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Friday, July 16, 2010

Elliott Wave Update ~ 16 July [Update 5:37PM]

[Update 5:37PM: The dollar may be bottoming in a wave (2), but technically there is nothing that screams that it has actually seen the very low of (2) just yet.  Doesn't have to of course and it is oversold on a daily basis .

The big question is, will it test its 200 DMA?   Its within shouting distance so its certainly makes sense.
The VIX was just kinda hanging out today after gapping up. Not sure if OPEX affected its reading or not because I am not that market savvy to know.  As a bear I didn't like the candle it painted today and considering the NASDAQ was down over a full 3% the VIX just didn't seem that interested in getting excited. Complacency?

What is interesting is that even the though the entire market (Wilshire, etc) finished well under the 20DMA today, the VIX couldn't muster a close over its 20DMA.
[Update 4:35PM] Courtesy of Consumer Metrics http://www.consumerindexes.com/ (these charts are on the home page) these charts show that consumer demand decline has not found a bottom and is actually starting to dip down even further.

These charts are in a way are a direct reflection of social mood and how everything is still in a long-winded, deflationary contracting GDP mode.

So when I am calling for Minor 3 down when the market finishes this latest relief rally, its not without supporting evidence. Note how much on the middle chart the amount of decline from the recent peak. From a +5.8% spike to a minus 2.5% negative is a big swing even though it has taken a different form from the 2008 contraction event.

Well we finally got the expected weakness back toward 1065-1075 support. 1070 tried valiantly to hold but the market slipped under and finished on its low pretty much. Down volume ratio was pretty broad based all day and end of day recorded 3.97 decliners to every 1 up so it could have been worse. But the bearish market internals and long down candle very much threatens the [b] wave count.

The market could not escape the down trendline and channeling already in place. But I didn't expect it to do on first shot after the big rally from the 1010 low. So hence we got a turn-back from the upper channel line.
But we'll throw a [b] up there and see if it sticks around here next week or not. You all know the drill here. The call is for Minor 3 to play out once the market has "topped" on this latest relief rally .  And it may indeed have topped. But it will take Monday to help confirm whats going on.
It seems fitting that we had a big bear day when all week long all you heard was grumpy bears on various websites complain how "they" "pinned" the tape for OPEX yet come Friday, the tape went straight down once again frustrating the maximum amount of market players.
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