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Wednesday, May 2, 2012

Elliott Wave Update ~ 2 May 2012

Key support was backtested today and held so far.
CMG's chart is pretty mature.
China is aligning up for its wave C of (2):
NYAD count is still looking good.
6 month yields.  You can better believe that eventually rising mortgage rates (10 year not shown here) will spur lower house prices.  Anyone who says housing has bottomed has not considered what an effect of a 6-8% (or eventually more) mortgage rate will do to crush demand for high priced houses. After all, not many even have 20% down money.  Rising mortgage rates will not play well in a declining social mood. It may have worked in the run-up to the housing bubble peak, but probably not again.
GDOW may have put in its (b) wave low. Again, like the US markets, China, CMG, etc, one more spurt (c) to fulfill the wave count would be ideal.
Technically, its a very dangerous market at the moment. There does not exist neither excess bearishness nor bullishness.   (Yes it takes bulls to make a bull market yes?)

There are glaring weekly and even monthly negative divergences and total volume is dropping as predicted. Running on fumes and potentially near the end of a multi-year and even multi-decade wave count for the NYAD line, stocks are not cheap despite what Greenspan says. Incidentally I agree with Mish's contrarian call 

However with that said, most of the charts above would count "ideal" if they all had one more wave up. In the SPX, Wilshire, and Industrials, it would be wave (v) of [v] of C of (Y) of P[2].  On the GDOW it would be a counter-trend (c) wave of [ii].  Even the one stock chart - CMG - would look good with a final spurt.

Prices are holding support so far and the former breakdown zone of 1388-1391 SPX has now been backtested a few times.  Lets see where we go from here.
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