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Wednesday, September 14, 2011

Elliott Wave Update ~ 14 September 2011 [Update 9:31PM]

[Update 9:31PM: Its going to take a move above 1230 SPX for the top alternate count to make any sense so its still just an alternate count. And there still is a bit of price margin between today's close and 1230.

Unless 1230 is taken out then it makes better sense the market is in wave [iv] - despite the NDX chart . And the only way the SPX makes sense as a Minor wave 2 up is if the 1356 was a truncated high. If there is an even bigger squeeze and a backtest of the broken neckline and/or 200 DMA, well there ya go.

[Update 8:42PM: This is a very tough market.  On one hand you have a pretty good amount of bearishness such as the II survey that came out today after a post-crash that indicates at best we are near the end of wave [iv] heading into a wave [v] and a Minor wave 1 low. For instance the put/call ratios moving averages are at levels seen in the 2008 crash.

On the other hand, you have the Nasdaq100 which is actually a decent count and has approached 61.8% retracement from its high - more of a wave 2 event rather than a wave [iv] and certainly counts as a wave 2 at the moment.
Via Sentiment Trader, you have QQQQ liquidity and TRIN sentiment charts which are approaching bullish extremes.  This is more a wave 2 indication. 
Nasdaq100 TRIN:
So the QQQQ's are certainly trying to keep this market elevated. The banks sure aren't.  If the QQQQ's are heading toward a bullish extreme within this upward correction, the overall market count may be that of Minor 2 up.  Thats the real danger here - not that we are too bearish in our counts, but too bullish by calling this a wave [iv] and expecting a big bounce after our new low under 1101 SPX.  After all, we have entire countries ready to blow up like Greece. No one really knows if a sovereign default will mark a waterfall or will be a temp bottom event (bullish).  The waves are mixed bag at the moment and that may be because we have only seen a small portion of the declines to come.

Perhaps the SPX will try and rally into FED and meet up with the 50 DMA which it has not touched in a while.  The 50 DMA will come lower under the 1230 pivot.

The strong price squeeze today blew up the count of (i)-(ii), i-ii of Minute [v] down.  Likely the market is still tracing a wave [iv] either a triangle of some other combination or we have a wave (ii) of [v] expanded flat.

Overall the market internals tell a bearish story: The advancing versus declining stocks on the NYSE finished at a ho-hum 2.86 and the up volume was 8.99.  Looking on the 60 minute chart this is lesser and lesser than the previous buying frenzies as of late.  Its consistent with a short squeeze in my opinion.

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