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Wednesday, June 30, 2010

Elliott Wave Update ~ 30 June [Update 5PM]

[Update 5PM: The dollar's count is also playing well within its wave structure. We can guess that a B wave is playing out and will take the form of a flat or triangle of perhaps a combination.  But so far it surely counts well as a pause in the decline of the dollar that started at its peak.

Technically, note the possible BEAR FLAG forming and of course the H&S formation.

Originally I surmised that the dollar would make a C wave (2) price low in conjunction with a Minor 2 high in equities. Since we assume Minor 2 high is "in" the next logical place in the wave structure is that Minute [ii] of Minor 3 price high will correspond (nearly) with a Minor C of Intermediate (2) pullback on the dollar.

Incidentally, GOLD has a decent chance of having a good blowoff top during the C wave pullback of  the dollar. In fact I would be disappointed if it did not play that way.

So Gold's long run (for now) would be over on the far edge of the right shoulders forming in equities. Just a thought.  But we'll see how long term sentiment stacks up on Gold if it rises further from here. So far
sentiment is not yet back at a (long term) extreme. Perhaps a blowoff peak will put the final touches on that sentiment extreme.

Today couldn't have played out any better as far as the primary wave count. After yesterday's extreme downside internals indicated that a middle third of a likely Minute [i] of Minor 3 down had occurred, we surmised that all the final subwave fours and such needed to play out.

And today did not disappoint.  Working off extreme oversold on the hourly indicators for most of the day, renewed selling came in at the end after a truly uninspiring price action. 1040 support broke.

Here was yesterday's chart where I surmised a bump in a subwave iv and then more decline

And today's result
The SPX usually counts pretty much the same as the Wilshire, I use the Wilshire to help interpret form and orthodox endpoints.

[Here is an example from just the other day: When I surmised a sideways three day bearish triangle was in play I noticed that the proposed "c" wave price high (due to the rules of triangles) was on a differing price peak for the Wilshire versus the SPX.  It made me think, hey that looks a bit odd and although a triangle is on the SPX, the Wilshire is indicating perhaps not a triangle.  Well the hard wave down the came.  Was the Wilshire giving a subtle clue? Compare the 10 minute Wilshire versus the SPX 10 minute squiggle chart, you'll see the Wilshire (which is the entire market) decidely makes a nice subwave ii of (iii) where the SPX is more mushed. Anyways - that is some deep squiggle stuff but it had brought me some pause the other night]

SPX 10 Minute
Here is the SPX 10 minute:  The Fibonacci calculations for a wave (iii) expansion works nicely so far.  Extrapolating this subwave count outwards gives a Minute [i] low of near 1000-1010 if we get a "picture perfect" subwave count from here on out. It will of course decide for itself when it wants to bounce.

We do have an open gap down there below 1020.
Could we be in for a "waterfall" much deeper than 1000 prior to a significant counter bounce?  Am I shortchanging the wave degrees here and will it extend much further than this count calls for since we lost 1040 support?  We'll find out.  For now, we can only surmise we have a decent probability in both count and potential bounce points.
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