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Friday, March 26, 2010

Elliott Wave Update ~ 26 March [Update 8PM]

[Update 8PM: A few things stand out on the IYR weekly  chart: 1) Its overbought at major resistance  2) IYR doesn't seem to do negative RSI weekly divergence.  The RSI peaks at the same time prices do.  3) ROC and volume is waning over time. 4) The inverted H&S pattern target has been met  5) The breakdown gap from 2008 was closed. 6) It retraced over a healthy 50% from peak even though real estate is no where near out of the woods yet in fact its showing signs of turning down even more. Possibly the biggest disconnect in the history of anything.

Note on the waning volume comment (and volume in general): Its hard to keep saying "no volume" in this P2 rally.  When you look at the candle bars, even this week's candle volume bar dwarfed anything that occurred even in late 2006.   So can I honestly say no volume here? Of course not. But in relation to the beginning of P2, the volume is declining. But all in all, Its hard to make any kind of determination concerning volume when even the lowest P2 candle dwarfs all those years in the beginning.

But all in all, if your going to short real estate, this would be as good a spot as any on the entire P2 rally I suppose. I'd rather short at 70 RSI on the weekly than not particularly since the IYR tends to never show any RSI weekly divergence. Due diligence of course.

[Update 6:50PM: The "All In" charts. is it safe to count waves on the NYAD? I don't see why not! It seems to work I think. You be the judge.

Looking for a wave (4) to finish out here on the NYAD and then a wave (5) of [5]. This fits the B wave scenario in the SPX, and then a C wave to P2 peak. Thats about the best I can do is take it one month at a time for now.

As bearish as I am, its like flying an airplane I guess. Constantly cross-checking and scanning various instruments to see if your in the pattern, at the right altitude, wings level, etc. It looks like there is a wave up missing on this chart at the very least.
Even the weekly counts nice in a much larger pattern.]

[Update 5:25 PM:  All the waves appear to be in place, as a minimum, for Apple. The daily shows a double negative RSI divergence. The ROC is slipping also.

Also I suppose its rare to see a double negative RSI divergence on the hourly, daily, weekly and monthly showing single divergence in a 12 year cycle wave pattern that appears to have every wave in place down to the squiggle on an individual, well publicized, high flying stock. Well here it is.  And yes, these kinds of stocks can and do often run right over this kind of stuff, so well there you go.
The squiggles confirms that there certainly "appears" everything is in place. Doesn't mean its the high and couldn't extend (or that i have the labels grossly misplaced), just means that a minimum wave pattern in place  as of now.
Even the Apple weekly shows an official double negative RSI divergence. And the ROC may be waning. However the weekly candle is a bullish candle so....
Even the Apple monthly looks like an excellent EW pattern and the technicals support the overall count.

Primary count has not changed.  I have the market correcting in a Minor B wave of (Z).  Normally a good B wave would be a 38% correction at least.  Since I am referencing 1086 as the start point, thats 1044 on the SPX.  At least a 24% correction should be had here and that is 1158 which the market has not yet corrected back to.  Or somewhere in between, maybe 1150ish support.

In any event, the waves seem more corrective down when looking at the entire move down rather than impulsive just yet so that supports a corrective wave of some size. My take at the moment is a B wave.

The media ran a "market top" story  on a "classic reversal day". Sounds like the great H&S pattern in 2009. But as Kenny said, there is no real history of that classic reversal day except the 2007 peak.  So we'll assume that wasn't a P2 peak.  I do however think it may be an A wave peak.

If it was an ED pattern, then prices should begin down Monday into the 1150's.  However, an ED pattern is supposed to be exhaustive for the near term and today's action was not really looking all that exhaustive since it was a flat day. So I think the ED is looking flimsy.  We need bear follow-thru on Monday to confirm but my hopes are not high.
Here is the Wilshire in the same chart except you can see its slipped beneath the trendline a bit. We'll find out just how important this trendline is next week.
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