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Tuesday, March 24, 2009

Elliott Wave Update ~ 24 March

Main theme(s) that TA's are trying to answer:
1. When will the market produce a bonafide Minor wave 2 pullback (at least 38%)?
Answer: When it is ready. The waves appear extended and a solid structure is in place to say its about "ready". It could not close the 826 gap which is bearish.
2. How deep will the pullback be? Wave 2's are normally 50-62% or more. enough to question the entire up move. The bulls should be doubting.
3. What is some likely spots for a wave 2 target? Backtest of the 6 month trendline. Depending on how long this takes, the lower it can go to backtest.
4. Will the 4 point gap at 768-772 get filled on a wave 2? You betcha it *should*.
5. Will the gap at 826 get closed first? Not sure. It was half closed and they gave it a go today and failed. The NASDAQ filled its gap so the market may lack incentive to do so. Also it is *perfect* in the sense that it is now *expected* to get filled and setting up as bearish.
That's the gist of it. If the market makes another bullish move to close the 826 gap, it would a wedge move likely which is bearish. But I am not betting on it.
7. Where will the market find support? Many, many places to choose from. From the 20,50 and 200 DMA's to backtesting trendlines and filling gaps and support zones, there are a lot of places.
The SPX was buried at the end of today right on breakout support of 805 so that was a bearish move. And to add to that this is a huge minor wave 1 and I can count a perfect number of extended waves so if it needs to add one more subwave I will find it hard to count at this stage into the overall structure as it has already retraced past expected wave count points. So that is good evidence the initial move up is over.

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