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Friday, June 4, 2010

Elliott Wave Update ~ 4 June

I just don't see how anyone can buy this market. Bless the bulls who buy.  Maybe at SPX700, but really, what the hell is so cheap about 1100 SPX?? I don't see how a technician can navigate on any sense of "normal" because the old paradigms are being shattered on a daily basis. The only thing that explains whats going on adequately is wave theory in my opinion and the primary count that a powerful primary wave 3 down is what the market is in.

The down volume ratio ended the day a 118:1.  Decliners versus advancers were not too bad considering at only 9.67:1  Another 90% down day for sure. Can we even compare these numbers to what exactly?

The SPX officially closed under 1065 by a hair. This is unhealthy for the bulls as the 36:1 up day and the 20:1 up day was completely reversed and then closed under. Another gaping gap down scar is now on the tape.  Is it a permanent bull target that will keep the old timers buying this market despite how clearly dangerous it is to be trading in?

The market seemed on the verge of a "flash crash" and heck, the wave pattern isn't even officially at the "third of a third". In fact the market is still way up at 1065 SPX when you think about it.....

Last March 2009, people laughed at anyone suggesting a market rally to 1000, let alone 1220 in only 14 months. Yet now that it is here, all seems well and normal again. Yet things are clearly not! Now, many cannot see a drop below 800 again let alone 700. Yet merely 15 months ago, that trading range seemed normal and appropriate and, ironically too high!

The neckline of the H&S pattern is being breached yet again, and the 200DMA has been rejected twice now. Two-time failures on the 200DMA are usually bad....
I keep saying that yes, there is a myriad of wave patterns possible but it keeps following the primary count so no need to abandon it just yet.  The next major move is looking for a move under the recent 1040 low. I will however this weekend take a hard look at some alternates.

However, the market is unable to challenge, let alone recapture the massive "bad breadth day" of May 20th.

The primary count has the market approaching a major "point of recognition" third-of-a-third spot.  It would be a good point for a big flash crash.
Is sentiment bearish? Sure it is.  But when they found out Madoff's funds were a Ponzi scheme, sentiment on that went 100% bearish yet that "fund" still traded to zero huh?
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