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Friday, April 23, 2010

Elliott Wave Update ~ 23 April [Update 10:05PM]

[Update 10:05PM: Seven banks failed Friday. Nothing unusual (LOL), but all from Illinois.  You think the FDIC has a huge backlog of banks to where they are doing them now geographically for ease of service? Is this a switch of weekend strategy to save money, time, expenses for the FDIC?  

It indicates to me they have a HUGE backlog and they know it. They let the cat out of the bag...

[Update 9:20 PM: Playing around with the (X) wave triangle.  If we do get a ramp up on Monday, 12,880-12922 is the close/open/peak resistance   of the 19-22 Sep 2008 rally high Minute [ii] of 3 of (3) of P1 resistance.

For the Wilshire this would match the 1) triangle breakout target - shown by blue bars 2) C = A on the last (Z) zigzag - shown with black bars 3) Apex time target for triangle  4) 66.6% or 2/3rds retrace of P1 (12,880 exactly)

Now lets hope we get that Monday ramp job. If not we have a count for a gap down

Negative daily divergence on the RSI big time and this time I think it will payoff. This would be in-line with the RSI negative divergence on the accumulation

MACD lines still look garbled. ROC is continuously waning since last August.  It hasn't touched the zero line in quite a while, but it will again, of that I am sure it will.

[Update 6PM: The market seems to have a target in mind and its relentless effort to get there seems to be unstoppable.  The top of September 19th, 2008 rally high just before the big crash seems to be the magnet (using the Wilshire that is). That and the inverted H&S and 61.8% Fib markers for the SPX and DJIA perhaps and the 200 weekly SPX 200 MA. These all reside in the 1220's range and seems logical (except I think inverted H&S is like 1243). So we have a crapload of spots the market just seems to be lunging for.

One problem is that earnings season is producing some exceptional leviation on various stocks. They are all floating on air waiting for their turn in the sun. One more solid week of earnings and we'll have been through a good bulk of them so another scraggly week may be in store; buy the earnings reports on select stocks seems to be the case this season. There seems to be no logic actually and indeed that kind of proves that there never was.

If Monday is for some reason a gap down and weakness instead of a gap and run-up surge, we have a pattern to account for that if the decline appears to be yet another (a)(b)(c) that gets bought at trendlines etc.

This ending diagonal pattern that has thrust out of a triangle pattern is a most bearish setup that we saw for the DJIA in January 2010. This time however, its virtually the entire market of 5000 stocks which could indicate a more significant pullback to come.

I like the ending contracting diagonal pattern more than the expanding because the expanding is really an unheard of pattern using EW guidelines via EWP by Prechter.

This pattern would account for a choppy week and take us to the end of April.  And of course then comes "sell in May." If we end up with an ED pattern the follow through to the downside would be selling.

One thing for sure is that the market seems to be pushing up in "threes" or zigzags which is generally a bearish wave sign at this stage of an extended rally.  I do not believe the high today is a (b) wave in a developing triangle. The market just came out of a triangle so I rather think exhaustion is setting in and this is a potential ED pattern if Monday shows immediate weakness.
The market has pretty much tracked my expanding ending diagonal pattern, so I see no reason to change things. (a)(b)(c)-looking moves and it appears its going into a parabolic blowoff peak.  It feels like an early blowoff Monday surge is coming and then reversal of some kind. Surely some bull pigs will be taking profit if the market surges in a gap up open Monday into the low to mid 1220's near the 61.8% Fib marker of the SPX and the inverse head and shoulder pattern of the DJIA (approx 11330+) and the 200 weekly MA of the SPX at 1224.

Volume remains elevated in ETF's such as SRS. Some divergences occurred today. New market peaks in just about everything except Dow transports and financials. The NDX100 is at its June 2008 peak of 2055 and held under that.  VIX did not make a new low nor really come close (yet) so that is diverging.
The Wilshire has now closed over Lehman BK Day at 11800+.  Gunning it to the Sep 19-22 resistance seems logical. It should hold at least on the first push. (yeah sure heh)
Once upon a time in P2 I suggested this chart would make a new high before P2 was over. Almost....
Advance/decline count looks pretty much complete.  Notice the divergence patterns in the RSI indicating pullbacks.  We are having the biggest and longest divergence so far of P2.
Apple is an example of how things may be going parabolic. Not only did it jump back in its tight up channel, it jumped to the upper channel line!  Amazing. I labeled it as an extended 5th wave.
And finally, if this Wilshire apex is going to work marking a significant peak, we are about there.
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