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Friday, April 20, 2012

Elliott Wave Update ~ 20 April 2012 [Update 6PM]

Update 6PM: French CAC.  Could be nearing an initial 5 waves down and due a wave [ii] bounce.  If the wave [ii] bounce materializes, no doubt that the American markets would probably rally also.  This is on reason to respect the Minute [iv] potential discussed in tonight's post.

Obviously I think this is still a highly dangerous market for huge downside potential (even if it manages 1 more rally leg to challenge 1410+ SPX prices)

But we are still waiting to see what the market is going to do.  Since this is a wave blog, lets review the near term wave evidence.

1. We have a 3 wave move into the market peak - supports the notion this is merely Minute [iv] pullback.

2. We have what could be a 5 wave move from the market peak to 1357 SPX.  This formation has what could be an extended fifth wave.  The fact that the fifth wave is extended supports the notion more of a Minute [iv] pullback rather than a first wave down.

3. Others have it labeled as a double zigzag down. This would support the notion of a Minute [iv] pullback.

4. There are three waves up since the 1357 low. This is evidence of a counter-trend move to the 5 waves down. That supports the notion of a wave (ii) bounce although it could merely be an (x) wave within a complex Minute [iv] corrective.

5.  There are 3 waves down since the 1392.76 high of the 17th of April.  This supports a continuing corrective pattern.

Most of the near term wave evidence, one must conclude that there is a decent chance the market is tracing out a complex Minute [iv] pattern. Likely it would be a (w)-(x)-(y) pattern.

There is breakdown resistance at 1388-1391 SPX. The market needs to conquer this to have a chance at higher prices. So far it has been stubbornly hanging around and has refused to continue impulsing down.  That is the price action we are faced with.

At any rate there is consolidation going on. Since the move down from 1422 was sharp,  the consolidation could easily be a bearish consolidation. Hence this is why the market in my opinion is more dangerous and risky to be long.

So we are again presented with two "best" counts:

The bull count: Or see this chart for a variation on the pattern
The bear count. Even the bear count supports the notion wave (ii) is not yet over challenging breakdown resistance because there has not been a 5 wave move down from the 1392 peak just yet.

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