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Monday, May 10, 2010

Elliott Wave Update ~ 10 May [Update 9:26PM]

[Update 9:26PM: As bullish as Europe was, they fell a long way.  So in that respect, the US market played catchup to the downside all in one day. The FTSE100 has yet to hit its 50% retrace.]
Bored so I made a chart with all the lines I could come up with. The rise looks wedgy.
Well market internals were screaming and a 90% up day no doubt and the best day in 12 months. That usually supports more upside but things are not "normal" to say the least so the jury is out on a lot of things.

The NYMO is now -64 instead of a near-record -124 and oversold is about -70 so that is no longer at extremes.  However wave 3's I have found usually only start when the indicator is near neutral or zero.  

Wave 2 is the primary count. Some interesting targets lie just above using the Wilshire:
1.) 61.8% Fib
2.) [c] = [a]
3.) Top of the mega-crash candle.
Time-wise it would be ideal if wave 2 took a few more days longer in some form or another. To be honest there is no obvious path higher if it needs to go higher.  We have some good wave guesses, but really, its up to the market. Its still highly volatile even after peaking early at 1163 today at 9:44AM, the market failed to make a new high above that. At one point it retraced some 15+ points intra day but in the context of things seems small LOL.

The mega gap up today is near-historic probably if I were to venture a guess. At 11.5 points wide, its a huge bear target. Of course the danger is if it closes, then there goes the rally entirely. Yes the bulls are in a pickle with that gap. The market will close that gap, its just a matter of when of course is always the tricky part.
I don't know if this is valid, but the RSI on the DOW has only retraced a Fibonacci 38.9% when using the price high at the same time prices have retraced some 66% (on today's closing basis). Much less than that when using the RSI extreme. That seems to betray the underlying weakness of the market and if the DOW got closer to making a new high the negative divergence would likely remain quite substantial.
And finally, a massive backtest of the upper supercycle channel line (in blue) might be the target of this rally. That too lies just above. One last effort to get the credit bubble blowing again, and today's mega-bailout is an "ALL-IN" play by the world's central banks.   If it fails, what else do they have left? 
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