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Friday, February 4, 2011

Elliott Wave Update ~ 4 February [Update 5:15PM]

[Update 5:15PM] Say what you want about my EW counts on equities, but my bond counts and dollar counts have been pretty darn steady for a while now.

The 30 year bond yield has appeared to have broken upwards out of a tight ascending triangle.  Bond bullishness is very low at the moment so after the wave 5 of (1) top, we'll have a wave (2) retrace in yields.

The dollar has an impulse pattern 5 waves up - so we are at least seeing a short term trend change.

Of course both the dollar and bonds turning would work perfectly well with my SPX ending diagonal count below. In other words, it will be bad news for equities and the drop may be very fast if the ED pattern is correct.
5 small up on the buck. A good sign.
The waves traced over the last 2 days don't make much sense unless you zoom back a little and take into account a possible Minute [v] ending diagonal triangle wedge.

Is it correct? Again, all I can do is present the patterns - its up to Mr. Market to see it through.  However, this structure has an uncanny internal look of a-b-c overlapping patterns which an ending diagonal should have per EW Principle. The reason it sports a-b-c patterns at this stage, so the theory goes, is because the market is losing its overall ability to impulse upwards due to exhaustion.   Hence it can only advance in "threes" versus fives thus forming an ending pattern, the diagonal triangle.
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