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Friday, March 27, 2009

Elliott Wave Update ~ 27 March


I agree with Kenny the market is tracing "threes" for the past few days. I called yesterday's intradays waves as an ending diagonal for green Minute [v]. Perhaps having minute [v] trace its entire wave in one day was kind of hasty (even though the market did indeed drop today). Looking at the larger picture, it could morph into a more proper ending diagonal. And that means a move up Monday to close the gap that the market failed to close on Friday. That would be about 1-2 more days of upward, actionary (impulsive in spots) waves to a peak somewhere north of 832.

End of month and end of quarter "window dressing" could account for keeping the market propped for a few days to fulfill the ending diagonal. Just speculation of course.

There are good Elliott Wave reasons to keep the market in an elevated (above 810+ or more) state for a few more days. I have discussed the apparent need for the market to want to prevent from getting trapped back into Primary 1 down trendlines. It can do this by price advance and/or time. Right now it is tracing upwards and sideways using time as an escape. The further in time, the more the market moves from the trappings of the old trendlines. Doesn't have to be this way, call it a hunch though.

There are plenty of reasons to be bearish. The market is overbought, there has not been a 38% retrace and resistance is bearing down. So it would be easy to just say the market is more than overdue for a pullback and indeed there are some wave possibilities for a deeper pullback but I have no great deal of confidence in it at this moment as the waves are not behaving in any kind of definite form on the shorter minute charts. But I will post alternatives this weekend on the more bearish possibilities derived from the wave structure and trendlines.

The other chart I have is an XLF chart. It is in either a bullish-type contracting or ascending triangle formation, both bullish types. The only problem I have is the upslope bottom line seems a bit steep. I have plenty of notes on that chart so need need to repeat them here.
So one key this week will be the financials and its triangle pattern. Its failure or success will very much determine market direction.
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