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Tuesday, November 22, 2011

Elliott Wave Update ~ 22 November 2011 [Update 5:09PM]

[Update 5:09PM: TLT may be in wave 5.  We have to assume that because the move from 3 to 4 down counts best as a 3 wave move. So we might speculate that a Minor 3 down in equities - at least part of it - for now, will result in further flight to bonds. U.S. bonds turn in the spotlight is not yet ripe I suppose.  Not until the final wave is in.
Not much to add today as far as wave counts.  Best guess squiggles.

Key point is that if this is Minute [i] of Minor 3 down, then we are likely drawing close to a third of a third wave selloff. I m still looking for a possible small bump up prior to that occurring. Perhaps tomorrow/Friday we get a holiday light volume bump, but thats just speculation based on looking for a small up wave ii of (iii) of [i] of 3.
Prices are slipping below support.
For those looking for an end-of-year surprise rally, the best wave pattern would be a Minor 2 double zigzag.  But prices need to hold near here and turn quickly and regain the initiative.
However sentiment and technicals do not really point to this scenario playing out.  For instance taking a look at one of my favorite Intermediate term sentiment charts via Sentiment Trader, sentiment was in fact much nearer a bullish extreme recently than bearish.

So downside prices are wide open and ripe for a Minor 3 down.
This Prophet chart shows major resistance line above. A retest of that resistance would fulfill our smaller subwave ii.

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