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Monday, November 8, 2010

Elliott Wave Update ~ 8 November [Update 9:06PM]

[Update 9:06PM: BKX hasn't yet retraced 50%.  At about that mark is solid resistance band. Call it a wave 2 at 50%]
[Update 8:51PM: The SPX was the only index really that failed to meet its inverted Head and Shoulder target from the 2009 low.  1250 seems to be about the target for both. This is nonlog scale and the P[2] ZZ would certainly look more than reasonable.  Can it go much higher? Sure thats up to the market. Lets find the top of 3 of (C) first I suppose and then 4 of (C) and go from there.]
[Update 8:06PM: Another look at NYAD and how it may fit into the overall scheme. It would probably take a drop of some 60 or so SPX points to produce a wave 4 on the NYAD. So that supports the notion of at least 1170 SPX.

December is a Fibonacci 21 months for the markets and the NYAD count.  Again, time ratios are a big wildcard, however 21 months for a P[2] seems to have a nice ring.  At the least, I am looking for my NYAD count to top out in 2010. If the SPX then makes a wave 5 high in 2011 and the NYAD fails to follow up, well, that would be your telltale sign negative divergence that things are ready to head back down.

So again, time is a wildcard but I do see a move down to 1170 perhaps for an SPX wave 4 and an NYAD wave 4. Then we'll see where things stand.

Again, its preferable if the NYAD weekly sees a little "bump" down I can call a wave 4. It would take a multi-week decline to produce said bump. So far no bump but it looks ripe for one.

[Update 7:03PM: Updated CRB index per Sqwii's suggestion in comments with parallel lines.]
[Update 6:45PM:  The SPX sports a nice wave relationship at 1231 where wave 3 = 1.618 times wave 1.

Then I am generally looking for a pullback eventually toward the 1170-1175 range.  The move that deep would likely be an initial [a] wave of a flat or the deepest [a] wave pullback of a triangle.  So initially the deepest move in wave 4 may occur in the beginning in an [a] wave. That is just a guess and with sentiment so high, that can be expected.

This pullback would likely be my NYAD wave 4.   And likely my NYAD count may finish its wave pattern ahead of the SPX early and the last bit of SPX waves up would see divergence with the NYAD and lower NYAD highs.

Time-wise, I am just guessing based on a possible parallel channel.  Note that wave 4 flat scenario might have weakness going into the end of the year.

So we need to spot the wave 3 top and then anticipate a wave 4 pullback.

Note the inverted H&S target is about 1260. That is just inside Intermediate wave (1) of P[1] low of 1256 SPX in March 2008. So it could be said that P[2] would have retraced into P[1]'s price range which is a typical behavior.

Another target would be the lower 1240 range where wave 5 would be only .618 times wave 1.

Time-wise is just a guess. But I suppose the POMO-buying FED would help keep the market elevated for more than a few months in choppy action as laid out here.  The FED and the banks can buy the whole top wave 5 and get stuck as the bagholders. And then buy the initial drop down into June.

But again, I am looking for a pullback toward 1170 range is my best guess sometime in the near future. Anything lower than 1165 would be extremely weak wave 4.

So this is one scenario based on a reasonable wave structure and possible time. (and a lot of POMO days through first six months of the new year.)
Wave (iv) of [v] playing out today as expected.  SPX target for wave (v) of [v] of 3 is 1236 SPX derived from (v) = (i) and also the converging triangle lines give it about the same target.

We have some pretty nice squiggle counts. The entire thing could also be said to be a contracting triangle as per the converging blue lines.
The Wilshire count showing wave's 1, 2 and 3 of Intermediate (C).
Gold. I've never encountered a situation where a vast majority of vested interests insist there is no GOLD bubble. That may be well and true depending on how you rate a "bubble", but everyone wanting one to occur has me thinking that because there exists a high desire for one means it may not happen.

However $1500 gold is nothing to sneeze at!

Instead we would just get a nice 5 wave Primary pattern. Nothing wrong with that. There are already enough waves in place to label the move. Just seeing if it can burst higher which it may do. I certainly wouldn't rule it out. But the move may be a quick one if it happens.  A burst toward $1500.
The weekly is overbought of course. But the question of the week is will Gold ramp to the upper channel line?  If it happens this week, I have that line at approx $1482 give or take $10.
CPC 3 and 10 day moving averages are getting low again. Bullishness prevails.
Apple's pattern is a bit unusual.  But it still makes a valid wave pattern.
India almost a new high. I almost don't have to label this chart.. You can see the 5 waves from the 2008 low and you can see 5 waves within the recent wave up.
CRB almost has the little inverted H&S target in sight
VIX is hanging tough. No new low yet. My wave pattern stands for now. Gap up today smartly closed.  But well we'll see.
The simplified count is kind of liberating.  The shortness of wave 1 of (C) may limit the total length of (C).
Yet there is undeniably higher sentiment.
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