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Thursday, April 16, 2009

Elliott Wave Update ~ 16 April

Primary count: The SPX has finished (or will on Friday) a 5 wave ending diagonal move off the 779 low. This 5 wave move is either a C wave in an ABC correction or the final wave 5 of a 5 wave move off 666 low. I don't particularly favor either at the moment. The key seems to be that this is clearly and ending diagonal and so I have to chart it as such.
Ending diagonals can only occur at the end of structures, hence as a wave 5 or a final C wave. Ending diagonals usually retrace deeply as a rough guideline, often the entire diagonal move is retraced. There could be overthrow if there is a missing final subwave in this last wave 5 up. it failed to hit the trendline but that is normal. We'll know Friday soon enough.
Alternate Count: There really isn't much of an alternate scenario other than this is not a 5 wave move off the 779 low, but rather a series of 1's and 2's and the 779 low was a Minor wave 2. So this would be a Minor wave 3 playing out and its fixing to get real bullish. But this doesn't make sense because the waves do not fit this type of move very well. Also upward momentum is clearly waning. There is a steady negative divergence on the hourly chart and e-mini daily futures MACD and stochs are screaming high.
If the market finishes around 855 then the weekly will be a Doji candlestick which indicates indecision and could set next week up for *finally* a down week. If Friday is struggling with this mark look for the bulls and bears to battle it out over setting the weekly candle. Bulls would love a 7th straight positive week.


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