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Friday, December 31, 2010

Elliott Wave Update ~ 31 December

We are waiting to see how the markets shake out when volume comes back next week in the New Year.

Several options presented. And of course none may be correct.
A close alternate
NDX100. Something has to give.

E-minis [Update 11:17AM]

[Update 11:17AM: The NASDAQ 100 is another structure I'm keeping an eye on. I favor it taking out its 2007 high.  It seems to be working on some kind of Minute [iv] already.  It need only make a new high here to fulfill a Minute [v]. Not sure how the [iv] is going to play out here is thats what it is.]
[Update 11:02AM: Here is a more detailed look at what is soon to be developing as my primary count. I went back to using the orthodox Minor 4 wave marker that I first showed back on  1 December
Key support level is green line I would think. A breach of this and we have a new wave structure occurring.

Thursday, December 30, 2010

Elliott Wave Update ~ 30 December [Update 9PM]

[Update 9PM: 
TOP ALTERNATE COUNT (which depends on 1246.73 not being breached)
This count is my top alternate.  It has some merit because as I have mentioned the wave one's seem to be the big impulse wave during this P[2] rally since March 2009.  Look it up. Every first wave off a low has been a nice impulse and the third waves have actually been the complex ones. Perhaps this trait reveals the corrective nature of this P[2].  In a true bull market, wave threes would be the strongest. Here we have wave one's doing most of the heavy lifting.  Role-reversal sort of.  Then the wave fives have been a blowoff up move out of some sort of ascending triangle or consolidation pattern. 

Therefore according to this, we are entering some complex wave territory for the top of wave [iii] of 5 and then [iv] of 5.  But no matter, price level is the key here to this count. Wave (i) at 1246.73 cannot be breached or this count is null and void as I have it charted.  1291 would be where 5 = 1.  That would be the target for this count.

This count would allow a blowoff GOLD wave 5 of (5) of [5] move toward $1500.  It would also stretch wave (C) of P[2] to a more reasonable Fibonacci expansion level versus wave (A).  The dollar may retest 2010 lows. Oil might hit $100 and, well, blowoff tops in just about everything might occur. Bonds would likely continue to rise in yields though.

And of course it would break every last bear standing (if there are any left). And then when the market is at such a ridiculous level, and corporate margins have been squeezed by the CRB and the consumer is pissed at  $3.40 gas again, well... there ya go.  The Federal Reserve has never been more leveraged. Indeed the entire world would be super-leveraged.  Which would invite, of course, a super-reversal. 

Ponzi schemes always end badly. This will be no different.
Again, 1246.73 is the key to this count:
And why consider this count? Because my NYAD is still making new highs and it may be pointing the way. Perhaps its working on [iii] of 5.
[Update 8PM: US long bond.  Still maintaining this count for now. ]
Its getting harder to find possible upside counts using the base counts I have been using for the last many weeks. However the Wilshire has no 5 wave structure down from its peak.

I don't have a good upside count at the moment. Up until now its been easy to see more upside squiggles. We'll have to let things shake out for now.
Ending diagonal in the DJIA? If it is, an immanent price collapse should be coming would be the confirmation.
SPX daily. Still overbought.  Multi-year resistance at 1260-1270.
Wilshire hourly.


Its taken 3 weeks to rise 300 Dow points.
MACD signal line looks like it wants to rollover.

Wednesday, December 29, 2010

Elliott Wave Update ~ 29 December

Again, we have enough of a wave structure to consider Minor 5 complete. Indeed down to the Minuette level, we have more than enough squiggles.

But we still need to a meaningful decline that breaks key support (for now I'll call that 1246ish) and an impulse pattern down to confirm. So we'll adjust as necessary and let the market ring itself out as it must.

Intermediate (C)
Perhaps I shortchanged my NYAD count and didn't let the Minor 5 run high enough.  

E-minis [Update 2:18PM]

[Update 2:18 PM: Whenever a wave three, of any degree, fails to extend a nice Fib 1.6 or greater than its corresponding wave one, it leaves open the door for the wave five of the same degree to extend.  This may be happening here.

Where I have i of (v) marked would have made a nice wave (v) top, yet when it decides to extend, this point then becomes subwave one of five. So thats what I did here in my labeling.]
S&P futures hit another new high.
So far NASDAQ100 minis are lagging
As are the DJIA futures

Tuesday, December 28, 2010

Elliott Wave Update ~ 28 December

The wave structure has traced sufficient sub-waves to include small scale waves to complete the Minor 5 wave move from the July low.

So we are awaiting key reversal confirmation. First, we need a five wave structure down. We did not get that today on the Wilshire (or SPX) in the morning as I pointed out, and that led to a new afternoon high, at least on the SPX. Second we are awaiting key support levels to break under. On the SPX a close under 1246 would probably indicate some new structure was developing.

SPX Minor 5:
SPX Minute [v]:
SPX Minuette (v). It may need yet another spurt, however I am satisfied it is complete if it sells off instead. I do have a habit of expecting that one more squiggle. It may not be there.
Wilshire failed to make a new high this afternoon versus the SPX. I suggested this may truncate or the high was in this morning. Either way works. We'll see.
Intermediate (C).
INDU may be in an ED pattern.

E-minis [Update 11:56AM]

[Update 12:11PM: The S&P cash indexes may lack a 5 wave structure off today's spike high, but I wouldn't get hung up about it as the e-minis probably make a nice 5 wave impulse pattern down as the high was not matched during trading hours.]
[Update 11:56AM: All the squiggles are now sufficient to complete Minor 5. If it decides it must extend in either time or price, then so be it, its up to the market.]
The problem is, there is no 5 wave impulse pattern to the downside just yet.  Even if this squiggle count below is correct, there is a lot of damage to prices and the last squiggle would probably truncate.] 
ES at new highs

Monday, December 27, 2010

Elliott Wave Update ~ 27 December [Update 6:18PM]

[Update 6:18PM: Wilshire squiggle count. As you can see, its doesn't look quite done yet. Wave iii extended a Fibonacci 1.38 exactly of wave i. ]
[Update 5:45PM: Oil's weekly]
[Update 5:33PM: The DJIA definitely has a different count than the SPX. Here is one such interpretation.]
Primary count is that the market has nearly finished all subwaves of an Intermediate-sized 5 wave move from the July 2010 lows.

If tomorrow is a gap up to new high, it is one high I would expect to short with extreme prejudice. The wave patterns are fairly straightforward. Will it work? Nothing is guaranteed in the wave business but even so, your probabilities are pretty decent here.

Here are the 5 waves from the July low:
 And a look at Minor 5
And yet an even closer look at Minute [v] of Minor 5:

E-minis [Update 1:37PM]

[Update 1:37PM: Best guess.]

Thursday, December 23, 2010

Elliott Wave Update ~ 23 December

Primary count is that wave (v) of [v] of 5 of (C) of P[2] is in progress.

SPX. 1265 is where (v) = (i) within wave [v].  1265 is the post-Lehman day Sep 2008 bounce high, otherwise marked as Minute [ii] of Minor 3 of P[1]. It also has breached the underside price of (1) of P[1] - 1256 - which is also a normal trait of wave twos.

The squiggles project a possible gap up Monday for wave iii of (v). An end of day reversal would then be a possibility should that happen. Or a Tuesday peak as suggested below. However running the price out that long doesn't look right.

Revisiting the P[2] wave form:

After making this wave chart from sentiment data of the new AAII 10 day MA, I reconfigured the P[2] wave count based on this sentiment pattern which is an awesome EW structure by the way.
There is a certain symmetry to it.  (C) would be .618 x (A) @ 1309 with this count.  As it stands now, (C) =  .51 x (A).
A slightly reconfigured GDOW. It still requires a new high.

E-minis [Update 2:30PM]

[Update 2:30PM: That would make a nice wave (iv) if it holds.]

[Update 11:43AM: Best guess on squiggles is that the market is tracing (iv) of [v] in some kind of triangle or complex sideways combo. The red horizontal line is my marker as the next wave four, in this case (iv), usually maintains prices above the previous subwave four low, iv of (iii), as a general guideline.  Hence the red line. For the SPX thats about 1254.]
[Update 11:33AM: I have two competing versions of the dollar at the moment.  I am leaning toward a series of one's and two's. We'll keep both options open.  There is actually not much difference. They both ultimately point up I suppose.

This chart eliminates the "bad print" cancelled trade lows.
This chart keeps the bad print.
[Update 10:52AM: Wave charting the AAII 4 week MA.  Nice EW pattern wouldn't you agree?]

[Update 10:40AM: Total capitulation in sentiment to the trend. Latest American Association of Individual Investors sentiment survey data. Charts courtesy of]

I have no clear count on the last up squiggles just yet. Best guess is a sideways wave (iv) of [v] (not shown).
Best guess for the dollar hasn't changed.
Sentiment Trader's sentiment indicators levels are 48% (bearish extremes - optimistic sentiment) to 0% (bullish extremes).  Highest all year and the dumb/smart money spread hit 50%.  There is really nothing to add as this high level of bullishness condition is persisting for the last few weeks.

It will correct as it always does. Its a matter of timing and what price pattern plays out when it does correct. Will we see heavy selling and impulsing down? Or, if this is a true bull market as most everyone says, will we see big corrective patterns and a more easy landing for prices?

As they say, time will tell.