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Monday, August 31, 2009

Elliott Wave Update ~ 31 August

Another "contrived"-looking move. Huge gap move down in the a.m. and then the MM's held support all day with nary an attempt to challenge the gap down. Dip buyers. It reminded me of the pullback moves that recently took the market from 1018 to 978. I show these examples on the chart also.

I'd have to say, the bearish stories were out in full force this morning. China was down 7% which the "newspeople" assume that weakness was going to flood into the US markets.

And the gap down and lack of any attempt to close the gap produces an unusually bearish "feel" for the day yet at the end of day the DOW was down only a mere .5% or 48 points. Financials were still playing today, and rallied nicely all day. I don't think the HFT machines are done playing with those....

So the bearish news stories were all over and "prepped" for the expected bearish month of September. And its not even September yet!

So all in all the down move still seems convenient. But what I think doesn't matter. What do the waves say?

The move down from the 1039 top could be one of 2 things:

1) 1039 was the "top" and this is the beginning stages of P3.
2) The move down from 1039 was a (c) wave in an expanded flat that comprises all of Minute wave [iv] of Minor C up. I show this possible count on the chart. This means the market hasn't yet made its final peak.

From the recent 1039 peak, it appears we have at least 3 waves down and today's sideways action could have been a wave 4 which means tomorrow the last wave 5 will play out with early weakness to a new low under 1014.62.

In any case, that huge gap down today could be challenged and closed no matter what count we are in after the end of a 5 wave move from 1039 peak.

If the market explodes downward tomorrow, P3 is the count. That's about how I see it.
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