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Wednesday, July 7, 2010

Elliott Wave Update ~ 7 July [Update 7:35PM]

[Update 7:35PM: I was reading and seen where JPMorgon just tonight cut EPS for AA by 33% with just one week prior to earnings reports. That got me to look at AA's chart.  It makes for a nice EW pattern with some long-winded positive divergence on the RSI and MACD.  AA has lost 35% this year.

I'd say that recent gap down is certainly doable price target on an earnings pop. Maybe the JPM thing has a final AA washout tomorrow in premarket or whatever.  May be missing a final internal squiggle on the blue 5.  So we'll see.
Update 5:09PM: The dollar chart is actually behaving pretty much as first panned out when it was topping with some 98% Daily Sentiment readings.   No need to even change the trendlines at the moment. Still looking for at least 40%-50% retrace.  Even 62 % retrace is possible if they announce "QE II" - (Or even if they don't). (see Zero Hedge for those off and on rumors)

Here is a media story on the Euro's strength. After the "Euro is doomed" theme for so long, now the Euro rally and dollar drop has induced the usual sentiment nibblings

I await to see the "dollar is doomed" theme back in vogue again in the next week or so. Yet if the dollar pulls back as we hope, the whole thing is going to make a giant bull flag...

[Update 4:50PM: The CPC chart can be useful in that it can possibly be compared to other 5 wave structures that took place in P[1].  This is basically the same thing in what I explained over the weekend using  the BPSPX chart

Its the same concept. Why should it work? because shifts in sentiment between certain wave points always work basically the same way. Too bearish, time to rally in a wave pattern, too bullish, time to decline in wave patterns. What happens internally during those rallies and declines, the makeup of the wave structures, and the total price moves, determines the nature of the market at hand.  The decidedly extreme downside market internals are creating wounds on the market that it has yet to be able to recover from.

Anyways, here the CPC is interesting. Will Minute [ii] go beyond the recent Minor 2 CPC low as it did in P[1] as outlined in the red box? Keep an eye on it.
The recent price lows of each index were spread out over a multi-day period:

1 July - 10 A.M. - Nasdaq and Nasdaq 100
1 July - 11 A.M. - Wilshire5000 and S&P500
2 July - 1 P.M - Dow Industrials
5 July - 8:15PM - E-minis
6 July - Russell 2000 and Dow Transports.

So all these indexes took a while collectively to make a turn back up. After a few false starts,  today broke back above the H&S neckline.

So the primary count is that Minute [ii] of Minor 3 is retracing a Fibonacci portion of the decline from 1131 - 1010 SPX.  Being a wave [ii] the retrace is "expected" at least 50% or the 1070 gap area. The 20 DMA resides at 1075 at the moment.  This is a solid target area for now.

This gap down represents that top of a very bearish candle that will be hard for the market to escape above in price.  So squeaker closes over this area is possible and then any attempt at "escaping" this bear candle gap down area with a price surge above should bring out the selling in force.  This is what happened basically at the 1131 peak. The bear candle that created the big gap down at 1115-1107 was closed over then when the next day tried to "escape" above it (and use it for support) the market decided not.
Looking at the internals, this bullish day was expected and due.
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