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Monday, October 25, 2010

Elliott Wave Update ~ 25 October [Update 11:15PM]

[Update 11:15PM: Here is the Supercycle channel again, this time with my count I just whipped up showing the extended cycle wave V from the early 1980's to the 2000 high.  Basically I argue that everything above the Supecycle channel is a bubble market and an insane rise of asset mania.  Some other points I'd like to make in no particular order:

1. Notice how each subwave one advances prices above the previous highs. The first subwave one wishes to advance prices.
2. See how the primary (black) waves make sense on this chart?  When looking at the charts only since 2000 or so its hard to see what makes sense. But basically we propose that the market will do in reverse what it did from the 1980's onward once the credit system bubble we are in gains speed in collapsing.
3. Look at my blue box areas. Kind of neat and pretty much where you'd expect them to be (in wave threes of some degree)
4. The proposed cycle "b" wave at the 2007 peak is because cycle wave V had such strong residual undertones updraft that the forces to be pushed the corrective high above the orthodox 2000 top.  This is the result of a historic credit bubble (which is popping!). But being it was a b wave, it was built on false pretenses. Isn't that pretty much true?
5. Note for the same reasons we have such a robust Primary wave [2] of cycle wave "c". A flood of credit still exists.  Yet they always pop and deflate to beyond from where they started. And this bubble started under DOW 1000 
6. Note the long cycle wave IV offers strong support at DJIA 1000. This would be a normal retrace area for the bear market or, the previous subwave four. 
7. Note the proposed massive Head and Shoulders top forming in the market. 2000 (left)-2007(head)-2010?(right).

Finally, agree or disagree with my call for a big down market, but this is EW theory and I have presented the count for you to see.   After a wave V, an a-b-c correction to the price range of the previous subwave IV would be normal. And that price range is 1000 DJIA and under.

"Cannot happen!" I always hear.  hrmmm. Looks awful squishy below that neckline.

[Update 10:12PM: German DAX count.  Broke up out of the mess.  Triangle in there somewhere, probably two. Note the alts.]
Long term we notice it diverged at the 2007 world market tops.  So to see it diverge with other market tops here in 2010 makes perfect sense to me. Also note the inverted H&S target is now being properly dealt with.]
[Update 9PM: Again a new high on the NYAD chart today. I'm kind of kicking around 2 different EW counts for the NYAD.

One version is this. For this to be a good count, the "top" has to be put in like pronto or Blue 3 of (5) would become the shortest wave within (5) which is a no-no.  What I like about this count is the subwave ones [i] and 1 always try and lead higher relative to the next higher degree in price in each leg.
And the more conservative chart in which we are still looking for the top of blue 3 which should be imminent.
[Update 7:56PM: DJIA taking stabs above the Supercycle Channel line yet again. Breadth patterns looks like the market might want to rollover]
Playing around with studies.  Chande Momo Oscillator. The rally from the August low has been similar to the rally in March/April.  Lets see if it flashes the same way...
[Update 7:43PM: AA count.]
[Update 5:50PM: having fun with the BIDU count instead of a straight-up wave 4 triangle. Instead this chart shows wave 4 as a double three: Zigzag - zigzag - triangle. See this chart for a larger picture ]
And Goog popped higher out of the triangle I showed Friday
The first minute of the day's opening saw a huge surge in up NYSE volume ratio.  The opening minute's tops were 24.6 up volume ratio and 7.72 advancing stocks to every one down.  Yet the end of the day finished at a paltry 1.81 up volume ratio and merely 1.5/1 advancing ratio.  That darn near constitutes a panic buying situation and near reversal.

The news was great as the 10AM news saw the reported Sep home sales jumped 10% and all indexes did an intra-day gap up including the DJIA which is rare on its tape. And shortly after that, the tape reversed down after finding an early peak.

And so the day ended green with a battle.  But one has to wonder, just how much gas is left in the bull tank after an open like that?  Sentiment is getting stretched by certain measures to beyond the April extremes.

VIX was well green today despite the green market.

Potential Wilshire count. (c) = .618 x (a) at 12642.
Another gap up tomorrow to take a stab at challenging the SPX 1197.5-1202.26 gap? Is it a squiggle too far for now? As long as (1) of [C] of v remains intact, we must consider it.
Interesting Fib relationships on the DJIA particularly v = .615 times iii.
Candle is a potential topper. There are now some decent negative divergences on the daily.

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