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Wednesday, March 7, 2012

Elliott Wave Update ~ 7 March 2012 [Update 4:45PM]

Update 4:45PM: the hourly Wilshire shows the big picture in a nutshell in log scale. What happens if this trendline breaks?  Place your bets.
ORIGINAL POST
Wilshire squiggle count has some things going for it on the bearish side. Each little impulse has a nice 5 wave substructure.

Backtesting the base channel and forming a downchannel? Well, we'll know tomorrow, no use pondering until we get further wave evidence.
Apple fulfilled what appears to be an a-b-c rally after a potential 5 wave move down:
The NDX has a clear 5 wave pattern down and so far only 3 waves back up.  Prices failed to reach a higher high late in the afternoon versus the S&P500. That is a potential bearish intra-day non-confirmation.
Perhaps today was a wave i down. This chart aligns the base channel to the price peak versus what is shown on the 5 minute chart above.  So we have horizontal resistance and this adjusted version of the base channel that could be the target.

If prices can break up into the proposed base channel and regain horizontal support above 14,300ish, that implies another higher high may in the making. Again, lets see what happens tomorrow. We have a decent setup for some more selling pressure - even if we get a small up open tomorrow -  so we'll lean toward another day of high selling pressure coming around the corner.
CONCLUSION:
The market experienced a 96% down volume ratio day yesterday and was fairly oversold and due for a bounce. The bounce came and shook out oversold. For instance Sentiment Trader's proprietary STEM (short term extreme chart) went from oversold yesterday afternoon to nearly overbought today despite not making up all the ground lost from yesteday.

Today finished about 80% up on the NYSE and 75% on the NASDAQ.

The bears need a follow-through day of selling - preferably another 90% down day - within the next day or so to signal a solid trend change. The waves are "setup" to do just that.

Now lets see if it happens.

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