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Friday, January 14, 2011

Elliott Wave Update ~ 14 January

Well things worked out well for our wave (v) of [v] of Minor 5.  Thats the primary count and with advancing stocks at only 1.37 (finished with a spurt up) ratio today, it fits well as a wave (v) of [v] event. However Monday Tuesday could bring a blowoff top near round number 1300 if there is a gap up open. 1300 is certainly round-number resistance and 1309 is the summer of 2008 price high for the SPX prior to the crash.  That is one reason why stocks have hurdled upwards as of late as its heading to next resistance.

We have a slew of Fib relationships and we are within a target window for these.

Stocks have reached record territories in closing above its 10 day moving averages.  Closing above its 50 DMA.  All sentiment charts are extremely bullish and have been persistent. Put/Call data is very bullish.  The market is ripe for a turnaround. I am sure I will hear the 400 catcalls about how its ignorant to say so but thats what EW theory is about: counting waves. Thats what we do here.

I have been steadily charting this Minor 5 in a patient fashion.  The time is near. Minor 5 is nearly equal to Minor 1 in all intents and purposes after Minor 3 extended a near perfect 1.618.  So there is no reason to expect we have Minor 5 run over 1300 resistance without pause. Intermediate wave (C) is .618 times the length of wave (A) for all intents and purposes. Full moon on the 19th.

On the credit front, munis are coming under heavy pressure and are likely leading the way. A crumbling credit market will only lead to trouble for stocks.
Squiggles are open to interpretation.
And a closer look even still. Nine waves up
I mean really, this NYAD pretty much says it all. After 5 waves, its due for a correction. Thats the theory.
This too looks ripe. We are at historic levels here.  The steady accumulation over the past 2 years without correction is remarkable.  It truly is "All in".
Note the Fib relationships. A spurt Tuesday (Monday holiday) to the upper blue trendline wouldn't surprise me.
Wilshire Fib relationships. Todays's high .608 times wave (A). Remember the Wilshire 5000 is the entire market pretty much so it holds good credibility.  A gap up open Tuesday will put it at .618 pretty much if the market needs to blowoff in a high-volume buying panic.

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