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Wednesday, April 20, 2011

Elliott Wave Update ~ 20 April 2011 [Update 8:25PM]

[Update 8:25PM: The dollar. Looks like a giant cycle wave II flat at the moment.
Sentiment really sucks. Via Sentiment Trader. Just looking for that "death of the dollar" news magazine cover. There is at least 100 million Americans who think that the dollar is headed for worthlessness.  But more importantly, I think, there are probably the same 100 million Americans who don't want the dollar to be worthless. I think that counts for something.
[Update 5:50PM: Its curious that EWI didn't mention that the VIX closed below its daily BB today. Without fail they have mentioned this on every occasion since 2009 low using it as a "setup" for a market downturn once the "trigger" is set and the VIX closes back inside its BB.

Well therefore I'll mention it. The VIX "trap" is set. We need the "trigger" to close back inside the BB.
 It was proposed that Minor wave 5 ended in truncation for the SPX and Wilshire 5000.  One strong guideline of a truncated top is that exhaustion sets in and prices collapse as a result. That has not happened with today's strong up move and the DJIA hitting another new high. So the idea of a truncated Minor  5 does not appear correct.

If we now rule out Minor 5 truncation in SPX we are left with 2 options. 1) The SPX and Wilshire topped in February. This does not look correct either as the Wilshire almost matched February's high by a mere 8 points (hence the proposed truncation.  2) Minor 4 is still in play in an attempt to oscillate prices until a proper Minor 5 can commence.

The massive SPX gap up (biggest I ever remember seeing) is just as ridiculous as the gap down the other day. I suspected the gap down would be closed in an expanded wave (ii) flat but the move up appears stronger than is warranted for a wave (ii). We shall see.

So hence, one must assume the stupidly large gap up today will be closed soon also. But would this indicate a reversal? Not necessarily if the market traces a complex wave [c] of Minor 4 triangle to close the gap.

Wave (c) of [b] is required to go higher than (a). Then back down to close the SPX GAP UP in a wave [c] of a Minor 4, likely triangle, is the best guess for now.
Did any of that make sense?
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