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Monday, October 10, 2011

Elliott Wave Update ~ 10 October 2011

Quite a surge today. A 90% up day on the NYSE although the NASDAQ did not register a 90% day amazing as that is. The amount of retrace of over 120 SPX points since last Tuesday's lows confirms this is likely Minor wave 2 up with a target north of 1230SPX. Minor wave 2 is supposed to be a sharp 5-3-5 zigzag and sharp is an apt description so far as the market has already retraced over 40% from the early October low.

The squiggle count gets bumped up a notch as a result of the amount of retrace points back up so far. [a] of 2 wave has been quick.

The violent move to the upside again seems to confirm the ending diagonal triangle Minute [v] of Minor 1. The market has cleared the diagonal triangle wedgelines and has cleared a down-sloping line for Minor 1.

Yet amazingly, the market has not even yet quite broken the "lower highs" in the SPX.
Daily shows a market closing above its 50 DMA. Wave [a] target range between the 38% Fib and the top of [iv].
Top squiggle count.  1200 challenge perhaps for wave [a]. There are no doubt other counts and degree combinations.  We'll go with this until warranted.
As you know, wave two's job in this case is to completely break the previous extreme bearishness.  Today was just such an example.  Wave 2's require a certain combination of time and price.  

So far, Minor wave 2 is all about price and very little time.  We'll have to peek in on sentiment measures in the next few days and see how they have reacted.
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