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Wednesday, February 29, 2012

Elliott Wave Update ~ 29 February 2012

Today's wave and price action supports the notion of an ending diagonal count that was discussed in last night's update.

It may have one more leg higher although we could have enough waves already.

Here is one version:
Here is the second version which sees one more upside a-b-c move We'll know tomorrow.


E-minis to a new high.

Tuesday, February 28, 2012

Elliott Wave Update ~ 28 February 2012 Update 9:20PM]

Update 9:20PM: Finally King Dollar. Fresh sentiment data - Public Opinion - via the excellent Sentiment Trader - came out tonight and shows quite a bit of negative sentiment toward the dollar. It may go a bit lower.

What is remarkable is that sentiment is so low yet prices have sported perhaps a series of ones and two's up from last year's low. This price/wave action combined with a very negative sentiment is the perfect setup for a powerful wave three higher which catches most everyone off guard. This is the kind of stuff Prechter teaches and he is extremely observant of this kind of sentiment data combined with wave patterns entails the heart of EW theory. 
Looking for a move to somewhere under 78 probably to the lower channel line to form the wave 2 price low.  
Incidentally the EURO sentiment is at 53%. Certainly not a bullish extreme, but considering Greece is getting ready to exit (in my opinion) and the ECB running an even bigger Ponzi scheme than is the FED, well thats pretty good sentiment. It likely has to go up a bit more, but having it at 53% is already amazing.

Update 8:10PM: Ending diagonals (if thats what this is) are hard to count as they should be. The market masks its moves and maintains a bullish emotional sentiment all the while losing overall impulsiveness to the upside. Sure the market is moving in bursts of 5 wave moves up but they now best count within a series of A-B-C's up rather than larger 5 wave moves. 

This is where the emotional "prices are all that matter" comes into the argument. Upside is upside and at this point in the trend - since it has been in existence for a while now - will become a main argument for bulls to stay bullish.  Every apparent coming correction is a "dip buy" thus reinforcing the bullish sentiment. This pattern of staggered overlapping correctives followed by buying bursts are what form the overall A-B-C upward moves.

Some people will insist this is a "running" correction in which prices maintain while market technicals (and other sentiment measures) "reset" and imply much more upside than most expect after the reset period is over. This could well be the case but thats an assumption that is more an act of faith due to past performance than hard evidence at this point.  Just because the market has had such running corrections before (usually at much lower levels in price and further back in time) doesn't mean they are occurring now.

When will this ending diagonal end? When the expected "corrective" is finally dismissed by even the bulls that expect a correction.  When the bears no longer have any shorts of significance to squeeze (and are afraid to short at all for that matter). When the slew of dip buyers have run short on supply.  

Under that perfect ratio of catching the most off guard as the market possibly can in conjunction with waning upside A-B-C stabs, then the market will fall off a cliff in a swift move down that traps the myriad of bulls buying each small dip the past weeks. Catching shorts off guard who have been squeezed little by little until they give up and now are afraid to chase prices down. 

In other words the perfect "air pocket" that we have seen in action on several occasions since the 2009 low. 

That is what an ending diagonal implies. 

I don't really like the count, but its the best I can do as I likely have an incomplete picture.  As I said earlier, if its an ED pattern, it may need some time to fully develop, particularly if its a large one.
NDX is clearly in a thrust move out of a triangle. A triangle implies the last correction and this thrust up is the final move. A triangle of this size implies the final high will be a significant one for some time.

Measured move from "E" is 2665.

Update 6:15PM: French CAC count.  Virgin space has yet to be breached but I suspect it will. Triangle measured move from "[e]" matches projected wave [v] price high.

Yesterday, EWI pointed out that the NASDAQ Composite had closed up two days in a row with negative breadth. Today was also a negative breadth day despite the nearly 21 point rise.

The Wilshire5000 seems to be wedging in overlapping wave moves which could constitute an ending diagonal triangle. Ignore the wave degree for now, we'll sort that out and I'm too lazy to relabel for now.

The problem with ending diagonal moves is that you can tend to label them too early. They are like triangles in that sense. They take their time to play out.

Under long term resistance of 14,562. Until the market clears this level and holds as support, I don't know why everyone is getting uber-bullish.
Apple's wave count:
Long term daily. It has enough waves in place. Question is, how high will the final squiggles go?


Monday, February 27, 2012

Elliott Wave Update ~ 27 February 2012

Market internals were quite pathetic.  Ending diagonal count still applies.
Hourly Wilshire5000. Has not confirmed the other indexes.

Sunday, February 26, 2012

Friday, February 24, 2012

Elliott Wave Update ~ 24 February 2012 [Update 5:05PM]

Update 5:05PM: Detailed Apple count over the last many months. Proposed extended wave 5 of (5) of primary [5].
Still tracking the possible ending diagonal triangle count.  ED's are like triangles in that you cannot rush to label them too early.

Marker internals can be seen to get weaker. Today was one of the weakest so far despite the fresh market highs.Wave degrees will be worked out in time.
Industrials could use a pop to finish out a wedge.
The dollar is a key market at the moment (as is Euro).
SPX possible squiggle. Its hard to count which is appropriate. Again note the waning market internals.
What about all that money that is supposed to leave bonds and head into stocks? Well, stocks are actually at the "overvalued" mark.  Bonds are "undervalued". (Via Sentiment Trader)
Even the GDOW sports a potential wedge finishing today at major number resistance (2000)
MUB has cracked and follow through today to the downside on volume. Taking back about 30 days of trading in only 2 down days with potential for more.  Thats the danger of being long in these markets at the wrong price.
NDX daily.
APPLE count. There is negative divergence on the on balance volume. 214 hedge funds own Apple.


Dollar count:

Update 10:12 AM. Update on last night's counts:

Thursday, February 23, 2012

Elliott Wave Update ~ 23 February 2012 [Update 6:09PM]

Update 6:09PM: Update on the Gallup Presidential Approval Tracking charts I posted a few weeks back. It was predicted that approval would rise to the blue arrow on this chart.

And the result since shows that was the case. If this down channel is to be obeyed, we are about to see a huge reversal in the President's tracking poll data to the negative. And that would coincide with a top in stocks perhaps.

We'll see if the channel holds.

Update 5:40PM: MUB is cracking
Wilshire count:
INDU count:
Both are ending diagonal counts which implies exhaustion and a subsequent price reversal.


Top counts at the moment on the Wilshire and INDU

Wednesday, February 22, 2012

Elliott Wave Update ~ 22 February 2012

The market was trading a bit "heavy" today even when it was at its rebound high points.

Best count(s) since the December low. At the lower channel line more or less.

Possible impulse down from the high using the Wilshire 5000.  What should be troubling the bulls is the appearance of that little ending diagonal wedge at yesterday's high. That could signal exhaustion at least for more than a few days.  That wedge was from the Industrials "lunging" up to touch 13,000. Considering the market was 10,450 in only October.


Tuesday, February 21, 2012

Elliott Wave Update ~ 21 February 2012 [Update 7:36 PM]

Update 7:36PM: Wilshire count since the pre-Christmas low. Wave degree isn't important at the moment.
Close-up of the virgin space. It need not be big, it need only be valid.

Update 5:40PM: Nikkei proposed "E" wave getting stretched.

Update 5:31PM: Rising Wedge. Showing negative divergence on the breadth thrust.
Price and Volume Trend shows longer-term negative divergence.

Update 5:26PM: There appears to be a small wedge ending diagonal at today's high also.  Where it fits in the overall count is unclear.

The e-minis show perhaps that the market is losing its overall impulsiveness to the upside.  Each motive wave (i), (iii), (v) would no longer sport a 5 subwave impulse within each, instead we would count them as a-b-c "threes".  This is how you label an ending diagonal. Wave (iv) and (i) should also overlap giving further evidence of a loss of momentum.

In theory, having each wave (i), (iii) and (v) sport a "three" is a clue in this loss of momentum.  Having wave (iv) overlap (i) is another sign of loss of impulsiveness.

Here for instance is a proposed ending diagonal triangle count. We already have the (iv) overlap with (i) and legs (i) and (iii) count nicely as a-b-c "threes".

A solid break under, say, 1353 futures - or approx where the green dashed line is - might be bearish.

Dow Transports have broken down further today despite the shiny new Industrial 13K touch.
Wilshire5000 (and of course the S&P500) have not yet confirmed the Industrials and NASDAQ upside high breakouts.
Wilshire 5000 long term resistance.