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Thursday, August 27, 2015

Elliott Wave Update ~ 27 August 2015

This market has been producing some amazing swings intraday.  The current massive trading range is being dominated by High Frequency Trading machines. The HFT's stepped aside during the opening plunge of Monday but since a floor was found they have been ripping the market in massive point moves almost unlike anything seen before (except 2008).

Its a broken market.

But anecdotally, I find through my personal interactions with every day adult investors that they have not flinched barely at all. Almost universally, this downturn has not much bothered the typical 401K invested person who doesn't much take interest in their accounts. They are not in panic mode like most of the Chinese mom and pops have been of late.  In fact I have mostly heard laughter about having been ripped for an 8% 401K loss in a few days. Its weird. In any regard, no panic.

The market was sideways trending since 2014 in a tight range near the highs. That support broke. Prices plunged as a result and stops got crushed.  But my hunch is that most retail are blissfully still in the market.

My guess is that we are probably in a wave 2 up instead of a wave [iv] of 1 down. Regardless, the market is at the mercy of the HFT's. Underlying liquidity is quite suspect.  

Major Resistance is the key. And yet  prices are still quite a ways from upper resistance despite the massive and historic 2 day rally. Thats just how far the market had dropped.

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