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Friday, March 12, 2010

Friday updates

After the close, What started out as a fast paced, up tempo day, quickly turned into a boring day of consolidation in most likely another 4th wave. Since we never made that lower low below 1138.98, the trend remains up, and again, a day filled with consolidation burns off the over-bought conditions clearing the way for more up-side and that can be see in the chart above with the indicators back below the neutral line, and sitting in slightly over-sold territory. The daily chart of the SPX is showing NO divergences on the RSI.
Breadth for the day ended at 1.23:1, advancers, back to those low volume numbers.
The corrective, a-b-c, up, option is still on the table as there has been nothing to invalidate that count yet. An interesting side note that came from Kenny's Technical Analysis Blog, was the length of wave A, and wave C, are nearly identical, 67.92, and 67.39, respectively.

Click here for a live, and updated chart!!!
7:49, This is what I have for the shorter term counts, and so far we have nearly three completed waves, leaving two options, a correction, a-b-c, from 1144.50, or the 3rd wave of an impulse.
If that rally was corrective we should start a strong sell-off for the 3rd corrective wave down, most likely a "C" wave, since the sell-off from 1150-1044, was corrective (wave A), and the rally corrective (wave B), it would make sense that this sell-off also should be corrective (wave C) and be targeted down near 1044, followed by wave D (back up, to test 1150) and finally wave E, down, before an impulsive wave to make higher highs.(that is just one option on how a corrective wave might play out)
If the rally is going to turn impulsive, then we are looking at somewhere in the neighborhood of 1175-1190, where we will run into trendline resistance (see the chart below, red dash line).
As long as we keep making higher highs, the trend remains bullish, only by making lower lows can we go back bearish, and the first low, would be breaking below 1138.99.

7:31, This is what I am carrying for a longer term count for now. I have spent weeks pouring through charts of the SPX trying every possible idea, and I just can not come up with an impulsive count from the bottom at 666 for this index that does not break the rules of Elliott wave. When you look at the daily candles, this task seems easier said then done, once you start getting into the smaller counts, there are just too many over-lapping corrective waves that leave no possible options for the required impulsive waves needed for the larger structure. This morning, in one last attempt I tried a leading diagonal, and that too breaks the rules (wave 4, does not enter the 1st wave).
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6:56, we broke above 1150.45, so now the medium term, and short term trend are both up until we start making lower lows, a sad day for this bear, but I can not fight the trend.


  1. I still believe we have moved back into a bearish phase. Timing and divergences suggest it. Markets often go further than one expects at these junctures, but they always come back!

  2. SPX popped up to exactly the point where C=A at 1153. And it achieved the target near the open after the target date of March 11th. Price and time suggest 1153 was an important peak, but the count is not clear. Another move upwards thru 1153/5 will open up 1185/95, but until then the better bet is that a peak has been reached.

    If so, this was likely wave 'A' of a large rising ED and wave 'B' will probably want to at least overlap the price action at 1110.

  3. Michael for the longer term count, may I suggest an expanded flat for the price action from November thru February? For those who believe this is a rising triple three thing or triangle, that could have been wave 'D' (or X) and we now get a rising ED for 'E' (or Z).

    Very good work as always.

  4. Thanks David, I plan on playing with the longer term counts early in the morning, before the kids awake, in total peace and quiet and see what I can come up with. For me the early week-end mornings are the best time to think undistracted.