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Wednesday, August 11, 2010

Elliott Wave Update ~ 11 August [Update 8:57PM]

[Update 8:57PM: Updated NYAD counts. Its amazing how well these show up as waves. The divergences are glaring particularly the weekly.]
Proposed extended 5th wave of a 5th wave of a 5th wave ....
Weekly divergence is really eye opening. In a nutshell, this large pattern represents the "endgame" and that the HFT bots will have to drastically shift directions to make money...

Weekly highs on the NYAD for many months now, but the markets are no where near the 2007 highs. Now also big negative divergence on the RSI.
[Update 8:30PM: Oil update. Significant downturn and consistent with the view of Minor 3 down in equities.]

[Update 8:25PM: Interesting tidbit of stocks moving in lockstep at the greatest level since the 1987 crash.

[Update 7:15PM: One of my favorite stand-alone sentiment indicators, which works well as a proxy for a slew of surveys and other indicators, is probably the BPSPX on Stockcharts.  After a huge drop off from the extreme highs marking Primary wave [2], it took some time to get this indicator (BPSPX) sentiment turned around and getting back up again. Since this is a Minor sized wave 2, sentiment was not expected to reach back toward its peak, only a portion.

Comparing the bounce from other Minor size wave 2's and even Intermediate (2)'s within P[1] puts this Minor 2 of August 2010 in very good standing.  It reached 60% again. Now after a few days of downturn, it has curled back down finally, but not by much so far.

So it has only dropped a few points so far.  EW theory in the primary count of P[3] suggests strongly that sentiment now has to run its course down to the extreme. I'm only interested at the moment to find a Minor 3 low in sentiment.  Notice how low the target range is. This is derived from P[1]'s data  range on where its various wave 3 lows occurred. Since this is in theory a stronger wave of P[3], one can expect a good downturn in sentiment for the Minor 3 low.

So I'll be watching this closely. And you can see by my target range, it has a ways to go.

Minor 3 down of Intermediate (1) of P[3] is the primary count.

I am looking for Minute [i] of Minor 3 subwave to advance prices lower perhaps to the H&S neckline.

Wilshire shows a perfect base channel in log scale. Most every index has repeated the same. Also note that a sell event has taken place at the same price level. The market seems to be reaffirming this as too high prices exist.  And why not? Downgrades of the economy are happening like wildfire.  The 2.4% GDP number was likely BS.

But mainly this is affirmation that social mood is still declining.  Therefore economic activity (and risk) is shrinking.

Good kickoff wave for Minor 3.  The 37 down volume ratio was 4th worst so far this year. The decliner ratio was not too outrageous bad but considering its the dog days of August so its probably pretty decent.
So 5 waves to Minute [i] of Minor 3 is the theory. Therefore likely working only on Minuette (i) of [i]. Not really a 5 wave pattern down just yet but I suspect its coming.
The dollar also shows evidence of a strong kickoff wave for an Intermediate (3) of Primary [3] up.
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