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Tuesday, June 23, 2009

Elliott Wave Update ~ 23 June

Last night I threw some charts up with a bullish count with the thought in mind that P2 was not yet topped and that at some point, the market will have to rebound for the final leg of P2 in a triple zigzag to P2 peak.

However, the waves have yet to cooperate. Every bounce since the 956 high has been of the dead cat variety and today was no exception.

Tonight I take a different slant and show the waves from a permabear perspective (which I am by the way). I show you the wave degree labels that would most likely fit into a P3 scenario. The initial 53 point move down from 956 peak would only be Minute wave [i] of Minor wave 1 of Intermediate wave (1) of Primary wave [3]. The rebound to 927 would be Minute wave [ii]. That would mean the market is in the midst of a Minute wave [iii] lower.

There really would be no other way to interpret the structures if 956 was the true P2 top. You could change the degree labels and bump them up one level, but regardless the market has reached the point where a "point of recognition" is coming at a small-scale level (if this is the true count)....the meat of a wave [iii] move lower. This would of course most likely bust down through 878 support lower.

So what do I think? It doesn't matter what I think. What only matters is what the waves are tracing out so far. And so far the market is impulsing down in very bearish 5 wave moves and correcting in scraggly ABC's. Today was no different.

We will know soon enough and I have to show you both scenarios.

I'll add that yes the 50/200DMA crossed today yet on the hourly chart, the 50/200 crossed today in a bearish manner. I will also say that the market is "oversold" but that doesn't matter much if this is a wave [iii] lower. We seen in P1, how "oversold" gets even more oversold until you lose all your money.

In the long run, P3 will kill a lot of people basing bounces on basic TA but a wave 3 of any size will crush bounce expectations. I must not fall into that trap and must stay in tune with the waves. And so far, they ain't a pretty picture if your a bull.

Its this simple folks: Either P2 topped or it ain't. There ain't no "in between". I'd say within a week or less I'll chart which one it likely is. But for now, the market is teetering on the edge of a break much lower in the meat of a wave [iii] move (or even the meat of a wave C move if you desire).

The bulls still have time to recover, but they better get their act together quickly or risk losing 875 support, a key level, altogether.
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