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Tuesday, August 4, 2009

Elliott Wave Update ~ 4 August

Persistent. November gap is closed. Closed above 1000 second straight day. That was somehow important.

Negative divergence on the hourly persists. From yesterday's high to today's high there exists big negative divergence on the hourly on the e-minis.

The chart pattern still fits well as an ending diagonal in some form or fashion. The e-mini chart is a different count than the one I showed yesterday. Rally laggards are still bringing up the rear so these things cannot be rushed.

Those of us who called for a great Primary Wave 2 rally back in the dark days of February/March always said it will squeeze and squeeze until there are no shorts left. 'Til every last soul converts to a bull. I "believed" it would happen, but now actually seeing it, its still hard to swallow.

Its hard to argue all the strong technicals. 200 DMA is turning upward and resistances are being knocked out one by one. There are a lack of sellers for now. There will be bull converts. The public will jump on board. I await calls for a higher market. And who would argue?

There exists key resistance right at the 1007 level and the market is challenging to break above. The chart pattern (ending diagonal) suggests there will be a pause (Minor B wave) prior to breaking this next key level. It doesn't have to be a huge pause. Or it could. Only the market knows.

And P2 marches on. I will be curious to see sentiment data ($BPSPX) that won't come out until later.

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