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Tuesday, July 12, 2011

Elliott Wave Update ~ 12 July 2011

The late day new low makes the move down from the recent 1356 high a 5 wave pattern.   This confirms our suspicion last night and again this morning that Minute [iv] of Minor 5 is likely not the top count. There has been simply too much price damage and the severe nature of selling does not fit a Minute-sized wave [iv] "correction". Officially wave-wise it has not been eliminated and remains on the table (particularly if 1333 gets recaptured), but technically its probably best to consider an [e] wave first.

Remember the "nasty [e] wave down" that I had been talking about since we first started speculating that the market might be trying to triangulate a Minor 4 of Intermediate (C)?  Well it got pretty nasty recently.

Credit stresses of a sovereign level of major world economies are nothing to lightly disregard.  It is but a taste I believe of what is to come to most the entire world in P[3] down. Indeed it has been predicted.  I am under no illusion that we are in a wave 4 or an [e] wave. For all I know, the market could flash crash tonight taking us well under 1250 support. That is how serious the problem is. The world's financial markets are the living, breathing definition of a Ponzi scheme.  The Ponzi gate-keepers wish desperately to hide this fact by their very actions and words. Yet Ponzi schemes always ultimately fail and spectacularly so. Why would I think this would be any different?

The market (social mood) ultimately is the final arbiter for timing. And if this is a Supercycle (a) bear market which I am convinced in every bone of my body that it is, we have a long way to go toward a bearish low. Thus prices will sooner or later align with the larger social mood deterioration to the downside.

However, until the market actually has a solid breach of 1258 SPX, we still must entertain all our EW stances.  After all, social mood may not be ready to let go yet. This is in fact occurring with the debt talks going on as we speak.  A debt raise compromise and a bullshit deal may mean we simply wish to have one more drink before the bar closes.   This last "hurrah" in social mood could translate into a lurch for a Minor 5 thrust up out of an [e] wave - the glory days of old for asset mania.  I think it may truncate on a bunch of stuff, but still, 1365 SPX is a hard pill to swallow if you're short at 1290 SPX.

There is of course a good chance a debt deal gets done thereby affirming the social mood's penchant to have that last drink before the bar closes. So the debt talks fascinates me.

The debt ceiling talks may mirror social mood.
Raise the ceiling - stay for another drink - Minor 5 up ensues out of an [e] wave (but ultimately the bar closes shortly thereafter)

No debt ceiling deal  - social mood lets go of the Ponzi and lets it fall where it may.

5 minute chart taken from the perspective of an [e] wave of Minor 4.  We have a pretty decent 5 wave pattern down at the least for now.
Everyone sees the head and shoulders potential of the market.  If the 1370 was P[2] high, I have this as Minute [iii] of Minor 1 down.  For now we'll take things one squiggle at a time.
Daily chart shows the 50 heading down and 200 coming up. Closed under the 50 DMA today which seemed to be the goal. Maybe we test the 20 DMA for (a) wave of [e] support.
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