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Tuesday, August 21, 2012

Elliott Wave Update ~ 21 August 2012

A pretty decent reversal today.  This comes after what appears to be all waves in place on the Wilshire5000 and S&P500.  The S&P broke to new 4 year highs fulfilling a rising wedge since the 1010 SPX price pivot low of July 2010, the DJIA and Wilshire5000 did not confirm.  In fact the Wilshire closed well beneath yesterday's closing price.

Note small five subwaves since pink wave (iv):
The VIX took a decent jump today. I suspect that gap will be closed sooner or later. But where will prices be?
The S&P fulfilled the wedge pattern by achieving a new high. If today was its peak, then we must respect the bearish potential of a price collapse following the wedge.
Or the S&P counted as a rare triple zigzag: They both imply the same thing - that the rally is over.
10 year:
Potential Apple count. This count is from the perspective that its wave (1) was the extended wave. And on log scale you can see the comparison via the black lines where wave (3) and (5) would be about equal. Note the OBV negative divergence.
Overthrowing its expanding Ending Diagonal pattern?
Still a wide non-confirmation between the NY Composite and the Industrials. Does it matter? I think so.
NASDAQ100 count
Yesterday's CPC close. Pretty frothy.
CONCLUSION:
Price action was potentially bearish today with the morning poke up high and then closing lower than yesterday's close.  What the bears need is follow-through to the downside to confirm this potentially bearish candle. 

The minimally fulfilled wedge in the S&P and a potential wave 3 down in the Wilshire5000 could portend an intense wave of selling.  

Here is the kicker:  IF this is wave primary [3] down to come in the S&P and Minor wave 3 down in the Wilshire5000 and DJIA, prices could drop extremely fast after upper support breaks. 

WHERE IS THE MARKET BREAK POINT?
Well the lower rising wedge trendline on the S&P500.  This would roughly match a price area betyween the 50 DMA and the 200 DMA between 1365 and 1332 SPX.  If prices break beneath the lower rising trendline - and by extension the 50 and 200 DMA - things could get out of hand to the downside.


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