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Wednesday, August 26, 2009

Elliott Wave Update ~ 26 August

The waves from the 1037 high looks like a complex set of zigzags. It counts well as a Minute wave [iv] correction so far. The entire correction is likely a form of a double three with a possible triangle forming as the last corrective three. I posted this pattern from 2 slightly differing perspectives.

The 5 minute chart suggests the correction is virtually over and that the market will head to a new high early tomorrow. The 10 minute chart shows that the Minute [iv] could give a fakeout higher early and then fall back into more corrective waves finishing a long -winded triangle. The peak of the market then would occur Friday at some point or even Monday, the last day of August.

Regardless of what pattern plays and how long it takes, the key support is 1018-1021 zone. A break of this support is bearish.

Formidable resistance exists at 1037-1044 and there are two heavy bear trendlines to match this area. The rising P2 wedgeline and the Great Bear line coming from October 2007 peak.

In addition to the combined resistance forces, bullishness has now reached levels of October 2007 in a key market investor survey. This survey happens to be what EWI also tracks as a one of their major sentiment surveys. Taken all together, My hats off to the bulls who continue to buy at this stage of the rally. It takes big "kahunas".

The price action does look bearish in a sense. The sudden drops and hard-down 5 wave structures (that I assume for now is just parts of 5-3-5 zigzags) reminds me of the sudden spasmodic rises that occurred sub-700 SPX. Not as extreme in the inverse but thats probably because bears have been long chased away from shorting this market. The CPC put/call ratio is also gyrating wildly and I seen a reading of 1.51 registered today. A lot of money is wanting to shift to the short side. I mean, really, Apple was back at $170. Even during its great runup to October 2007, it only hit $202. Its like good times again huh?

A great battle is near. It could get bloody for both sides....

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