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Thursday, November 3, 2011

Elliott Wave Update ~ 3 November 2011 [Update 9:52PM]

[Update 9:52PM: I love this NFLX chart. Starting to bounce up into the huge gap down.]
[Update 8:55PM: Some more charts. First IF, and thats a big IF, we are still in Minor 2 up, then the markets are likely in wave [b] of 2.  Wave [b] of 2 can take the form of a zigzag, flat or triangle or some other complex formation.  For now let's stick with the simple.  We don't know the pathing that [b] will take, but the guideline is that it usually retraces 38% or close to it.   It has come close so its possible the price low for [b] is in.

The Zweig Breadth Thrust event that occurred on the 14th is somewhat of a price "marker".  I said at the time that I respected the ZBT and probably that event is influencing the consideration of a longer-timed Minor 2.  IF there is a wave [c] coming in Minor 2, I wouldn't expect [b] to get much lower in price under the ZBT day. On the SPX that is about 1205-1224.  So a dip below 1200 would be acceptable, but not too-too low.

For instance, a deeper move to say, 1140 SPX for [b] might nullify the ZBT day which wouldn't make sense if its just a [b] wave.  Not only that but it would look and act like a third wave down which if it went to 1140 it probably would be.
Here is a closer look at that CAC chart:
I have Japan in wave (E) that requires some up prices over the next few weeks.
Of course getting even simpler, we are trading between the 50 and 200 DMA.  The 50 DMA may be due a touch point soon. But it is moving upwards toward 1200 SPX so timing the touch at what price level is tricky for now. 
NYAD double divergence coming?  Weekly and daily.
Heck could have just kept the primary count and all would be well in bear-blog land.
My gut tells me the market is probably not in Minor 3 down.  There are several reasons mainly:

1. Time. 5 months of decline with less than a month of retrace is not the norm.

2. Europe, such as the French CAC, could use another 5 waves up to complete a zigzag retracement.

3. Market extremes.  This is not an easy market and just like P[2] has pushed things to the limit, and then wave [ii] of 1 down pushed it to the limit and now Minor 2 would not surprise me to also take things to the extreme.

4. Certain sentiment measures could still need some strengthening perhaps. And that takes more price (and time)

5. The 7-7.5 year cycle theorized by Prechter (begun in March 2009) - of which approximately the first half of the cycle is pushing stocks up -  apparently has some push left in it.  The halfway point in time for this cycle is in early to mid 2012 where one can surmise that there will be no up cycles left in play to push up the market (they will all be aligned downward). That does not imply stocks must make a new outright high above 1370 SPX, it just implies it may have some bubble action left in it.

6. Seasonality from now through the end of the year.

The alternate is still on the table of course, but it would have to work through support at the 1215 level.   Until that happens, its easier to imagine Minor 2 is still in the works. Which means the SPX is in wave [b] of 2.

However, we are looking for a decline back down to complete some kind of wave [b] pattern.
Yes I am letting the French influence my wave counting.
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