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Saturday, August 29, 2009

Elliott Wave Update ~ 28 August

The price action of the past days/week have been whippy and waning. The market has experienced some nasty little selloffs lately and that reminds me of the sub-700 early March low but in the inverse. In March the selling exhausted itself and market bulls were practically nonexistent at 2% Daily Sentiment Reading (DSI).

The current market has produced a distinct spike down on Friday much like the sub 700 SPX had a prominent 20 point spike up prior to making its final 666 low. In short, the market is sporting signs of exhaustion. DSI has been hovering in the upper 80's and nearing 90%.

A possible ending pattern is an ending diagonal. I show that in my charts. (Nate also shows the a possible ED). It has a lot of merit and would be a logical place for one to occur. It will likely be messy to count, may be quick and the reversal down may be intense and unexpected.

The intraday squiggles support the ending diagonal up move as they stand right now. We have some obvious pivot points to watch and trendline support. Has the market topped already? I have a NASDAQ squiggle chart that may support that count. See Friday's midday update. We'll have to see how futures do Sunday night.

Bigger market volume is coming back in the market in September. Any professional trader/money manager who has made out like a bandit in the Spring/Summer rally may just want to take some precautionary profits...
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