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Thursday, June 24, 2010

Elliott Wave Update ~ 24 June [Update 8:15PM]

[Update 8:15PM: Is the planet growing tired of Apple just yet? Fatigue setting in? I am tired of even charting the darn stock. If they stay pumped until earnings...sheesh its more than 3 weeks away I think.  At any rate, Crapple is reaching an inflection point as it strives to maintain support above $265-$270 which it has done well indeed. This is a bit reconfigured than the recent Apple chart I have shown. I adjusted the wave (4) triangle.

I moved the "A" just for visual sake.  Its valid down at the price spike low.  The adjustment of the triangle would make wave (5) longer in time which seems appropriate since its an Intermediate sized wave. This would imply Minor 4 of Intermediate (5) is tracing out, and a new high is yet to come.

The alternate is of course that the high is "in".  We'll know soon enough. If it fails to maintain upper support shelves.

[Update 7:30PM: One possible theme of corrective up waves in P[3] is that any retrace waves may be on the "weaker" side of things.

Today's early low would have made a perfect spot for a Minuette (i). This squiggle count imagines that yes, it was the (i) low and perhaps an expanded flat is playing out for Minuette (ii) with a target area of only the 1092 gap down created today (not 1100 or the blue virgin box area).   But c waves of flats are supposed to be 5 waves. We seen that (we think) on the recent Minor 2 peak at 1131, five waves up from the 1042 low.

This c wave structure would fall short of 50% retrace which if in a Minor wave 3, is certainly realistic as the downward pull on stocks may limit any retrace moves. Just speculation here.

Anyways, just a possibility as the last down move in the afternoon is looking a bit like a "three". The "a" was certainly a three. So we could have a 3-3-5 expanded flat going on for Minuette (ii). This of course depends on 1065 holding for any morning bearish move.

Primary and Alternate counts have swapped.
The [b] wave is now firmly a more remote alternate as the new low today confirmed a larger overall 5 wave move from 1131 peak. In fact, the early low today looked like a perfect spot to form a wave (i) of [i] of 3 low. The market then started to rally in what would be an expected wave (ii) that would retrace a Fibonacci portion of the entire move down from 1131 peak.

But it failed and reversed early and made a new low in the afternoon. But even so, it still fits into a 5 wave pattern, at the least. So the market is clearly now impulsing down in 5 waves and every counter rally is a craggly 3 waves. That is one strong reason to suspect 1131 is Minor 2 peak.

I suspect the market failed to rally today because it simply required lower prices to launch a counter rally from. No one yet interested and technicals were not screaming "buy me". 1065-1072 is more solid support that should be fought over a bit harder then the higher price levels.  1072 is a particular price axis that is a key axis for the market going back into early Fall of 2009.

Trying to judge the correct wave degrees
As far as wave degrees and the medium term picture, I am looking for a Minute-sized wave to move lower than the 1040 low as I suspect all wave one subwaves will attempt to lower prices than the previous wave one of next higher degree. It is a bias I have and until it proves grossly wrong, I see no need to shortchange things. After all, Intermediate (1) of P[3], in theory, has a lot of ground to cover.  So there is no need to scrimp on the waves just yet.

So how this Minute-sized wave [i] achieves this in the squiggles could be tricky to count.

Have we said goodbye 1100?
Therefore the 60 point move down from 1131 would probably count best as a Minuette (i) of Minute [i] of Minor 3 down. But this assumes there will be a rebound wave (ii).  Trying to predict the smaller-degree rebound waves can be dangerous in a Minor 3. However if there ever was a spot to launch a rebound rally in a last-ditch attempt to touch 1100 area again, the market is likely near that spot with some decent support spanning 1065-1072.

Remember, if P[3] is the larger count, and the market is working on building the far right shoulder of a much larger right shoulder of a 10 year head and shoulder pattern, sooner or later its going to say "goodbye" to these higher levels.

So is there one more effort to climb just above 1100 left in it? We have a perfect "blue box" virgin wave area that marks a potential wave (ii) of [i] rebound.  If it cannot do it now, it may never again. The 1100 area is slipping away. Minor 3's target is certainly lower than 1000 SPX and perhaps even much lower than 900 SPX.

Market Internals
Internal down volume ratio and decliners was slightly less today than on Tuesday (where we have wave iii marked) so that also supports a wave v of (i) low.

30 Minute SPX Chart
You can see a pretty good positive divergence on the 30 minute chart of the SPX with the RSI low on wave iii down.  So this supports the idea of a wave (ii) rebound to the blue box area for one last hurrah above 1100. However the MACD is kind of weak in backing up this positive divergence.  Its certainly nothing to bet the farm on. However the ROC and Ult Osc also have positive divergence.

So the bottom line is if the 1065-1072 support area holds firm, then we can expect some kind of retrace wave (ii) rebound of the entire decline from 1131.  The blue box area would be a possible target.

The flip-side is that Minor 3 decides to crush this divergence somewhat and roll over it and impulse down some more.
Unfortunately until we get some kind of clear larger-sized corrective up (other than intra-day bumps), or a more complete set of downside impulsing, we are largely feeling our way along here.  It will start to become clearer as the days pass.  But Minor 2 peak at 1131 is looking pretty decent at this juncture.
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