Custom Search

Wednesday, August 28, 2013

Elliott Wave Update ~ 28 August 2013

One potent bearish setup exists at this moment. A possible formation of a "base" channel and a steep, narrow "acceleration" channel has already formed.  The purpose of the base channel is to establish a new trend change.

The purpose of the "acceleration channel" is to smash through the base channel and get prices to accelerate, and in this case, the acceleration would be to the extreme downside.

I have shown these setups before. And as before, these setups either "pan out" or they are false setups and do not. Such is the simplicity of EW counting logic. So it will be interesting to see prices tomorrow.

Today's weak rally alleviated intraday oversold indicators such as TRIN readings. After closing over 2 yesterday in an oversold condition, today's TRIN closed below 1 (.97).
Another count I am looking at is an expanded wave [ii] flat count for Minute [ii]. This would require a lower low to complete wave (b) of [ii]. Then a very sharp rally in 5 waves possibly to the open gap area at 1685. Another variation on this is that today's price low was (b) and tomorrow we'll continue to the upside in fulfilling wave (c) of [ii].
Once again the CPCE closed quite low despite prices behaving poorly over the past many weeks. Very complacent and no sign of panic.  This chart alone wants me to stay extremely bearish.

Also EWI reported Trade-Futures Daily Sentiment Index on Gold and Silver was 87% and 92% respectively. That is again quickly one-sided.

So we have a sharp rebound in Gold/Silver, complacency in the put/call ratio. Both could support more heavy stock market selling if gold and silver happen to take another momentous dump.
Last night I showed the main longer term channel setups. Prices have not quite touched the first major (green) channel (Intermediate).  One potential is that if prices smash through the base channel shown in the Wilshire 5000 chart above, then prices will also be "smashing through" this Intermediate sized channel at about the same time. That might cause the SPX to run down to the next higher degree channel which is significantly lower at around 1530ish.

So you see, channels and stuff can matter. The super bearish "setup" is there. Now we await. If the GREEN channel holds, then it too is a logical bounce point.

blog comments powered by Disqus