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Thursday, March 4, 2010

Thursday updates

I was playing with the count on the Dollar today, and RTZ in the CiL made a great observation, that we still have not had a strong looking iii of 3 wave for the Dollar. But this count here, a very bullish count, would make a lot of sense, because we might not of had a iii of 3 yet, but rather a 1-2, 1-2 count, with the strong impulsive iii of 3 still to come. It really makes sense that the reason we were having such short 3rd waves was because they were only the iii of 1 waves. Also very interesting how the 38.2% retracement off of the top, comes right to the point of maximum support at 79.53, when labeled with the 1-2, 1-2 count. When I looked at a longer term chart, the RSI also never really did have a strong peak as it has had in the past either. One last thing that really makes sense, is that if this count is correct, then we would be just about ready to start the iii of 3 wave up, and the same time the indexes are about to start a large wave down, and on the SPX, quite possibly the 3rd wave down, putting the inverse correlation of the Dollar and the equities back in sync!!!
Breadth ended the day at 1.42:1, advancers, on low volume. This breadth chart, which is only a measurement of the number of issues advancing, compared to the number declining, is a great example of how breadth can be used to help with counting out Elliott waves and for tell-tale signs that a trend change is on the horizon. In a 3rd wave, momentum should be at its peak, and so should the breadth, usually peaking at the top of the iii of 3 wave, then diverging for the 5th wave as breadth declines, but the index still advancing. This chart confirms that momentum is waning for this rally, just as it did during the last rally back in January.

This is a longer-term look at the Russell where the divergences are really showing how much the momentum is waning in this current rally. The Russell was busy making higher highs yesterday, while the indicators were making lower highs. This action usually proceeds a top, and is a great sign that a trend change is right around the corner.
There is overhead trendline resistance around the 666 level. It would really be ironic to have the Russell top out at 666, after the SPX bottomed out at 666 last year. I have the Russell in a totally different count then the SPX, and I see no reason why that can not be possible, the wave structures are alot different, the Russell being much more impulse looking from the lows back near the beginning of February, advancing at a much quicker rate then the SPX, and the channel is much skinner then that of the SPX that has been struggling to make higher highs and with a lot more over-lapping corrective waves.

After the close, That was a pretty much a go no where type of day, and the Bollinger bands confirm that. We never did make any higher highs, nor lower lows, and spent the day in a big mumbo-jumbo mess of corrective waves, tracing out the final 4th wave. Since the trend was up yesterday, and today had no short-term change, the trend remains up. Levels for higher highs, and lower lows, are 1125.64, and 1116.51, respectively.
Once we break out of this range, it should be a sharp move, and hopefully fill in the final 5th wave around the 1136 level, if wave 5 were to equal the 1st wave in terms of price. I would not be surprised at all though to see a truncated 5th wave, barely making a higher high, it seems to be a trend for the last year to have the final 5th waves end on the short side.

10:25, BORING!!!, The indexes are stuck in consolidation mode today, working on a 4th wave, one thing about days like today is that they burn off the over-bought/sold conditions. And in this case, have relieved the over-bought conditions, clearing the way for more up-side from neutral to slightly oversold positions.

Click here for a live, and updated chart!!!
8:08, The is the most likely count I have going right now for the SPX, it is possible that we topped at 1025.64, but the wave down from there is much more corrective looking, then impulsive so I do not have much faith that was a wave 1 down. The expanding triangle for a 4th would fit better in the microcount. With higher highs to come, somewhere up in the 1130-1135 range, wave 5 would equal wave 1, depending on where the 4th wave finally bottoms. So far for the day we have not made any higher highs, nor lower lows, so the trend from yesterday remains in effect, and that is up!!!


  1. I'm sorry to say that I'm more bullish. I know it's like listening to a broken record (!). I see an extended 5th coming which will take SPX to the 1150 area by March 11th.

    We got a wave A followed by a B. C will equal A in the 1150 area. In C we've got 1 and 3 of equal length and an expanded flat for wave 4. An extended 5th of 1.618 will take C to 1150, meeting the C=A target.

    This ABC is likely wave A of an upwards rising ED that will end above 1200 and probably nearer to 1300.

    I promise not to make any more comments for a while!

  2. David, no, you are always welcome to make comments, and I look foward to what you have to say, please do not stop just because I might not be as bullish. I like to hear and see all sides :)

  3. Hi..
    been following you for several months now since I consider your work unique and fairly accurate..
    Here is a fundamental question that I've been asking other bloggers..and whats confusing me about all the EW counts..
    Can different major indexes be in different counts..I had thought Nasdaq, Dow and SP500 were in P3 already and basically waiting for minor 3 to commence..However, since RUT made a new high, it suggests it's still in P2. Can this be possible? Different major indexes in different phase of the primary wave? OR do I assume RUT is lagging and trying to catch up? or does this mean RUT is the leader and all the rest will melt up?

    Next question is I noticed EW people will switch between SPX, RUT, Global Dow and Whilshire charts to find the chart thats most fitting..but which one do you consider the standard for EW analysis?

  4. Good questions, First, yes, I do believe that the indexes can be in different counts, remember the NASDAQ back in earlier 2000 after the bubble popped, or when the NASDAQ bottomed in Nov.'08, while the rest of the indexes bottomed in Feb. '09?. So yes, there are of instances of the indexes being out of sync with each other and it normally happens at turning points.
    I like the SPX, it is a well balanced index, that is equally wieghted.

  5. I hate to say it but David "might" be right IF the SPX breaks up and out solidly above 1130. The 1128 level has as many fib correlations as 1150+.

    But lets see them blast it higher first.

  6. Hi Mike. Your USD chart looks pretty good, and correlates well with a UUP chart Kenny put out yesterday. FWIW, it also corresponds with my expectation for a [iii] of 3 down in Gold on deck.

  7. FTSE above old high Dow not gonna make it. Close to top imo.