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Tuesday, March 8, 2011

Elliott Wave Update ~ 8 March [Update 10:12PM]

[Update 10:12PM: NYAD chart. Technicals suggest it is losing momentum. Check out the ROC.
[Update 6:07PM:  Struggling with coming up with a bear wave (ii) (or [ii] if you prefer) since the recent chop low stands out as an a-b-c- down move.  So for the SPX, that would imply a wave (ii) or [ii] high somewhere between 1332 and 1344 which would be a narrow window.

[Update 5:24PM: Keeping with the Minor 4 theme, a look at the SPX gives some targets with the presumption of a 23.6% Fib pullback.   We likely have the wave [a] set. Now looking for a wave [b]. Wave [b] could turn out to be a triangle, or a zigzag if it breaks above 1332.

One thing that stands out is that it has been a tough market these past few weeks.
The longer prices maintain, the more evidence that a Minor wave 4 is tracing out. So tonight we explore the Minor wave 4 count. After all, the bear count is easy - we can just say a wave three down is coming (heh).

1. Fibonacci: A Minor wave 4 should pullback at least a minimum of Fibonacci 23.6% of the previous wave three.  We have not come close to this number yet which suggests that the market will eventually head down in prices some more.  A 23.6% pullback would take us into the price range of the previous subwave [iv] which is normal.

2. Channeling:  Minor 4's prices should ideally complete an EW channel for Intermediate wave (C).  A move sideways and a bit lower would accomplish this.

3. Form: A triangle or some double combo would be preferable but there is a good case to be made that all Minor sized and above corrections for P[2] have all been zigzags. So I would not rule out yet another zigzag in fact my wave chart suggests that may be the case.

4. Sentiment: Naturally the bullish sentiment will be washed out somewhat with a Minor-sized correction. Not sure that has happened enough yet. A further correction in time and prices would do the trick certainly.

Bears need to break major support at 1271. And it needs to head down pronto. A super-sideways wave two is getting a bit long in the tooth and losing credibility as a wave count. On my Wilshire chart above the blue box area needs to be breached.
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