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Wednesday, December 1, 2010

Elliott Wave Update ~ 1 December [Update 8:40PM]

[Update 8:40PM: Its very satisfying to see a 5 wave pattern down using the monthly chart for P[1]. At the April 2010 peak, there really wasn't a 3 wave pattern at all visible on the monthly for P[2]. But now of course there is a 3 wave pattern which is nice to see.  

Note the upper monthly BB.  Is this the target of P[2]? 

Note that the BB width has calmed down allowing for the market to set up for another possible major panic - P[3] down. Note the Rate of Change (ROC) has diverged and shows slowing momentum. Note MACD history bars showing slowing momentum.

Additionally note the Fib numbers I placed on the chart.
[Update 8:06PM: Back to the Supercycle upper channel line. Also note the breadth thrust indicator had pretty good positive divergence. Thats supportive of a wave 5 in progress.]
[Update 5:32PM: In addition to the combo pattern I presented today for Minor wave 4, the other major reason I am willing to "rush" wave 4 being over is the NYAD chart below.  If Minor wave 4 were to drag on for a few more weeks, perhaps the NYAD would "lose" the channel line.  There is not a whole lot of wiggle room to move sideways so-to-speak. I am not sure if this channel is important or not, but for now lets suppose NYAD is moving toward fulfilling its final wave 5 of (5) of [5].

I also like the Fibonacci time ratio of 21 months.
We of course have the wave 4 "bump" visual on the weekly and now looking for wave 5 possibly to the upper channel line. This would be of course a major cyclical peak of historic importance.  By my count, its all downhill after the peak is found.  That scenario of course supports P[3] down.

Just look at the Ultimate Oscillator. Its been a record amount of time since it hit the 30 line.  So yeah, I say a big correction is due. 
[Update 5:15PM: I first showed this chart at the beginning of November and drew the support line at about 1170. So far it has held.  Target for Minor 5, if thats what we are in, is 1246 SPX. This would fulfill two inverted H&S patterns and also wave 5 would be .618 x wave 1 at 1246. Also it would nearly overlap wave (1) prices of P[1] which can be a common trait of wave twos, in this case P[2]
Update 4:42PM: The SPX also fits the rules of a combination with a triangle at the final position. Using a 5 minute chart you can see the internal legs of the [y] wave triangle appear to be "three's".  And having a triangle in this position can really only really be labeled as I have below. Thus wave 4 is over is the primary count.

In the case of the SPX, the combination would be zigzag - flat - triangle.]
Primary count is that wave 5 is now playing out to a higher market peak.  I revamped the e-minis just today after I realized it appears to be a classic double three combination with a triangle in the last position. Thus the huge thrust up today out of a triangle.

I then looked at the Wilshire cash index (total market) and realized that the same pattern fits as a combo. Looking at the internals of the triangle all appear to be "three's" And then today's thrust of course leads me to believe we just thrusted out of this wave 4 combination pattern.

For those who need brushing up on zigzag-zigzag-triangle combo, review EWP by Prechter he shows a good example. I feel pretty good this was the case here. I should have seen it last night.

So if thats the case, wave 4 is over and we are working on wave 5 of (C) of P[2].
Final bounce on the base channel
I'll have more charts later.
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