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Wednesday, March 3, 2010

Wednesday updates

This is another chart that goes to show the differences in this latest sell-off, compared to the previous ones. Yesterday I posted a daily chart of the SPX showing how the volume for this sell-off from 1150 was 100% opposite of the sell-off and rally back in July. This chart shows the amount of time each correction took, and the time it took to rally back to the point of where the sell-off commenced in the terms of price. In every instance, the rally was much quicker to recapture the high, then the amount of time it took for the correction to play out. This is what should be expected for corrective and impulsive waves.
This time, the rally has already exceeded the sell-off in terms of time, and still has yet to make a new high, another reason to believe that something new and different is going on, and a another piece that shows how weak this rally has been in terms of price, momentum, and volume.
The Russell, also looks like it still needs one more wave up to finish off the 5th wave.
After the close, The SPX did manage to make another higher high, without making any lower lows again today, so the short-term trend remains up. The MACD, and RSI on the daily charts never did make it high enough to test the upper levels of trendline resistance, and there are negative divergences going on in the indexes. That makes me believe that the sell-off near the end of the day, was more likely part of a 4th wave. It also has a corrective, a-b-c look to it, that would be expected, and fit into the count fine as part of a 4th wave triangle.
Breadth for the day ended at 1.20:1, advancers, again on low volume, a day of mostly consolidation to relieve the short-term over-bought conditions for one more push up to finish the 5th wave.
Levels to watch tomorrow would be 1165.51, for the first lower low, followed by a break below the 1113 level. And 1125.64 on the topside.
Click here for a live, and updated chart!!!
The longer term chart of the Russell is also confirming that things are very near an end for this current rally, the MACD is about to hit trendline resistance, and all three indicators are way up into over-bought territory. The price action also is coming up to trendline resistance around the 658-659 level.

7:44, Still a little upside left on the SPX to finish the micro count, and to get the MACD and RSI on the daily charts topped out against trendline resistance. The SPX did make a higher high this morning, with-out making any lower lows, so the trend remains up, but I would be very cautious about entering any new long postions at these over-bought conditions.
FWIW, I am 100% short in Wall Street Survivor.
7:09, the VIX has now reached the old channel, and trendline support, at the same time the STO, and RSI are about bottomed out, this should be a good time to see the VIX reverse itself.

6 comments:

  1. Learning question for you.
    What is the difference between impulsive and corrective? Is one more critical to occur for a turn than the other?
    Thanks for the help

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  2. An impulse wave moves in the direction of the larger trend, while a corrective wave does just what it sounds like, that is, moves against the main trend. An impulse wave is constructed from 5 smaller waves, while a corrective wave normally has 3 smaller waves.

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  3. smokeyeyed, on the right hand side of the blog, under "EWI Free Resources!!",check out the second link down from the top "Elliott Wave Tutorial", that would be a great place for you to start understanding Elliott wave. It is free to use all those resourses of EWI BTW. :)

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  4. Michael, note that the rise for RUT can be an ABC, and confirmed if we get to C=A in the 670 area.

    A three wave rise for RUT will put it in the same camp as SPX - part of an ED that projects into May.

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  5. Hey David, yes, I having been paying attention to your counts :)

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  6. .. also notice that the move from 1150 took 19 days to get to 1044 and it took 19 days to get to today's high 1126 .. I think that today could have been reversal .. this equality time duration is typical [A] and [B] relation .. [C] down or a 3rd can start tomorow ..
    .. great charts ..
    .. regards ..
    Saboya

    ReplyDelete