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Tuesday, July 2, 2013

Elliott Wave Update ~ 2 July 2013

We'll stick with the call of a Leading Expanding Diagonal as outlined in yesterday's update.  This usually means that Minute [ii] should retrace rather deeply, perhaps to the 78.6% Fibonacci which is approximately  at 1661 SPX.  The guideline of a deep 78.6 Fib retrace is in Frost and Prechters' Elliott Wave Principle: Key to Market Behavior.

So if I am going to have an Expanding Diagonal Triangle as the primary count, we'll have to allow for a deep retrace rebound.  Doesn't mean it has to happen that way, but I have to make my count fit the rules and guidelines as most as possible (which is why I went with this count anyways).

But first, the market would likely need more (tight) consolidation in order to break resistance at the open gap down and the 50 DMA at the 1626 barrier. A triangle would be a good form to take as a consolidation wave.
So far the micro-squiggles support the count:
It appears our 10 year yield count is missing another wave up within wave (3). Which means yields may be consolidating in a wave 4 for now.  Bonds should often selloff with equities in Cycle wave c but of course not always.
USD Long term chart is still very constructive. Once a breakout occurs, I would expect a rapid advance to the 100 level. This chart gives Ben nightmares I am sure.

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