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Thursday, March 12, 2009

Elliott Wave Update ~ 12 March

Another super bullish day. Advance/decline volume was once again off the wall high. It must be true that people are more afraid of missing a rally than losing money. Wave structure was a tight channel up today and there may be some pushing early tomorrow to a wave 4 (5) peak.
I have no clear direction on how tomorrow will play out, these rallies usually run 3 days then start to go sideways or slightly down.
Here's what I think:
1) I think that wave 4 will hit the 200 MA on the hourly. When is the question as it will drop as time goes on. Why not tomorrow? It might. Or Monday if resistance and profit taking proves to be too much.
2) The upward advance to 750 was expected, maybe not as quick as it did, but such is bear rallies. The 729-734 gap was closed. The 752 gap, still has a micro-sliver left in it, not quite closed. Now it has hit the resistance zones from 750 to 780. This is a much tougher slog. Many people trapped here will be more than happy to get out break even. So not only does the market have too "take" 750, it has to take 757, 765 and 775 and then 780 even before thinking about an assault on 800 again. After a massive rally, its gonna run out of some steam.
3. So any pullbacks may (should) eventually slip under 750. It then has to hold at support layers beneath 750. So goes the next few days, but then again isn't every trading day like this? Its a game of support resistance I think until we get clearer indications of where this market is truly headed. There are some things that bother me about the market, waves and such, but until we see how it handles the tougher resistance zones, there is no need to change my view in that a wave 5 to a new low will indeed occur.
Volume , either up or down is always a key. That tells the story.
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