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Monday, January 31, 2011

Elliott Wave Update ~ 31 January [Update 8:36PM]

[Update 8:36PM: CRB count. Clearly, its a 3 wave move from the low.]
[Update 7:42PM: Long term Price-Volume-Trend (PVT) line.  Uncanny how it formed a trendline.
A closer look at the last 3 hits on the trendline. We can expect another stab or two at this line.
[Update 5:46PM: Possible count on Municipal Bonds.  Technically, the deep oversold conditions have been relieved, yet price action suggests a bigger downside move is coming.]

[Update 5PM: As suggested on Friday, the wave ii expanded flat count still works for us here.  The market is "setup" for a big wave iii down but of course it actually has to happen....
As long as key wave markers hold, we have to search for a count that would achieve new highs.

This Wilshire chart below very well shows the key wave marker and the possible counts.
Hourly WLSH shows a wave [iv] flat count.
Dollar still hurting


Note the heavier down volume candle.

Friday, January 28, 2011

Elliott Wave Update ~ 28 January [Update 6PM]

[Update 6 PM: P[2]'s count so far.  Note: I have wave 3 of (A) labeled where I do because its internal subwaves force the situation as the only logical choice. P[2] sports really no "third of a third" up as the subwave ones all seem to be the bullish wave within any substructure. Incidentally, this is another reason I have this as a true countertrend move (bear market rally).

For instance [i] of 1 is a bullish spike wave.  Also 1 of (A) is the big wave.  So goes [i] of 3 of (A) and even [i] of 1 of (C).   Its not something I realized back then, but its something I observed only recently.]
Impulse down from the top today in a nice 5 waves.
Alternate count shows a wave [iv] flat. But somehow it feels the character of the market has changed to bearsish after today's selling event and that there is more in store.
SPX daily. Retrace almost 70%. That is a normal wave two of any size.


No impulse up yet on the dollar. Grinding. Another triangle? That could mean a thrust down is occurring.

Thursday, January 27, 2011

Elliott Wave Update ~ 27 January [Update 6:02PM]

[Update 6:02PM: Another look at the dollar chart and the proposed Ending Diagonal on wave (c) of [ii] down.  We have wave i - iv overlap. I realize its not a perfect ED wedge as wave iii is longer than 1 by a little, however we'll go with it for now.
Another look at the last wave v of (c) of [ii] on the dollar.  We may need to get down to the trendline.
On my stockcharts chart, we may be looking at another hit on the long-term trendline.]
The proposed Intermediate wave (C) of P[2] is now exactly a Fibonacci .618 (.61848 to be exact) of Intermediate wave (A) at today's high, less than a point and a half from a perfect .618 in price.  At this point we can also say we have every single subwave down to the minuette (pink) level accounted for and perhaps even sub-minuette level.

Its a valid EW structure. 22+ months in the forming and a time/price/waveform structure that fulfills the duty of a counter-trend primary wave rally.  

If (C) does not equal (A) then the most common relationship is (C) = .618 of (A).
There feels like a Black Friday or Monday is coming.  The riots in the Arab world continue and sometimes things come unglued so fast that we have no time for debate whether we need a 10% market pullback or not. It'll likely happen quicker than anyone can imagine. This market may be setup for a flash crash event or two. The algo's simply don't care.

How about a 10% market drop in one day?? Egypt proved it was up to the task.

The dollar is perhaps close to getting extremely bullish.  A flight to safety. I am looking at an (a)(b)(c) down on the dollar

Who wants the Euro? You can have it. Its backed by no national army and no common heritage and an illegitimate political system at that. The dollar is. Thats reality. Thats the way it has always worked throughout history. The dollar may eventually fail altogether, but the Euro sure as hell will fail first in my opinion.

Zooming in, we are looking for an [A][B][C] down for the last subwave v as I have proposed the entire wave (c) is an ending diagonal pattern. But we have to be patient.
Some Wilshire counts. Intermediate (C)
A slight variation on Minor 5 versus what I show on the hourly chart above.
A look at proposed Minute [v] of Minor 5. It is a difficult pattern and is very unsteady looking. 
The SPX count more or less based on the NYAD cumulative line.

E-minis [Update 2:58PM]

[Update 2:58PM: I may be biased long-term, but I'm doing the best I can here. I am trying to stay true to EW theory. Thats what we do here. We may not get it right, but that doesn't mean we stop trying. For everyday comes a new opportunity always.  

Wave [v] would equal [i] very soon.

Wednesday, January 26, 2011

Elliott Wave Update ~ 26 January [Update 5:10PM]

[Update 5:10PM: This subwave count of Minor 5 is based off my NYAD chart posted below.  The final wave [v] up is not very impulsive to say the least.  I would not be surprised to see a wedge pattern here with a wave (iv) down closing the gap up created by today's open. Perhaps a gap down tomorrow to close the gap up and then a slogging push to over 1300. Highly speculative.]
I my opinion the dollar chart is an important wave pattern to watch.  I can still imagine it needs a final thrust down to a new low to fulfill the wedge (c) wave
And since I am proposing an ED for wave (c), the final wave v should be an [A][B][C] down. Here is that proposal. A break up and over 78.44 would indicate a reversal to the upside. 
UPDATE: Its broken under since I first made this chart above
As far as the market wave counts, obviously the SPX joined the INDU in achieving new highs while most other indexes did not to include the Wilshire 5000 which was very close but not yet.

Note the RSI trendline.
Zooming back looking at the bigger picture reveals the Fibonacci relationships are still very much intact.

Diverging RSI.
The NYAD chart recovered to a new high. It pretty much sums up the entire P[2] rally to date: relentless. We have a solid count on it and I used it to perhaps identify the true subwave pattern of the underlying SPX. I'll post that chart later.

Technically the NYAD has a long string of lower highs on the daily advancers shown on the lower indicator pane.  Its a perfect fit for a wave five event. 

E-minis [Update 1:57PM]

[Update 1:56PM: A reminder of Wilshire targets.
Looking for wave (c) low on the dollar. There are enough waves in place at the moment, but it may need a panic spike down first and overthrow the lower wedge. 

Tuesday, January 25, 2011

Elliott Wave Update ~ 25 January [Update 10:11]

[Update 10:11PM: Long bond yield wave count.  I have adjusted the count to a wave 4 flat.  If support breaks and its not a flat it could be the ALT that I show.]
Using  base channel technique:

[Update 9:57 PM: Dollar chart has pretty much lulled most people to sleep as it has arguably traced a lazy 5 waves up covering some many months. But now the retrace is approaching 61.8%.

(c) = (a) @ 77.10 which is a tad over 62% retrace.
Here is a more detailed look at wave [ii] down on the dollar:  I have an Ending Diagonal triangle for the (c) wave.  This suggests when the dollar does turn back up, it will be a sharp turn.
Heres the update:
Thats about the gist of it.  We either start a wave three down soon or it claws to new highs in a wave [v] (and then the bottom drops out).  The consolidation trading zone suggests more upside, albeit possibly unsteady upside, but the wave pattern "bounce" is not convincing as an impulse pattern up.

This chart shows the fractured market. And overall, that is not usually a bullish development after a 6 month rally.
The top alternate count for the Wilshire which may become primary if the market can break to the upside tomorrow. The RSI line is interesting. If we get another hit on it, we may see a near double-top high or at least a deep retrace up.
I'll have more later, but got to run.


Here is the best count so far for the e-minis.  The double ZZ back up may be more complicated than it needs to be, but the overall look is of a corrective wave up due to all the overlap.

So possible impulsive down versus what counts best as corrective waves up.
Dollar count is crucial.  I have it in a wave [ii] down that has corrected over 50%.

Monday, January 24, 2011

Elliott Wave Update ~ 24 January [Update 9:25PM]

[UPDATE 9:25PM: From a wave alternation point of view, sometimes its best just to zoom back on things and simplify.  From this standpoint, this chart also supports a squeaker new high on the Wilshire. By then of course, people (mostly bears and bear haters) will be downright apoplectic. I look forward to that. I have had patience this long, whats a few more days?

This chart of course supports the FED 2 day meeting with perhaps a huge sell-the-news event at the end.

Beware though, I have a habit of projecting that one last wave high that never comes. So this is still my alternate just for that reason alone and the fact that the waves count too funny from the [iv] spot up.]
[Update 9PM: Top alternate count for the Wilshire pretty much mirrors my alt for the SPX.  This chart has a lot going for it to include an unfolding megaphone ending.  All wave [v] would need to do is squeak to a new high. I think if prices struggled in getting there, that would be high odds that a wave five top is being put in.]
[Update 5:40PM: Update on the breadth thrust and PVT indicators I track using Think or Swim, same that I use for e-minis.

Breadth Thrust is still aligned for a major fall in prices.
PVT has practically hit the trendline from the 2007 top. 
My proposed double ZZ from Friday's update panned out for the moment.
And the alternate count for the SPX which may not match the Wilshire. Its a fractured market obviously at the moment which is how tops can be normally.
A good showing today in the NYAD.  Just a backtest of the broken trendline? 
Tops are a process. The bigger the top, the bigger the noise.  Keeping an eye on the total market.
I'll have some more counts later.