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Wednesday, April 29, 2009

Elliott Wave Update ~ 29 April

Primary Count: An ending diagonal has traced out in the final wave [v] of a larger ending diagonal. The next move is an X wave and the corrective could go sub 800.
Alternate Count: An expanding diagonal is playing out in the X wave position. This implies the correction back will retrace less and not go sub 800.
Second Alternate: A leading diagonal in the first wave postion of the next corrective structure is playing out. After a retrace back to the 840's or so, the market will get bullish and begin the next corrective phase upwards in Primary wave 2. I do not like this bullish alternate because it does not make a good fit at this stage. I merely mention it because the market has been tracing ABC's since the 825 SPX recent low. I don't show a chart for this overall count.
I show an e-mini chart that clearly shows a diagonal pattern. It makes sense as an "ending diagonal" and not a leading. Sell in May and go away may self fulfill this year indeed, at least for a little bit.
The 882.06 high today marks an exact .236 retrace of the entire bear market from 1576.09 to 666.79. .236 is a Fibonnaci ratio table number that is next in line from .382. So that is generally creepy and would make a good spot to retrace.
The market has "proved" it can break the 875 barrier. Also the DOW had a break above the bear trendline. These were good things to prove and get out of the way. Next time the market treads up that way, shorts will not stand in the way so much. The hardcap resistance has melted just a bit more....
Also the QQQQ's have rallied to their 200DMA, first time since summer 2008. Another nice milestone for an index. There is no reason to keep pushing the QQQQ's at this stage, as that near -term target has been met.
So pullback makes sense and "Sell in May" may be the way. I will offer this much: It may actually be "contrarian" to actually sell in May! Seems retarded yes, but everything has been backwards on this rally. Bad news gets bought. So the natural contrarian play is to BUY in May. But since this is a flipped market right now, I offer the contrarian play this year is to ACTUALLY FOLLOW the DAMN SAYING....and sell come May 1st.
Hehe make sense? Anyways since there was a new makret highs today, there are many examples of negative divergence on the technical indicators.


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