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Tuesday, September 15, 2015

Elliott Wave Update ~ 15 September 2015

The market continues to triangulate. The question is thus; is the consolidation pattern bullish or bearish? I lean bullish because the triangle appears to be an ascending triangle versus descending. An ascending triangle slowly eats away at sellers and the market gets exhausted of selling and eventually pops higher above the triangle. A descending triangle does the opposite: Prices tend to have lower highs (skewed to the downside) and buying is exhausted and the market breaks lower. So far the bullish scenario better fits the overall pattern. As long as key pivot points hold, we must respect the pattern.

That short term bullish scenario fits the wave pattern of a Minor wave 2.  There are 2 prominent open gap down targets much higher above in the market. The top gap is an extreme. Should that gap be reached, it would be an excellent place to try a nice short sell.
On the SPX, the key support level has been raised to 1937 SPX. Should that price point break decisively, well then we have to consider that this entire consolidation period was bearish and the wave count may be Minute [v] of Minor 1 down which suggests a lower low under 1867 SPX..
Yields of course are on the rise prompting wild speculation on if the Fed will raise short term rates or not this week. I have been making a case that the Fed follows the market (as Alan Greenspan has admitted). I base The Fed's rate decision mostly on the 3 month yield rate at the time of the decision.  If the 3 month yield is below .25, no rate change would likely  occur. Today it still stands at .07%. So my guess is no, the Fed will not raise this week.
However, the 6 month yield wave pattern has broken out along with other short term yields such as the 2 year reaching the highest since 2011 (via Zero Hedge). I use the 6 month for wave counts since the 3 month pattern is just too noisy for a decent count.

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