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Wednesday, September 1, 2010

Elliott Wave Update ~ 1 September [Update 11:15PM]

[Update 11:15PM: One last thing: Someone emailed me and pointed out that the futures surpassed the cash index today. I didn't see exactly where that occurred, but looking at the S&P e-minis futures, the prices are practically aligned on top of each other when comparing to the cash index. Highs were occurring in both today within .5 points or less.

What does this mean?  Well I am not an expert at futures, but if I read this correctly, its that futures are expressing too much optimism and is too bullish (sentiment) and the cash index is barely following through. This of course would be bearish.

Certainly the NDX100 minis surpassed the NDX today on the 11AM high which registered 1824.66 and the futures NDX was an 1825 high.  Now again, I am not an expert on these things so if someone wants to explain why this is happening, I could use some education.  Because as it stands, my take is that it is a very bearish sign (excessive futures bullishness) and this is the first I noticed it since the April peak.

[Update 11PM: If I am going to call the move down a 5 wave move, I might have to change where the wave (iii) occurred to where the strongest downside happened. This would suggest that wave (v) is an extended wave.

What is neat about this count is that if (v) is an extended wave, then this rally is about over already. Why? Because as Prechter recently pointed out in an interim EW Theorist, the subsequent wave two rally often peaks at the previous subwave two of  the extended fifth.

If we have that here, this rally is nearly over once wave v of (c) of [ii] completes. Note the "ABC" up so far. I  like this count. I think too many have switched too early to bull mode and "going to 1150" or wherever. As Hochberg said tonight, "its not the rally that matters but the day(s) after the rally."  This is spot on.

This market is being set up for a flash crash of big proportions with shorts run out of town.  When the trendline from July 2009 goes, you can kiss 1040 and 1010 goodbye too.

The move up certainly counts better as an ABC three than nit-picking on the 5 wave count with your up waves first.
The Wilshire and another view.
[Update 8:57: The RUT count:]
[Update 6:06PM: Long time since I did a financial chart. Financials are the bear market leader since 2007 and will continue to lead until the Great Bear is exhausted. Since achieving a P[2] counter-rally of just above 38% (weak) it has once again, led to the downside. It had actually broke under its H&S pattern and is now struggling to regain the neckline.
Original Post:
I had a great post but blogger screwed me over and had a conflict and didn't save.

The market has deemed 1040 SPX and the uptrend line from July 2009 important.

Minute [ii] is the primary count.
Grand Right Shoulder is taking its time. But in that context rally looks normal.
Another view. Upper base channel line (blue) should present some resistance.
NYAD would "look" better with a double negative divergence. It may happen. A move to 1106 may do the trick....
Sentiment was certainly bearish.  I expected a violent Minute [ii] of Minor 3 - as in 2008 - I just expected Minute [i] to end lower first in price.

Bonds sold hard. Dollar not so hard. Next selloff in equities, bonds may not rally - and dollar will instead.
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