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Tuesday, September 18, 2012

Elliott Wave Update ~ 18 September 2012

We have 2 counts so far we are tracking. However I added a variation to the second count of double zigzag.  Count 1 is the wedge. 2A and 2B shows the squiggle variations of the double zigzag.

1. Wedge count. This implies imminent bearish reversal soon and results in a waterfall price decline which resolves the bearish rising wedge in a nasty collapse.
2A. DOUBLE ZIGZAG SQUIGGLE VARIATION #1: If the double zigzag count is correct, then we need to pinpoint exactly where the market is within wave (C) of  primary [Y].  The DJIA below is a best guess. This chart supposes the DOW will make new all-time highs or come close.
Yet we also have another valid way to label the final wave (C) of primary [Y] of a double zigzag count. This supposes that there will be a bearish selloff here below the wedge yet prices rebound in a Minor wave 5.

This is what EWI's  count has morphed into more or less except I show radically differing pathing and timing for the "last wave(s)". I also used the Wilshire 5000 for superior form and channeling. There is a lot working for this count and it may be the best interpretation so far of a very tough wave. This count implies that the upper wedgeline will break under (greatly reducing overbought sentiment and such) yet prices will try again to take a stab in a wave 5 sometime in October just prior to election.

The key attribute to this count is the Blue 4 will overlap green [iii]'s price peak.
Sentiment measures still point toward the count of a rising bearish wedge which indicates a bearish reversal is near. Via Sentiment Trader, we now have 35% extreme bullish measures versus 0% extreme bearish.  That suggests an imminent top is near at hand.  "Smart Money" is 29% versus 63% which is quite a spread.

Yes sentiment can go higher or maintain with higher prices or at least we get some serious relief in a selloff in COUNT 2B above.

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