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Wednesday, March 3, 2010

Elliott Wave Update ~ 3 March [Update 10:10PM]

[Update 10:10PM Although not a short-term timing tool, the "ALL IN " chart seems to reflect that, well, everyone is indeed going all in.  Parabolic in a way. Definitely a divergence in that new highs on this chart but the market is no where near its old highs. The momo machines will reach a limit.]
[Update 9:15PM: Black Monday discussion.

A bit old, but I laugh at  how the game of media stories is playing out over the Greece situation.  Why did Germany become the focus? Obviously because without Germany, the EURO would cease to exist. But Angela Merkel has already emphatically said several times that they will not bail out Greece.  First, there is no legal jurisdiction for it! (and she clearly stated such). Second, the German public would burn down some public buildings if they did pay for anything that you can be sure.

Germany has made some tough choices on its citizens over the last few years.  Additionally, the Germans have no particular love for the Greeks nor vice versa I think.

So amid all the posturing, Merkel is basically saying , We are not helping the Greeks, and if we wanted to, we have no legal means to do so (as opposed to our FED bending laws every which way they can) In the end, Germany can go back to the once-powerful Deutsche Mark. The citizens would likely support the move in full.

So basically all the news stories and talk and "documents" being passed around is complete and utter nonsense and that comes pretty much from the Chancellor herself. Yet the media keeps spreading the lies and rumors and stories for who's benefit?  She also said in another story that Friday's meeting with Greece is not about any bailout talks.  I for one actually believe her.

If you believe the market needs sparks to start a massive selloff, Monday would be a good day considering I think Friday's meeting will prove fruitless.  And yes we have been conditioned not to go short into the weekend. I will on this weekend.  And the IMF doesn't want to hand out to beggars, lord knows there are 30 waiting in line if that happens!  But our sorry-ass FED will find a way to do the funneling....

So yeah. Black Monday type stuff. I haven't used that word in well over a year.  This is the "Lehman" of the sovereign debt problem (although by money standards, its not that much debt compared to Illinois!). This is the "test". We did the Dubai thing, that was like Bear Stearns. But they will want to see what happens if Greece is not bailed out. And I don't think the market will react kindly.

[Update 6:51PM As far as the overall count on various indexes, its open to a lot of interpretation at the moment. And most chartists would have valid points no matter how you counted it.

Its probably appropriate that there exists a mixed bag of counts. After all, some sub indexes made new highs so it makes sense that the previous down move counts as an ABC "three".  But other indexes could perhaps not make new highs and the Industrials is a prime candidate.

Just about any count at this stage will have some spots that may not look "ideal". But thats probably a function of a market in transition back into a bear mode with non-confirming tops.

So whats the point? The point is not to get locked down on the nitty-gritty and take a "it cannot be that because of this" type attitude (I'm guilty) in counting because you going to get flaws no matter how you shoehorn it at this moment in time.  Its actually good that it has everyone going every which way.  If all the indexes make new highs than this is all a moot point.

I still like this count on the Industrials.  And I still have a problem calling this a Minor wave  2.  Even on the cycle high in 2007, the NASDAQ made a new high on the SPX and DJIA Minute [ii] wave not Minor 2.

So yes its not perfect by any means. In the end it doesn't much matter at this stage as we are looking for 5 more small waves. The blue upper target box and 10500 seems like a worthy target. Then after that we see what happens.
The bullish percent indicator of stocks on the SP500 has now finally moved to an expected retrace spot if this is Minor 2 (or Minute). Yes it took some time in doing. Notice the RSI did not stop at the 50 mark as I suggested the other night and that it would keep going toward the green arrow.  We are about prime for a wave three down.
[Update 4:57PM: The daily chart of the SPX shows the "twos" are perhaps connecting.  I still say it could be Minute [ii] because I cannot see a proper Minute [ii] on this chart if we label it 2 instead. Of course if the SPX makes a new high, its a moot point. The previous twos in P1 stopped right about where there RSI is now.]
The move up today looked like a zigzag three but it can be fooling us. So it could be a b wave in an expanded flat of a wave (iv). The tight channel broke finally. Does this mean the up move is over? Could be but once again 1113 key support must be taken out to prove it.  So the wave pattern is set, and the moves should be easy to confirm because the market cannot go too low for a wave four and should hold key supports.  On the SPX, it should not lose 1113 support I would think if there is weakness early tomorrow.  We are looking for a volume down move to break those kinds of supports. 

My gut tells me a big huge selloff is coming and all this support is in fact not as hardy as one expects. But the waves may not yet be done. The SPX crossed through the 1100 mark on 28 differing days these past few months.  People are again getting a bit too comfy with these price levels.

The Wilshire probably shows it the best since its the entire market pretty much.
Again, the move up today looks better as a zigzag three rather than an impulse.  So we'll know soon enough if this up structure is completely over.
However yet another potential shooting star and this one is black (gap up that closes lower than the open) That is a potential indication of exhaustion and marking a near-term top.
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