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Thursday, April 9, 2009

Elliott Wave Update ~ 9 April






Primary Count: SPX peaked on a wave 1 or A from 666.79 to 856.91, a move nearly 190 points.
The waves finally finished what *appears* to be a 5 wave move off the 779 low. The intraday waves have some nice Fibonacci relationships which suggest a pullback to at least test the 842 support would be in order shortly. Also the top of the channel line was pierced as you can see on my 60 minute chart. This would seem a good spot for further pullback.
Alternate Count: The alternate count is now of course that this is the beginning waves of a Minor wave 3 (or C) and that Minor wave 2 (or B) did indeed bottom at the 779 low. I drew up a chart for this scenario. It is worth mentioning because I drew the waves from 779 as a series of "1's" and "2's" with today's move topping out the last of the "1's". That would imply a small pullback, perhaps to test 842 support, and then a blast off in a meaty bullish part of the wave 3. A relentless rip-the shorts-off kind of move. I know it seems implausible but if you recall I drew up a hyper-bullish scenario when the SPX was sub 800 and it did indeed all come true based on wave structures.
The "inside" middle waves of an extended wave 3 attempts to channel towards the upper wave channel lines of the larger structure. This is the weekend to contemplate this possibility. If it happens it will be bullish very soon busting on upwards toward 875 and then toward 900. If 842 holds support and the market gets very frisky...beware. Why would this happen? Well for one thing the market has had a period of consolidation and has held key support zones.
So in both scenarios the waves seem to imply a pullback to 842 on Monday. What happens after that will determine what direction the market goes: Bearish on a deep correction to sub 800 or bullish in a wave 3 move towards 900 and above.
We will know soon. Wave 3 cannot be hidden any longer. If this is wave 3, then the market is ready to get to the meaty part of it and we'll know. I slightly favor the bearish count because it seems to be wedging and there continues to be negative divergence. But this may not mean squat and can be rolled over in a bullish wave 3 in a heartbeat.








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