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Thursday, March 26, 2009

Elliott Wave Update ~ 26 March










Wave 1 appears to have topped today. Nice Fibonnaci relationships and an ending diagonal. Main Green Minute wave [iii], as I have my chart marked, expanded 1.682 of wave [i]. This is very near 1.618 Fib. Also today's high was where green Minute [v] = .639 x Minute wave [i]. Also Minute wave [i] and [v] connect on a channel along with [ii] and [iv], also a very satisfactory relationship.
These are very satisfactory relationships and the subwaves also work out very nicely in form and price structure. If there is any upside surprise I am looking at green [v] = green [i] at 856.5
But all in all the negative divergences, the very overboughtness, and now that the gap has finally closed at 827 and today appeared to trace an ending diagonal means that Minor wave 1 (blue) has finally reached its peak. (I think LOL)
What would the retrace look like? Well, my theme of late has been the market is trying to maintain support outside of some key Pirmary wave 1 trendlines. So perhaps the market manages to retrace a large expanding triangle. Metsrules of Stocktock social also played with this theme. http://social.stocktock.com/profiles/blogs/what-if-the-1938-rally-is
It is based off the 1938 market which follows this one in form very closely. Also I showed a recent chart of the 2002 low and how it traced complex expanding triangle to maintain support and key trendlines. But this is all just a guess. For everyone expecting a nice clean harsh bear leg deep back into the bowels of old Primary Wave 1 trendlines may be disappointed and find that the trendline *may* keep getting bought. So anyways, I am thinking out loud. But its something to look for. More violent swings may be the order of the day.
Finally the CPC (put call ratio) is definately turning back toward put heavy which is likely blowing a headwind into any further rally advance. Also the VIX feels its important to maintain above 40 although it closed for the second time under its 200DMA. Last time it spiked hard the next day. So we'll see what tomorrow brings. But there is no need for further upside that I can see in the waves although there may be some small unfinished waves finishing out the ending wedge move. Any break over 838 or so, is indicating something else is going on and perhaps heading to that 856 mark I was talking about. That would be another upside surprise.
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