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Friday, December 13, 2013

Elliott Wave Update ~ 13 December 2013

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I talked recently about what lower price level has to occur before we could conclusively determine that cycle wave b was over.  Lets look at that from a slightly different perspective. We'll look at it in terms of breadth, or more precisely, a reversal of breadth.

This chart shown 2 nights ago displays how breadth on the NYSE is lower then it was at the May 2013 high. This is a confirmation that momentum has slowed significantly since the 2009 low.  We would expect that to occur near a historic top.

Looking at the NYAD weekly, the tight channel would have to break for us to say cycle wave b is over. Of course I am predicting that is what will happen over the course of the next few weeks/month based on the wave counts. We have a ways to go though.

Yes there was a weaker Zweig Breadth Thrust that triggered on 18 October. And it has sustained the market since.  A close beneath the ZBT firing range (1646 SPX - see horizontal line) pivot would also likely confirm cycle wave b over in my estimation.  A reversal and close beneath the ZBT in other words.
Wilshire weekly shows a close beneath the upper cycle channel line. (SPX is sitting on directly on it)
BPSPX. This too is weaker breadth at the high as we would expect. Its neat that I could put the same double zigzag count to the BPSPX which is of course the primary count for cycle wave b.  Kind of helps confirm things in terms of how sentiment wanes and waxes.
Short term, the head and shoulders pattern still looks valid and all the "sideways" action of the last day or so looks like a small corrective consolidation of the market.before moving lower once again.  The head and shoulder target is shown. Prices have been hovering near major horizontal support. If support breaks, I fully expect the head and shoulders downside target to be met and probably overshoot to the downside.   Monday's open may determine the outcome of that bull/bear support battle.

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