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Thursday, May 19, 2011

Elliott Wave Update ~ 19 May 2011 [Update 5:43PM]

[Update 5:43PM: EW theory is a theory about social mood. In wave theory, a wave five top, whether it be  cycle or even Supercycle-sized, should show positive sentiment at an extreme.  This is a basic tenet of EW theory.


Here are three long-range sentiment charts I picked from Sentiment Trader and added some notes and trendlines. Where do they top in sentiment? All 3 clearly show 2000 as the orthodox "top" in sentiment, thus it is the proposed cycle wave V of Supercycle wave (V) of Grand Supercycle wave [III].  In addition, the DOW/GOLD ratio topped in 2000 by far.

If 2007 was the "top", sentiment in these polls should have reflected it. It did not.

If the current up trend is a cycle wave V as some propose, then these charts should be expected to make a move toward a new high extreme. But they are clearly not so far. If these charts couldn't make it back to the 2000 high in 2007, what makes you think they will now??

So we are no doubt in a supercycle bear market in social mood and it is expected to get much, much worse. Do you think piling on another 5-10 Trillion in debt will result in a mood shift to extreme positive making these charts go back to their all time highs? I don't. Do you even think we can get away with piling on more debt? I don't.

The sentiment evidence clearly shows this is a bear market rally either P[2] or a cycle sized X wave.

PLUGGING EWI
As many like to knock Prechter, he is properly interpreting social mood and thus the long range counts make sense. I highly recommend his newsletters. Click on my EWI links to the left and become a free club member and get free material. Then if you decide to add a service later on, I would get a small commission based on the service.

Prechter's latest Theorist newsletter is very exciting in how he shows the current time cycles and that there is only one cycle holding up mood at the moment and at most, it has another 6-12 months "staying power" and he expects the now downturning larger cycles will exert force and cause this to turn early.

[Update 5:17PM: This is a variation on a possible complex wave [iv] pattern that Doc showed in comments.
[Update 5:08PM: Here is a long-term count chart.  It has my top 2 preferred counts.  No matter how you slice things, there is a major top coming. Either P[2] or a cycle-sized X wave.  And in either case the best and most common structure for a wave two or an X wave is an A-B-C sharp zigzag such as we have now. So what we are trying to do is find the end of the (C) or [C] wave.
[Update 4:48PM: Kicking around a cycle-sized wave II flat with a falling wedge ED pattern. This implies the dollar is not yet done plunging. EWI is sure the dollar has bottomed and labeled the cycle-sized corrective as a flat-zigzag-zigzag combination.  I am not so sure as they are and hence this chart below. Only time will tell.
ORIGINAL POST
We'll stick with the expanding ED count for Minor 5 for now.  I'm not real thrilled about the count, but at the very least it appears an (a)-(b)-(c) up from 1318 SPX structure is in play.

Here is the proposed (a)(b)(c) up structure.  Will the proposed (c) wave up be enough to carry to new highs?
Even the DJIA has the same expanding shape.
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