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Tuesday, September 23, 2014

Elliott Wave Update ~ 23 September 2014

Evidence points to an ending diagonal followed by immediate weakness that took prices swiftly back beneath the starting point of the ending diagonal triangle. 
Speaking of potential ending diagonal triangles, as pointed out by Elliot Wave International in recent short term updates, the DJIA sports a huge ending diagonal count. Robert Prechter hesitates to label it as an ED pattern because its the biggest that he has ever seen. Yet the evidence is compelling at this stage.

The ED pattern comes complete with well-formed (a)-(b)-(c) internal wave counts. Remember, ED's are the result of a wave losing its impulsiveness (i.e.- losing the ability to create clear internal 5 wave count impulse moves for waves one two and three) and is a sign of weakness.

The general rule is a swift price decline back to where the ED started and often below.  So buying bounces at this stage may be a bad bet.
SPX hourly:
Wilshire 2 hour. This also has Ending Diagonal implications.  You can see wave [v] has overlap between (i) and (iv) and I gave it a generous impulse count. However it is not a norm.

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