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Monday, August 15, 2011

Elliott Wave Update ~ 15 August 2011

My 1195 - 1205 wave [iv] target price range has been met. The 38.2% Fib has been reached - a common wave four retracement. However today was easily a 90% up day on the NYSE in both volume ratio and advancers. A follow-through upside day? It certainly qualifies.  Yes, many people take these 90% up days with a grain of salt anymore due to the way these HFT robots all churn in the same direction but I still give them the respect they are due.

Therefore the strong internals might damage the bearish case of Minute [iv] of Minor 1 if we get even more robust upside.  The market will need to reverse sooner rather than later or it just won't "look right" as a wave [iv]. The way the futures move overnight we'll see how it plays out.

Of course Minute [iv] can go all the way to 1250 SPX as long as it does not breach 1258 - the wave [i] low. But would that make sense? No if that happened, I'd have a hard time marking it a wave [iv].

I have an upper price range of 1215 - 1220ish SPX before it starts looking "stupid" as a wave [iv].  This is next resistance and a squeeze of 1200 shorts would do the trick.
THE ALTERNATE P[2] TRUNCATED COUNT:
When the market was falling severely in the recent downturn, many wavers on this board and including myself entertained a P[2] truncated count. It made sense as the resulting fall-off and price weakness was severe.

If it is a P[2] truncated count, then we simply have made a Minor 1 wave low at 1100 SPX.  This of course means that the market is in Minor 2 up and is free to retrace as much as it wants as long as its not 100%.

This count implies the market is likely working on only Minute [a] of Minor 2 up. Today's robust internals and apparent follow-through day forces us to strongly consider this count. We won't make it the primary count just yet though. We'll give Minute [iv] a little more leeway - but not much more....


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