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Tuesday, July 7, 2020

Elliott Wave Update ~ 7 July 2020

The NASDAQ again got the focus of market bidding today. A spurt higher allowed it to touch its 1 and [b] of 4 upper channel line.  There are enough squiggles in place to consider the count complete, however the ideal Fibonacci target range cluster of 10,595 - 10,601 has not yet been met.

There is room in the count for another herculean effort to get to the target range. If it made another higher high, I'm not sure if the Wilshire would make another higher high than today to confirm it.
5 minute NASDAQ. There are no rules violation, however the market pretty much needs to "gap up and go" tomorrow. There is virtually no room left for overlap with [i]. Our upside target lies within reach of [v] of 5. What I like about this count is that waves [ii] and [iv] show alternation; zigzag then a textbook expanded flat. So we'll go with it and see what the futures bring us.
But we are at the mercy of the overnight shenanigans. At the moment, the overnight e-mini NASDAQ futures supports a final [v] of 5 higher. It has channel and horizontal support still as I type this.
Here is the weekly channel lines zoomed in. In yesterday's post, it was mentioned that the upper green containment line was at about 10,525. Today's peak in the Composite was 10,519 so it definitely felt the trendline and retreated.

If ever there was a place for the market to try and "poke through" the upper containment line, it would likely be tomorrow.
And the Wilshire is in quite a position on the daily. Almost bumped up against its downtrend line from peak and the 50/200 DMA crossover event is almost upon us. If there is one more hard rally tomorrow, it may make a touch on the trendline but not quite take out today's peak.
But the market is fractured badly. I don't just say this on a whim. The DJIA and NYSE "island tops" are still firmly in place.

The banks just broke under to a post wave C lower low.  Everything looks like it wants to peel off and sell but the NASDAQ won't let them quite yet.  A few more Robinhooders left to jump in and be led by Portney Pied Piper I guess.
I'll have more later.

NYSE.  As the NASDAQ composite made yet another all-time high today, the NYSE is 6.6% beneath its June 8th peak and 15.5% from its January peak.  A small 4.5% downdraft and we'll have a bear market in a major stock exchange.  Go NASDAQ, yay! (sarcasm)

We'll label it a flat for now to keep aligned with the other indexes.
Updated volume ratios. SPX another recorder (almost) low today. NYSE quite high ratio again.
Lockheed Defense Behemoth. 110,000 employees.  Challenging its "B" wave low.
This is a 40 year count and is far back that Stockcharts can go. The starting point is the late 70's/early 1980's and the start of the rise of the Modern Day Defense Giants. This chart starts at .92 cents!

Extended (5) of [5]. The bloated, cumbersome, business model of American Defense giants (Lockheed, Raytheon, Boeing, Northrup Grumman, etc) has probably peaked.  These companies employ and support millions of well-paying jobs via largely government funding. These are the kinds of jobs that have not yet been affected by Coronavirus and the downturn of wave (1). But I suspect they will be soon. The stock seems to be signaling it. Wave (3) down will start to expose this sector that is often overlooked.

These jobs are the kind of ones the Fed is trying to "save" by goosing the market. There are millions of hefty 401K's tied to the Defense Sector.  And largely every one of them has been taught to "stay invested".  So not only will this sector shed well-paying jobs, but a severe market downturn will cripple most 401K's. 

Wave (1) took out millions of low-paying jobs. Wave (3) will start to erode the well-paying jobs such as what we find in the Defense Sector and its multitude of smaller companies that contract out to the bigger ones.
I screwed up the wave degree's yesterday but it doesn't affect the count. I changed the wave degree to match the larger count.
The high for Tesla was last night. Today's price was unable to match the overnight high. That's probably a warning. A truncated [v] of 5 would make sense here in that case.  It would look better though to have the higher high to complete the (v) of [v] of 5.  Who the heck is buying to get another (v) of [v] even if you think Elliott waves are total bunk?
How's this for continued bullish sentiment? DOW down a few points shy of 400 yet the CPCE printed another .45. The 30 day moving average is in extreme territory. The other times were at peak of (1), peak of (5) and the occurrence in B of (2) in 2010.

This setup is particularly interesting, The 30 day moving average continues to go down despite the Wilshire 5000 that has not only failed so far to match its February peak, but it has so far failed to match its June 8th peak.  Its proof that everyone is completely focusing on one index only: The Composite and its QQQ's...
Gold looks like its spinning up the energy to finally burst higher.
And the all session count to help us hone in on the count. Wave i should be higher than (i) but the subwaves don't match a i peak so i assume there are more subwaves to i of (iii) of [v]. Once we find i and ii of (iii) of [v], we should surge up nicely in wave (iii) of [v].  Getting close.

The other way to label (this alt count not shown) is to assume i-ii, [1]-[2],(1)-(2) which means we are just about ready to blast higher in (3) of [3] of (iii) of [v]. I don't know, that may be rushing things.

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