looking at this avalanche of tumbling prices, bears hesitate to short because they figure its due a bounce up.  

But that bounce doesn't come in this case, only a gap down and still bears won't short figuring the gap may close only it doesn't. Selling continues and finally at 1125 AM, after a full nasty, 28 point SPX drop from the 1180 highs, they put on their first short...at 1152 support.  GAH.  Lunch hour finally has prices wandering up then their short goes red, they hesitate and bail on a jerky wave move up.

But then the day ends on the low and still, the biggest bears of them all, having seen an awesome market peak of 1180 and now the SPX sits at 1141 a day later and they have done nothing but lost money on... a short!

Frustrated, they have been thrown so off their game by now, they don't know what to do.  Having gotten squeezed continuously for 39 points up in a death march, they manage to capture nothing on the way down and even lose.  Yes I am familiar with this psychology which is one reason why I don't like to daytrade LOL. 

Anyways, the bullish count here? I guess that would be your looking at the most extreme 5-3-5 corrective zigzag in the history of P2 and we just gap up and run tomorrow.  That would kinda blow. I mean technically other than the 1 minute, there is no positive divergence on the RSI and MACD of even the 5 minute chart time frames.

Anyways, as always these squiggles sometimes oftentimes mean squat so due diligence and all that.]
[Update 6:05PM: Here is a follow-up to the VIX chart I posted last night.http://3.bp.blogspot.com/_TwUS3GyHKsQ/S6qarGX6g6I/AAAAAAAAEiw/JHcA4gUfrK0/s1600/vixdaily.png This was one reason to consider the ED pattern then big price reversal as last night's VIX suggested a bullish VIX was in development.  I'm kind of looking for it to move to its 50DMA.  It closed above the 20DMA.]



[Update 5:48 PM: Inverted Head and Shoulders target has been met on the SPX and Wilshire shown below.  Higher volume red candle today also a prominent shooting star.  And so if the bulls reverse this and head higher, what can I say? ...big yawn at this stage...ok whatever. You cannot squeeze blood from a turnip. How about the contrary play is that we just play this straight and we have eventual follow through, minus any new highs, to the downside at least to the January peak? Hrmmm?  Give the bears that huh? F'kin bulltard market.]
[Update 4:41PM: BIDU bearish engulfing candle. A close under the recent gap up would confirm it.]

In last night's last update, I showed the possibility of an ending diagonal triangle instead of the minor B expanded flat or Minor B contracting triangle.  Today that pattern seemed to follow through. The massive up volume 16:1 ratio gap up was closed under which, in my opinion, shows exhaustion of the near term uptrend.

This ED looks classic.  ABC internal moves and overthrow.  Price target is under the start point which is 1141.
Top of A of (Z)?
You can see each price rise was a proportion of the previous.
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