E-minis

Elliott Wave Update ~ 3 October 2012 [Update 5:50PM]

Update 5:50PM: Another look at the 2 year wedge. So far prices were only above the upper wedgeline for a little more than a week or 8 closes above.  That is acceptable in terms of time and price for the usual "overthrow" of the wedge.  Prices have been struggling which also fits the wedge scenario.

I re-drew the up channel on this SPX chart versus the Wilshire 500 channel shown below.

ORIGINAL POST

Yet another attempt to get above the 2+ year rising wedgeline. And another solid hit on the downsloping trendline from the 1474 SPX peak.

The primary count is still a possible leading diagonal but just barely. Obviously this pattern will resolve one way or another shortly.  A breakout to the upside would nullify it.

Local SPX candle chart shows another poke attempt above the wedgeline. The market can feel the wedgeline, it can feel support of QE3 day (1435 - 1440 support) and it is striking the down-sloping trendline from the price peak with regularity.  

Something has to give soon.

Top Alt count is shown on the Wilshire5000 hourly chart.  Prices are still firmly within the up channel.

GDOW Daily:

E-minis

Elliott Wave Update ~ 2 October 2012

Since the 1474 high, despite the loss of prices the wave structure has not been impulsive to the downside which suggests large corrective waves are in play. Usually it takes a 5 wave impulsive pattern to signal a trend change.  We have not had that yet.

However, there could be a leading expanding diagonal triangle in the making (which is our primary count) which was explained in yesterday's update.  We have to be patient with it. I assume since waves i and iii of the proposed diagonal triangle were not impulsive, I'd have to assume wave v will not be impulsive either and will instead take on an [A][B][C] look just as waves i and iii have.

Could be yet another test of the downsloping trendline formed since the 1474 high which has 4 solid hits including the price peak.

Our daily candle chart again shows the interaction of prices with the upper wedgeline and QE3 Day Support.  Market bulls are trying to maintain QE3 day support and get above the upper wedgeline - and now add the downsloping trendline.  So we have some forces of support/resistance in play at this range.  The winner will determine if new highs above 1474 are forthcoming or a break of QE3 day support and a fallback to probably at least 1400-1414 range for starters.

E-minis

Elliott Wave Update ~ 1 October 2012

A bit of a shooting star potential candle was produced today.  At one point at the high today the advance/decline ratio was 5.5:1 on the NYSE and the UP/DOWN volume ratio was 8.7:1. Yet the day ended at a mere 1.6:1 on both.  Lots of churning again.

A leading expanding diagonal triangle may be in the making. There are no clear-cut impulses down yet the subwaves and count does fit into a leading diagonal count. Lets review our guidelines for leading diagonal triangles:

Per Elliott Wave Principle (Frost/Prechter):
- Waves 2 and 4 of a leading diagonal always subdivide into zigzags.
- Waves 2 and 4 each usually retrace between .66 to .81 of the preceding wave

So the guidelines are being followed so far with each wave ii and iv having retraced above 62% of their preceding wave.

The ending bearish rising 2+ year wedge count is still viable and our top count.

 Local SPX candle chart and how it would fit into a leading diagonal count and interacting with the 2 year wedge count.  At some point, if this is a true wedge, prices would come crashing through the bottom wedgeline.

CONCLUSION:
The subwaves since the peak price do not have clear impulses down, yet if the pattern emerging is a leading expanding diagonal triangle, they do not have to be. In fact they tend not to be. We need a lower low to confirm the pattern.

Here is Prechter on Leading Diagonals in EWP:
"...a leading diagonal can also take an expanding shape. This form appears to occur primarily at the start of declines in the stock market."

E-minis