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Tuesday, October 18, 2011

Elliott Wave Update ~ 18 October 2011 [Update 5:28PM]

[Update 5:28PM: Apple took a hit in A/H's. A few days back I suggested it was in its final Intermediate wave (5).  The only requirement of that chart is that a new price high (5) occur. That it did.

Is it too short in time to be all of (5)?  Even with the A/H downdraft it is above $370 support and open chart gap. Only time will tell!
Apple Monthly.  What a run.  But all good things must come to an end.

The primary count is that wave [b] of Minor 2 up is tracing a running-type triangle. The purpose of this running -type triangle is to chew through 1220-1230 resistance. Remember I said it probably wouldn't be easy to take out 1230 SPX on first or second try.   The [a] wave's job was to get prices to the resistance zone - it did. The [b] wave's job is to absorb selling brought on about resistance and enable an eventual [c] wave breakout. In this case a running triangle (or expanded flat if it turns out to be) also takes further stabs at resistance. Just like picking through ice.

A running triangle can occur when the up forces of the previous [a] wave were extremely aggressive. That was the case with the [a] wave.

Its up to the market to determine what levels are important support for the [b] wave. For today, it seems 1190 was important.  We'll see if that holds on any subsequent price swings. If its tracing a running triangle and today's high was wave (b) of [b], then 1190 is indeed a key level that shouldn't be breached.
The bigger picture shows an approximate running barrier triangle with 1190 as the lower barrier.  This would also look like a big bull flag eventually I suppose.  The upper target for Minor 2 is the 78.6% Fib marker or approx 1305 SPX.  The Zweig Breadth Thrust event that triggered the other day forces us to strongly consider 1300+ will again be reached. 
There are of course alternate squiggle counts. The main point being we count this uprising as Minor 2 and wave two's typically are 5-3-5 zigzags and that often 62% retrace is reached. In this case the 200 DMA is also a strong target.  A running triangle with a price "floor" of 1190 makes it very tough for shorts to exit and feeds the into the bulls hands.

There are a myriad of short term patterns that could play out including an expanded flat in which 1190 is breached to the downside and the lower target of [b] is approximately 1170's.  So keep on your toes.

A secondary consideration is that wave [a] is still finishing up.  That implies that wave [b] hasn't even started yet.  But my gut at the moment tells me perhaps a running triangle is playing out. This would be the perfect situation for one to occur.  If it is, look for a "complex" leg to trace out, usually wave (c).
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