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Thursday, August 12, 2010

Elliott Wave Update ~ 12 August [Update 10:47PM]

[Update 10:47PM: First let me say I rarely chart leveraged ETF's due to the price decay factor and the effect it has on the charts. However, I like TBT here on both the daily and weekly. This aligns with my view that bond bullishness in general is very high. Sentiment Trader has some new surveys coming out maybe tomorrow on bonds and they are likely to be toward an extreme or very high.

Sure it may take a while to turn or may have a spat of more downside, but what would you do with this chart, short it or buy it? From an EW standpoint you have a power wave three down and then rise, then a slower wave five event complete with positive divergences.
Weekly looks like an attractive buy.
[Update 7:51PM: So far the weekly Wilshire is an ugly candle.  Note the 13/34EMA and the 50DMA and how they have converged....ala 2007.

But P[3], being a wave three which are the most powerful in a structure, should be bigger, badder and steeper than P[1] and so far that seems to be the case if the count is accurate.]

[Update 7:40PM: I meant to show this GDOW chart last night. It hit my blue box area at a minimum and just shy of the expanded flat target range. Not bad.]

[Update 7:22PM: Usually I like to wait until a place like Marketwatch posts a story about the current week's bullishness (or lack thereof) and then make my comments from that.

Mark Hulbert and Peter Brimelow usually post the sentiment angle stories and they are always interesting and worth a look. This week both the II and AAII surveys outputs corrected upwards significantly and I see no mention of that yet on any mainstream sight. Odd.

These charts are courtesy of Sentiment Trader. I don't like to get in the habit of posting this stuff as it is only available to subscribers of their website.  But since I am pumping their website (their "one-stop shopping" of sentiment data is well worth it in my opinion), I'll do it at this juncture because its very important information relative to the wave count.

(Actually another good site  posts the II survey data for free but it comes out Thursday night 1 day later)

So its nice to show this data rather than just say "sentiment is not bearish". That can be hard to believe unless you see it with your own eyes. Undoubtedly these data points have changed a bit over the last 2 days since the recent downdraft, but you get the picture.

My overall take is that the two surveys' readings are consistent with a Minor wave 2 top.]

[Update 7PM: Again the SPX long term shows that there is a thinly traded area under 1000 that is not that supportive as one might think.  I added an OBV to show the recent weakness at the wedge top.

Also note that should a downdraft Minor 3 occur from this level it is fairly consistent where the downdraft occurred in 2008.
Gold seems to be heading to the target zone at least at a minimum. Is it a wave 2 expanded flat?  Time will tell.]

SPX couldn't rally above the 50DMA today. It looked and felt like wave iv action.

Lots of possible variations but a move down to key 1065-1072 support seems doable for (i) of [i] of 3.
Top squiggle count could see perhaps yet another gap down tomorrow and then a rebound wave through to close the still unclosed one today on the SPX.  Its just one possibility

Note the ALT has the (i) low in already. Also I have it as a wave iv triangle due to the [B] wave is 3 waves from [A] and the [C] wave is a complex wave which is a guideline of triangles that one wave is complex and its usually the [C] wave.
Michael over at
has the Hindenburg Omen triggering today.

And stocks are more in lockstep than at any time since 1987.

So counting on wave two's may be a fool's game here.
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