So we'll assume today may have been wave ii of (c) and the market is working on wave iii up of (c) of [y] of 2.
TOP BEARISH COUNT:
Wednesday, December 21, 2011
Elliott Wave Update ~ 21 December 2011
The plunging VIX is quite remarkable. My gut instinct is that it is pointing the way toward higher prices as per the primary count of wave (c) of [y] of Minor 2.
So we'll assume today may have been wave ii of (c) and the market is working on wave iii up of (c) of [y] of 2.
INDU count:
SPX daily:
So we'll assume today may have been wave ii of (c) and the market is working on wave iii up of (c) of [y] of 2.
Tuesday, December 20, 2011
Elliott Wave Update ~ 20 December 2011 [Update 9PM]
[Update 9PM: Ok time to hawk Elliott Wave International products. Robert Prechter's work in Elliott Wave theory is unmatched by anyone. Sure we count waves, but Prechter is the entire package. His work on time cycles in particular is well worth the subscription to his Elliott Wave Theorist.
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(If you click my EWI links to the left and become a FREE EWI club member and decide you eventually want to buy some of their products, I get a small commission for each product you buy if you had signed as a Club Member first via my links)
Anyways, Prechter had theorized that a 7-7.5 year time cycle was in play since March 2009. This cycle holds prices up through the first half, then aligns bearishly in the second half and the end should point toward a major bear market low. Combined with two other long cycles in simultaneous play to include a 34 year cycle, all time cycles will be aligned bearishly lower as soon as this 7.5 year cycle loses its upward force. He theorized prices for whats known as primary wave [2] would top early in the 7.5 cycle. So far that is the case.
Below is my chart which visualizes nicely the 7-7.5 year cycle and its affect on prices. We had 5 waves down from the May 2011 top, so we must assume this is a wave two retrace. I have counted this chart from a "double three" cycle corrective rather than the accustomed P[1], P[2], P[3], P[4] and P[5] of cycle wave c.
In the end, the pattern won't matter much. If his cycle work is correct, and if a very low uber-deflationary price collapse is coming, well, we can argue about the waves when the DJIA is sitting at 1000 or below. I agree with the price target - DOW 1000 (1970's support) - and his cycle work seems to be playing out as predicted. Say what you will about Prechter, but his cycle work is second to no one and is worth the subscription to his EW Theorist which has been in publication for over 30 years.
Thats about all I'll divulge on his time cycle work as I can not really do it credit as he does and he deserves the subscription for you to get the whole picture directly from his research. I can merely tell you thats its the best and its fascinating.
1269 is where wave (c) = .618 x (a) within wave [y]. 1310 is where wave (c) = (a).
1293 is where wave [y] = .618 of wave [w]. 1293 is a preferred minimum price so that wave [y] finishes higher than wave [w] in price which is a strong guideline.
So 1293 - 1310 is the preferred target range for wave (c) of [y] of Minor 2.
TIME TARGET FOR MINOR 2:
First week of January 2012 represents where Minor 2 = a Fibonacci 3 months. This is in relation to a Fib 5 month decline for Minor 1 down resulting in a very nice 5/3 time ratio.
January 9th is the 34 month Fibonacci time ratio since the March 2009 low. Though we count Primary wave [2] as topping out in early May 2011 at SPX 1370, having a deep retrace Minor 2 above 1300 SPX on the 34 month anniversary of the 2009 bottom would be appropriate.
So ideal time target is January 3 - January 10th.
Prechter's 7.2-7.5 year "UP" cycle started in March 2009 is heading toward its mid-point. So from a cycle standpoint, there is not much "push" left to keep prices sustained. Once the 7.5 year cycle "loses force" and rolls over and aligns with the other time cycles the 20? - (I forget off the top of my head) - and the 34 year are already pointing down, then the full force of a social mood down swing will finally be upon us.
DJIA:
TOP BEARISH COUNT CONSIDERATION:
The top bearish count has the market completing a 3 wave counter move already. The SPX has already hit the 61.8% Fib retracement from the recent decline.
I don't think this is a very great 5 wave count down from 1267 - 1202, but it does follow the rules at least so it has to be included for consideration. If the bottom falls out on prices we can say this may be correct. But I am not holding my breath on that. An upside day such as this usually has a follow through day lurking just down the road even if tomorrow is a consolidation day or so.
Additionally, there is a big dollar futures up gap from 78.64 to 79.21 that should get filled. So the dollar likely has some retrace left in it.
A look at the daily:
<--------
(If you click my EWI links to the left and become a FREE EWI club member and decide you eventually want to buy some of their products, I get a small commission for each product you buy if you had signed as a Club Member first via my links)
Anyways, Prechter had theorized that a 7-7.5 year time cycle was in play since March 2009. This cycle holds prices up through the first half, then aligns bearishly in the second half and the end should point toward a major bear market low. Combined with two other long cycles in simultaneous play to include a 34 year cycle, all time cycles will be aligned bearishly lower as soon as this 7.5 year cycle loses its upward force. He theorized prices for whats known as primary wave [2] would top early in the 7.5 cycle. So far that is the case.
Below is my chart which visualizes nicely the 7-7.5 year cycle and its affect on prices. We had 5 waves down from the May 2011 top, so we must assume this is a wave two retrace. I have counted this chart from a "double three" cycle corrective rather than the accustomed P[1], P[2], P[3], P[4] and P[5] of cycle wave c.
In the end, the pattern won't matter much. If his cycle work is correct, and if a very low uber-deflationary price collapse is coming, well, we can argue about the waves when the DJIA is sitting at 1000 or below. I agree with the price target - DOW 1000 (1970's support) - and his cycle work seems to be playing out as predicted. Say what you will about Prechter, but his cycle work is second to no one and is worth the subscription to his EW Theorist which has been in publication for over 30 years.
Thats about all I'll divulge on his time cycle work as I can not really do it credit as he does and he deserves the subscription for you to get the whole picture directly from his research. I can merely tell you thats its the best and its fascinating.
ORIGINAL POST
Primary count is that today kicked off wave (c) of [y] of double zigzag Minor 2. Target range for wave (c) is 1269 - 1310 SPX.1269 is where wave (c) = .618 x (a) within wave [y]. 1310 is where wave (c) = (a).
1293 is where wave [y] = .618 of wave [w]. 1293 is a preferred minimum price so that wave [y] finishes higher than wave [w] in price which is a strong guideline.
So 1293 - 1310 is the preferred target range for wave (c) of [y] of Minor 2.
TIME TARGET FOR MINOR 2:
First week of January 2012 represents where Minor 2 = a Fibonacci 3 months. This is in relation to a Fib 5 month decline for Minor 1 down resulting in a very nice 5/3 time ratio.
January 9th is the 34 month Fibonacci time ratio since the March 2009 low. Though we count Primary wave [2] as topping out in early May 2011 at SPX 1370, having a deep retrace Minor 2 above 1300 SPX on the 34 month anniversary of the 2009 bottom would be appropriate.
So ideal time target is January 3 - January 10th.
Prechter's 7.2-7.5 year "UP" cycle started in March 2009 is heading toward its mid-point. So from a cycle standpoint, there is not much "push" left to keep prices sustained. Once the 7.5 year cycle "loses force" and rolls over and aligns with the other time cycles the 20? - (I forget off the top of my head) - and the 34 year are already pointing down, then the full force of a social mood down swing will finally be upon us.
The top bearish count has the market completing a 3 wave counter move already. The SPX has already hit the 61.8% Fib retracement from the recent decline.
I don't think this is a very great 5 wave count down from 1267 - 1202, but it does follow the rules at least so it has to be included for consideration. If the bottom falls out on prices we can say this may be correct. But I am not holding my breath on that. An upside day such as this usually has a follow through day lurking just down the road even if tomorrow is a consolidation day or so.
Overall today was a 97% up volume ratio day on the NYSE and the NASDAQ registered a 91% up volume day. The diverging VIX that I have been alluding to over the last few days was predicting today's rally. And yesterday's positive divergence in Breadth Thrust panned out.
Additionally, there is a big dollar futures up gap from 78.64 to 79.21 that should get filled. So the dollar likely has some retrace left in it.
A look at the daily:
Monday, December 19, 2011
Elliott Wave Update ~ 19 December 2011 [Update 8:12PM]
[Update 8:12PM: A small positive divergence on the Breadth Thrust indicator. Doesn't always pan out, but it is something that often precedes a rally as you can see where I have marked various divergences over the past year or so.
[Update 7:30PM: DJIA count from the perspective that a (c) wave is coming soon.
ORIGINAL POST
Another faded open this time much more quickly.
Another faded open this time much more quickly.
Will the market bounce at the potential apex line?
I tweaked the channel line a bit from this morning. Rejected again at the line and its losing support. If prices travel again to the lower channel line, its another 20 point drop.
Not a perfect impulse down, but its not too bad either. Channeling nicely.
Sunday, December 18, 2011
Friday, December 16, 2011
Elliott Wave Update ~ 16 December 2011
Looking at the 1 minute SPX chart below you can see that there is buying interest at these levels. The last 2 days of morning pops were pretty healthy via market internals. But selling caused each rise to fade. However taken as a whole, the last 2 days were somewhat constructive for the bulls: 1) They have temporarily stopped the bleeding prices (and perhaps even started wrestling control somewhat) 2) They have managed to finish above or in support range.
The VIX is also somewhat curious. Its "settling" down finally after many weeks/months of high agitation. From a bear's point of view, one could say that shows "complacency" and people should take a contrarian view and play short. However that complacency and lack of fear usually translates into higher prices first. So the lower VIX readings may be signalling higher prices first before decline. In other words, Minor 2 would be finishing its job. From a wave count perspective that would imply wave (c) of [y] of double zigzag Minor 2 to come.
Thats my gut thinking at the moment anyways. Subject to change depending on Monday/Tuesday price action.
Wave action there is overlap everywhere on every index at the squiggle level. EW theory teaches us that we should be wary and that this may be corrective waves at the moment. And thus a (b) wave of [y]. Again, Monday will be telling and should add much to this puzzle.
SPX 5 MINUTE CHART:
Prices have finished at the down trendline. Again this is probably key to prices for Monday. If bulls can "pop" it at the open again on Monday, they will likely recapture and "break" the down trend line. That is the first step required toward advancing prices higher of course and can be construed as a bullish development.
If prices gap lower Monday under 1209, it can possibly be counted as a 5 wave move from the top. So Monday's opening holds some meaning to things in my opinion. Price action is everything at this stage.
Being that futures will probably largely determine the opening Monday here is the e-mini chart at the moment. It challenged the downtrend line today but got slapped inside. Its going to have to work sideways Sunday night to get back to the trendline for perhaps another challenge.
SPX Daily: Added a VIX indicator to show how the VIX is making a lower low, yet prices are well off their highs which is a big divergence. In the past, this can mean higher prices first for the market before complete complacency sets in. We shall see.
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