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Monday, September 13, 2010

Elliott Wave Update ~ 13 September

The ascending triangle proved correct

An ascending triangle presents a "marker" for our overall counts. 1105.15 is where the "e" wave is marked so that is a key reversal marker. There are several ways of labeling this ascending triangle (listed in my order of preference):

1. Wave (b) of [y] of 2 in a double ZZ Minor 2 count.  This implies a recovery high above 1129 will occur prior to 1105.15 being breached.  This implies Minor 2 will top when the final subwaves of (c) play out. This would be the shortest possible pathing for Minor 2 to find a peak.

2. Wave (iv) of [c] of Minor 2 in a simple [a][b][c] Minor 2 zigzag count. This count implies practically the same squiggle gyrations as count number 1. above so its a moot point.

3. Wave iv of (a) of [y] of 2 in a double ZZ Minor 2 count. This implies that wave (a) will top shortly tomorrow (or did today), perhaps under 1129,  and a (b) wave pullback will occur. 1105.15 may be breached in this case.  Then after (b) wave pullback, (c) wave will achieve over 1129 in the future.  This would be the longest possible pathing for Minor 2 and have the greatest possible flexibility.

4. Wave (b) of Minute [ii] of Minor 3 down. The SPX would not be able to break 1129 by rule and is on the final wave spasm prior to a spectacular collapse. Yet, in practice this implies practically the same thing as items 1. and 2. above so again its a moot point.

So those are the 4 basic bear Minor 2 counts (and one Minute [ii]) and counts 1, 2, and even 4 are similar in nature.

Wave count 3. above allows a vast amount of flexibility as far as near term squiggling. It implies that (a) wave could be topping and a (b) wave may pullback even as deep as say 1086 before wave (c) carries the market above 1129. This count also allows a greater time length. It is not my preferred count because sentiment measures seem to be "rolling" onward toward a necessary bullish peak.

I prefer that this market "gets it over with" sooner rather than much later. It seems a "liquidation" event is playing out and it makes sense that this event keeps playing out to the very end. This is the same type of liquidation event that played out in March -April rally. There were no big pullbacks on that relentless rise upwards and there may be none here either.  So thats why I have wave counts 1. and 2. listed as priority.

I also prefer last week's narrow sideways move that took 5 full days counted as a (b) wave and not a wave four of some kind. Its just preferable time-wise at the moment.

The Wilshire 5000 shows the count(s) and implies that today's move could merely be wave i of (c). This implies any pullback will maintain the ascending triangle breakout gap up. That is again the key. There is room for a nasty little wave down to ii of (c) but its possible today's low was wave ii and tomorrow just keeps squeezing in wave iii up.
And here are the counts I discussed above on the SPX:
So in review the ascending triangle is a good "marker" for us to cue off of and incorporate that into a larger wave count.  What happens from here is narrowed down more and more.
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