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Wednesday, January 19, 2011

Elliott Wave Update ~ 19 January [Update 6:51PM]

[Update 6:51PM: The e-minis I have labeled now as an ending diagonal pattern.  The evidence for this is that the price collapsed back to at least the beginning of where the ED started. An ED pattern is naturally an ending pattern that really only occurs at the end of wave fives. For instance, to have an ED pattern this large attend the top of, say, Minute [iii] of Minor 5 would be unusual as a wave three typically does not terminate in such a  fashion. In other words, wave threes do not exhaust, wave fives however do!

So that would be more evidence that the minis are perhaps exhausted and in need of a major correction. Of course as you can see, breakout support is still holding so nothing in life is a slam dunk.
[Update 6:25PM: Ok lets take a crack at those squiggles today using the Wilshire. Best I can make out is we have seven waves down so far (double ZZ) which is corrective.  What I'd like to see is another new low quickly occur on the Wilshire 5000 (and SPX). Perhaps a gap down open and then bounce hard for a wave two of some sort back to the previous wave [4] price range.

I plotted wave [5] as being an extended wave its really the only way I can see counting this from a bear perspective.
There is every reason to believe the market topped in the Wilshire and S&P500 as we have accounted for every wave at Intermediate, Minor and right on down to the sub-minuette level. Yesterday I showed a couple of powerful Fibonacci relationships were met in the Wilshire 5000 almost to the point. The DJIA may have another high coming with its wave structure looking corrective today. A diverging set of tops would be normal.

The Wilshire shows what may turn out to be the P[2] high.
The SPX shows a top alternate variation. Upper support has not yet been broke.
I'll have more charts later.
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