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Tuesday, November 30, 2010

Elliott Wave Update ~ 30 November

I have been using the Wilshire a lot because I think it best reflects the overall waves of the entire market. Primary count is still some kind of Minor 4 pattern.

Trouble is, there is such short term variation potential, that a dominant pattern has yet to emerge. Price action has  been stubborn yet not really bullish.   Sentiment is stuck in neutral in many respects. Its a largely mixed picture and the market has responded in its usual schizophrenic fashion.

Will 1173 break down hard short term? I would't bet against it.

Will 1200+ again be attained short term?  I wouldn't bet heavily against it. We are a bit in no man's land unless of course this kind of price action suits you as it does some.

So here we sit. The waves suggest that no matter the short term struggles, there is not yet any impulsiveness to the downside (nor upside obviously). So that suggests corrective waves. And taking the next logical EW theory step, an eventual new high above 1227 SPX.

So we'll throw some squiggle counts up there and see what sticks.   It probably won't much matter as the MM's would just as likely break support or retake resistance in the usual manner - either running up futures or selling them off prior to the open.  So we'll either look like geniuses or fools.

I could just as easily lean toward the downside with a differing count - double ZZ down from peak (and fulfill an H&S setup). New day of the month tomorrow. We'll again give the count the benefit of the doubt for the bulls.

I could see a H&S setup in here too with a downside target under support.
Breaking the market up into some various popular indexes shows just how divergent the market is at the moment. Some indexes are in good shape others have struggled.  New day tomorrow should bring some rotation. But the bottom line is there is not yet any impulsing down and therefore that supports the count of Minor 4.
CRB
BPSPX has held up well because support has held. Should we have a good down day tomorrow, this will retreat. Its one simple reason to be biased to the shortside overall in the longer term - BPSPX is still way elevated.
NYAD has formed a channel. So if my overall count is correct, it should soon make a move to the upside - which should mean higher market prices
The longer term NYAD is sitting near a 21 month upchannel line so its a logical place for a bounce to occur. (of course its a logical place for a spectacular failure too!). But my count shows its missing a wave 5 of (5) of [5].
Bottom line:
1. Major support (1170 area) is holding
2. Waves seems corrective in nature (supports Minor wave 4 count)
3. No impulsing down. (suggests that even if lower prices are coming here short term, it may still be considered Minor 4 as a primary count.)
4. NYAD count is holding well and may be near a bounce point (channel line)

So until something alters this picture, this is why we have a primary count of Minor 4.

E-minis

I'm still willing to give the market the benefit of the doubt here.  We have an obvious support zone.  Perhaps a descending triangle on the e-minis is in works as I have labeled below.

Descending triangles are distributive in nature so there are no guarantees it will hold with prices eventually breaking to a new high. But a lack of solid impulsing down suggests that the ultimate outcome is that these waves you see are corrective. At least thats what we can see at the moment. Like EWI said last night, if it was a big impulse down, then a power wave three down would soon be upon us.  So we'll find out soon enough.

Monday, November 29, 2010

Elliott Wave Update ~ 29 November [Update 7:50PM]

[Update 7:50PM: Updated Wilshire 10 minute chart. It looks decent for now.  At some point though, if this is Minor wave 4, then the [b] wave would look better if it were to break upwards to a certain extent. So far it has been weak and unable to stick its nose above major resistance for a spell.
The price action reminds me of late November/early December 2009 when the SPX at that time had broken above to new highs and then tread sideways in a tight range for a number of weeks prior to breaking higher in late December/January. At that time we had the "Dubai" crisis (that seems like "preschool" stuff compared to now where we have graduated to Irish crisis)

At any rate, there is no definitive pattern emerging just yet for minor wave 4 although we likely have at least the [a] wave marked correctly. We can imagine a triangle but its ultimate form has not been revealed.

This SPX imagines a short triangle although its probably not right.
At some point though you would think prices would break a bit higher for a [b] wave peak as suggested below on the Wilshire chart.
The NYAD count updated. I am looking for a breaking move either way in the NYAD. More specifically though a possible move higher that may "lead" prices and give us a clue if Minor wave 5 is coming.  Nothing has emerged just yet.
Longer term is getting close again to a long term channel line.
The dollar count is playing out nicely. We now have overlap which confirms the move down was a three wave move which is corrective
Keeping an eye on GDOW. It is in danger of breaking EW rules if it keeps dropping in price. It could be an out-lier index.  Note the ALT count which is basically a double Intermediate zigzag.

Sunday, November 28, 2010

E-minis

[Update 5:22AM]
E-minis all-hours is shaping up to be a triangle.
The thing about triangles is you have to let them develop if they require. For instance it could be tracing a complex [d] wave right now and not an [e].

Wednesday, November 24, 2010

Elliott Wave Update ~ 24 November

Calling yesterday's low a (b) wave price low of Minute [b] has worked out already using just the Wilshire5000.  The Wilshire made a higher move which we could label wave (c) of [b].

I guess you can say we have an inverted H&S pattern but its not textbook and the target is higher.
Hourly
SPX hasn't confirmed the move higher.

Last night I showed an example of a Minor wave 4 downward flat.  Tonight I present the triangle.  Minor 4  depends of course that the market hold decent support as it has so far.

E-minis

We are in much the same situation as we were yesterday.  Best bet for bulls is to hold a trading range between the yellow and purple lines.  Bears naturally want to break the yellow line support. Light volume day though.

Tuesday, November 23, 2010

Elliott Wave Update ~ 23 November

Quite a bearish day although no need yet to change the squiggle counts just yet.

The key I think is that nothing is particularly impulsive down when looking at the entire correction so far. So that supports the notion.

E-minis

Price action could be better here for bulls over the last 24 hours. If prices can break over the red down line I painted, I think they can maintain. Otherwise,  another hit on the down-sloping green line could happen (yet perhaps maintain above the yellow support - call it a wave two) at the least.


Monday, November 22, 2010

Elliott Wave Update ~ 22 November

Primary count remains that the market is in Minute [b] of Minor 4. It could be a [b] wave of a triangle, flat, or expanded flat but in each case, the expected form of the Minute [b] is a 5-3-5 zigzag up.  After an initial five waves up from the recent 1173 pullback low, there should be a small (b) of [b] playing out.  Then a bullish (c) of [b] up.

Thats the best interpretation of the entire structure to date and so far Minor 4 seems to be behaving in an expected manner since we painted the top of Minor 3.  A Minor wave 4 is expected to be a large sideways corrective pattern and guessing every squiggle is not to be expected. However the overall theme is that once a solid and nearly complete Minor 4 pattern emerges (triangle, flat, combination, etc), we should be able to see a Minor 5 wave up.

So far we only have some pieces of the total Minor 4 pattern so we are taking our best guesses in squiggles.

Looking for another 5 waves up. Looking for (c) = (a). Inverted H&S pattern also.
Here is an example of a bearish downward flat for Minor 4 although I only drew it this way because of the wave channel and a triangle would be boring to imagine at this point. However, its just as likely a triangle or more regular flat develops although I do like the idea of a nasty [c] wave of Minor 4 that breaks 1173 support yet would hold above 1150 somewhere. Then the final wave 5 rally may only squeak past 1227 for a nominal high. Wall Street awards billions in bonuses for another up year under the belts....
 WLSH60. Prices still holding above the base channel.
NYAD count. Keeping an eye on it

E-minis



Friday, November 19, 2010

Elliott Wave Update ~ 19 November

5 waves up from the recent pullback low implies that at least another 5 are coming.  The primary count has the market forming Minute [b] of Minor 4.  The expected form for Minute [b] is a 5-3-5 zigzag up.

E-minis

Thursday, November 18, 2010

Elliott Wave Update ~ 18 November [Update 9:30PM]

[Update 9:30PM: It amazing if you were a casual observer you'd think the dollar would be at all-time lows. Yet it has been over 32 months since the all-time low.  The great double hump impulse [1]-[2], (1)-(2) is a familiar bottoming formation. The sheer duration and size suggests the dollar will achieve great things much to the chagrin of the FED no doubt.

"Don't fight the FED?"  Buy their dollars ironically and you will be fighting the FED and the wave pattern suggest you might be quite successful over the long haul.

Fight the Fed by buying their very own dollars....yes. Thats about a perfect contrarian setup.
Bonds. Major non-confirmation. 30 years leading the shorter duration. Rising yield deflation. Langoliers....
The NYMO was pretty oversold which supports the 1173 as a wave [a] low.
ORIGINAL POST
Primary count is that Minute [a] of Minor 4 ended at the 1173 SPX low.  The market would then be working on Minute [b] of Minor 4.

The Minor 4 count is interesting in that at some point, a [b] wave of either a flat, expanded flat, triangle or running triangle means that a bullish [b] of 4  wave must play out somewhere along the way and that this [b] wave would head back and perhaps challenge the highs and even make new highs in the case of a running triangle or expanded Minor 4 flat.

So at some point we must label the price low of wave [a].  This is where it gets tricky.  We very well may have seen the price low of [a], yet we cannot be sure it needs another move.

We'll adjust if needed but at the moment, there is no reason to suspect 1173 was not the [a] price low. It was major support and we expected it to hold.

The structure "looks right" as a 54 point [a] wave dip in prices seems about right and a bounce at the midpoint axis of the previous sub-wave [iv] ascending triangle.
A closer look using the Wilshire for form. Price retrace to the midpoint of the previous wave [iv] ascending triangle is near-perfect theory on where one expects prices to retrace for Minor 4.
Notice the bounce off the blue base channel. If it were to hold the base channel in a continuing sideways move, it may form a Minor 4 ascending triangle.
Keeping an eye on the NYAD count.
GDOW
And the bigger picture

E-minis [Update 12:33PM]

[Update 12:33PM: Primary count is that the [a] of Minor 4 low occurred at 1173. The market would then be working on wave [b] of 4. Wave [b] would likely be part of a triangle or flat of some kind  I reconfigured the squiggle count to reflect this.]

Wednesday, November 17, 2010

Elliott Wave Update ~ 17 November [Update 7:19PM]

[Update 7:19PM: Keeping an eye on the Price and Volume Trend of the DJI. Obvious huge divergence already. I'm looking to see if PVT breaks under the purple horizontal live.]

[Update 6:35PM: My NYAD count helps keep my bearings when viewing the markets.  I was projecting a wave 4 NYAD count and now it is playing out.   What is interesting about this chart is that it projects the final market rally to occur over low-volume holiday time as it has in the last few years. This is when the algo's can "have their way" perhaps and push the tape around more easily for certain.

Ending the year on a high would of course mean record mega-billion bonuses for Wall Street. "Doing God's work" - indeed.

This NYAD won't lie. Its raw internal data. It too has, as you can see, a valid wave count. And that count is almost over. I so do wish I get my NYAD wave 5 of (5) of [5] of V.  Then its all downhill from there....yes thats the raw outcome of my count.....
[Update 6:04PM: Playing around with the SPX squiggles. We have a potential backtest situation on 1194-1195 resistance and the downtrend line.]

Not much has changed. Still projecting a Minor wave 4 count and trying to confirm a wave [a] price low.

The double ZZ count down for [a] requires yet another new low
Larger picture shows the Minor 4 count is still solidly on track. Not much else we can do but have patience. We expected this pullback after the previous ascending triangle breakout and now it has occurred.  Minor wave 4 should find support somewhere between 1155 and 1175.  It has hit 1173ish. So its already in range. But another price low would certainly work for the squiggle count of a double ZZ.