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Tuesday, April 7, 2009

Elliott Wave Update ~ 7 April



Primary Count: Today's price action forced me once again to change my Primary count back to the bearish [a] [b] [c] expanded flat for Minor wave 2 that closes the 768 gap.
Alternate Count: The alternate count of a Minor wave 1 finish above 845 possibly 850 is almost officially dead. This morning's downside drop of 21 points took the SPX through the lower Minor wave 1 up channel line. A very bearish price move. It briefly tried to regain the channel during the day and then at the end of day, sold off again. The waves of the past 4 days have been very overlapping with a few harsh down moves mixed in. There now exists 2 significant upside gaps and the SPX today held right above a lower gap at 810-812 or so. The volume is on the light side which is ultimately bullish for the market longer term. What was again strange is the VIX actually finished lower today and had a decent red candle down.
Elliott Wave International just issued a special update tonight confirming the ABC expanded flat as the likely coming moves (which I first proposed back on 1 April by the way). This indeed would fulfill the 1938 chart move that I have been showing off an on. I only mention this because every time they do that, they usually are wrong (but issuing short term wave moves is a highly risky business - but thats what I do and I am often wrong for a day move - so I am not knocking anybody here). So in that regard, until 810.48 is officially taken out on the low side, I will tell anybody reading this that upside surprises is the theme of Primary wave 2. If 810.48 holds (and no slop allowed on that!) and the market moved higher to close 1 of the 2 upside gaps, that would indeed be an upside surprise at this moment. I do not favor that happening though but....officially there is still a possible bullish count no matter how unlikely as I write this.
When 810.48 breaks under, I am confident in a further eventual drop to sub 800, likely back to 768 to close that gap for Minor wave 2.
Earnings season is upon us again. Reality check time.

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