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Wednesday, April 8, 2009

Elliott Wave Update ~ 8 April


The count scenarios haven't changed from yesterday so consult yesterday's charts. Primary count has the SPX eventually heading back to sub 800. The alternate is just too stupid at this point to repeat and that is that the past 5 days has been a Minuette (!) wave (iv) tracing out before a push to 850 or so.
I tweaked my intraday waves and I agree with Kenny's intraday counts on the 1 minute (and I didn't peak first, we both came to the same conclusions and then I seen we were similar which is not surprising). The larger point is this thing may retrace higher or could break down at any time its just a tough call but the NASDAQ seemed a bit peppy so I favor first more corrective to the upside (yet less than 845) prior to the market retracing on a deeper move.
A few interesting observations I would like to comment on:
1. The VIX is breaking down. Its getting near its long-standing gap soon. However it looks due for a bounce. So perhaps a nice bounce of the VIX will correlate into a lower cash index SPX move very shortly.
2. The /ES minis, futures, have made a high of 848 (over 850 SPX) Sunday night and a low of 802.25 Tuesday evening. both the high and low was made in A/H's. Its very unusual for this not to get reflected in the eventual cash index during trading hours. The differences are quite curious. A look at the structure of the futures from 848 to 802 takes the form of a 5-3-5 zig zag move which of course does not translate well at all into the SPX cash index waveforms at the moment. So needless to say, its been quite challenging. However both futures and SPX have both corrected about 50% so in that regard they are similar.
3. Two gaps above and two gaps below. A deep retrace of 78% or more back up could fill one or both upper gaps prior to a move back down to sub 800.
4. The market wanted to move higher in A/H's Sunday night (848) and also showed a willingness to move lower Tuesday night (802.25 low). Yet both moves did the opposite out of the gates on Monday and Wednesday. So...its a tug of war. Good luck trading.

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