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Thursday, May 23, 2013

Elliott Wave Update ~ 23 May 2013

Probably the most satisfying way to label the rise since 2009 is a double zigzag.  Each zigzag has its own channeling characteristics and each zigzag "kicked off" with a rare Zweig Breadth Thrust event. The entire rise - albeit a bitch to count - still is very satisfying as a large corrective event.  And a corrective event of this size means bottom line its all bullshit and ripe to come unglued in historic fashion.

And just look how total volume has dropped steadily since the market low in 2009. This is bearish.

Still, we are awaiting a solid break of the red ellipse to confirm a trend change.
The short term squiggle count suggests it may be nearing. However, the retrace for wave (ii) has only been 38% so far. Normal wave (ii)'s trace higher of course. So the EW form would look better for the bear case if there was some more retrace higher prior to any new low. However, the alt count works too. In either case, the rebound off of today's low has the form of a corrective wave and the selloff has the form of an impulsive wave. That is a good indicator so far of a trend change.
As an example of long-term extreme market sentiment I present a fresh study via Sentiment Trader.  The Rydex bull/bear ratio is showing an extreme bet on further upside.
UPDATE: I do like to use the Wilshire5000 for superior form and often channeling too. It however has not yet reached its upper channel line. So if the market still has some perkiness left in it, I'll be watching this chart closely for either a move toward the upper channel or a break of the ellipse containing prices.

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