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Thursday, January 6, 2011

Elliott Wave Update ~ 6 January [Update 6:16PM]

[Update 6:16PM: Wilshire weekly shows my preferred count. Its nice you can see the waves on the weekly at Minor level (blue) and above. This was true with P[1] down too.  Using the orthodox wave (A) high and orthodox Minor 4 price as shown here, we have some interesting wave relationships coming up between 13777-13791. 

At 13777, Minor 5 equals Minor 1 within wave (C)
At 13791, Wave (C) equals .618 times Wave (A), a common relationship in a 5-3-5 zigzag pattern as shown here.

Thats a pretty tight window. You also notice that the red line may be next resistance at the dual 2007 Lows of 13,769 and 13,816. 

So 13,769 and 13816 2007 price lows aligns pretty well with the 13777 - 13791 Fib relationship window as described above.  We'll see soon enough I guess. Also note the level of overbought on the RSI. 
Still have my basic count on bonds intact. My guiding principle (bias) on this count is that (1) will attempt to advance prices above [1] as it is a subwave of a larger primary wave [3]. Rising interest rates good for who? Stocks?  Mom and pop in debt? Corporate and municipal debt?  Who exactly? Certainly not the Fed who will stand to go bankrupt if rates continue up which if this is a Primary [3] up they certainly will.

The economy and financial markets need credit expansion to keep this Ponzi going. Rising rates only encourage credit contraction and default which is of course deflationary. We have reached the point I believe where rising rates are in no way good for anyone (except those in cash).  Why else is the Fed trying to keep rates down?

Primary count is that the market is working on Minute [iv] of Minor 5.  Best guess for the form of Minute [iv] is a contracting barrier triangle.

Whenever I see complex waves trace such as what traced today, I think of a triangle. One guideline of triangle formation is that one leg is a complex leg.  This leg is usually the (c) wave or if not then the (d) wave.  (a) (b) and (e) tend to be simple zigzag affairs. So what constitutes a complex leg?  One that is hard to count even as a corrective wave.

Of course in a triangle the (c) cannot be lower than the (a) in price. So we have a clear marker.
Wilshire hourly. Not much to add. I will say this though: Again we are at a point with today's Wilshire high that there is enough waves in place to consider the Minor 5 over. However, it doesn't have the "right look" for that to be the case. We'll find out soon enough. We have clear support levels and wave markers in place to help guide our counts.
The NYAD count seems to be signalling a pause perhaps Minute [iv]. It would still look better with yet another down day of weakness to fully form Minute [iv]. Perhaps a hit on the lower channel line again.

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