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Thursday, September 16, 2010

Elliott Wave Update ~ 16 September [Update 5:03PM]

[Update 5:03PM: I've had this Gold monthly chart posted on my public chart list for I think all of 2010 and I haven't changed it.  Basically it shows the inverted H&S target of approximately $1305. Now that is a minimum target and if wave (5) does not extend, then it seems about right.

In non-log scale you can see Gold has advanced nicely over the years.  The gold bugs (and I respect the stance) have so wished for a blowoff top (like oil) for so long and it has not appeared. Yet the price has doggedly moved upwards.

Blowoff peak coming?  Since so many retail want and wish it to happen, one has to think it will not happen. But again, I am neutral to the whole idea and we have a count that will accommodate such a blowoff peak.

But Gold is a funny thing. We exert a vast amount of effort to dig it up from deep in the earth only to lock it up back up in vaults dug into the earth. Part money, part industrial commodity, and certainly with a long history paralleling that of mankind's mere existence, it has hybrid sentiment measures of many things.

Yet in the end, sentiment is probably what matters.  And it is again another market where sentiment is running high in conjunction with a valid wave pattern.
Prechter argues that Gold is a commodity, so from that respect commodities can blow off and have its 5th wave extend. But seeing how wave [3] seems to be the extended wave (see last chart below - assuming the count is correct) I am not sure.
And for anyone who suggests I always bend toward EWI's view of things, it is they who have come around to the way I have shown my 5 primary wave counts of looking at things. 

Price action seems to continue to dictate that the market wants to make a serious stab at breaking above 1130.

It appears another triangle is developing and perhaps an early down move tomorrow will be the [E] wave or as I have it labeled on the Wilshire 1 minute chart, the triangle is over and wave v of (c) of [y] has begun to advance. The lengthy sideways shallow correction of this week smacks of a wave iv event instead of a wave i-ii.  So in that regard the next pop should be nearing exhaustion for this rally.

The rule on ZZ's and double ZZ's is that the [c] or [y] wave must finish higher in price that the [a] or [w] price high. So following that strong guideline, one could reasonably expect a higher high above 1129.4.

As many have probably heard, the AAII survey showed 68% bull ratio today, one of the highest readings in 3 years going back to the 2007 market peak.  So at the very least, it is hard for bulls to argue that things are too bearish. Certainly they are not.
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