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Thursday, October 25, 2012

Elliott Wave Update ~ 25 October 2012

Again stocks are unable to sustain a rally.  Big burst out of the gate only to be sold into.

Squiggles are a best guess here based on a possible wave [4] sideways action of the past few days. But for all I know, maybe stocks are instead just consolidating before a nasty plunge.  Certainly we have seen futures since the close get active.
Wilshire hourly chart shows a different take on the recent sideways action.  Could be a wave (iv) of [i]. Which implies we have another lower low coming prior to any bounce. And yes the top alt - Minor 4 - is still not officially eliminated because prices are still elevated. However the wave pattern and - more importantly - price action favors the bears at the moment.
On the SPX perhaps a test of the 200 DMA.
Trading range was defined largely by QE3 day candle. The trading range has now dropped back into Super Mario (Draghi) candle.  A close under 1396 is what the bears are trying to achieve.
DJIA with the Supercycle channel line (blue) and the wedge in green. Log scale shown. Heck it looks deadly bearish to me, but then again I'm probably biased as all heck. So I post and you decide.

BOTTOM LINE:
Da Bears have quietly taken a firmer grip of the markets. Even after today's opening spike you just felt that it was bound to reverse which it promptly did.  Things are not particularly oversold so there is no requirement for a major bounce.
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