Monday, January 12, 2009

Elliott analysis update


The above Weekly chart shows a clear break of the ten week long wedge that appears to be a completed Wave 4. This is a good time to remember that anything can happen in the markets and be explained away in retrospect. Nonetheless, if it looks like a break-down, acts like a break-down and feels like a break-down, it's probably going a lot lower.

Here is a closer look with the Daily S&P 500:


This is an almost perfectly formed and complete Wave 4 with a break of the channel lines drawn from the November lows.

Finally, below is our leading shorter-term chart, the 60 minute chart, which correctly gave us a heads up last Friday with a clear break-down warning that a new leg down had begun:


My analysis tonight is purposely succinct, not just because it's been a long day and the Red Wings lost to the Dallas Stars in overtime, but because sometimes less is best. Let's not make this Elliott Wave stuff any more involved then necessary. We are still due another leg down to complete the first phase of a multi-year bear market and as of tonight, the most apparent chart action is suggesting that Wave 5 down has begun.

A

8 comments:

Ariel said...

I agree we are likely to see another move down, and probably in a fifth wave after a completed 4th. I don't think it's a true triangle, based on the internal wave structure. But I don't want to make it complicated either :) I do think other market indicators confirm (and BKX DOES look like a tri 4th leading down), so my bottom line would be the same.

Marmaduke Weatherall, IV said...

Ariel:

Very prescient. "Old money" is now standing solidly behind both this blog and its trades. And, as we all know, OM rarely bets wrong.

Just ask my broker- I have been long puts and short the common on both Citigroup and AIG for a year.

MW

David said...

If I assume wave 4 ended on Tue last week and we've been in wave 5 since topping at Dow 9088 then we should be well into fractal 1 of Wave 5 down. Since I haven't put on all the shorts of my planned allocation, do you think it best that I wait for the corrective fractal wave 2 before instituting my remaining short positions?

Anonymous said...

thanks for thoughts, any comments on fas vs faz and what about updates for nnvc?

Allan said...

David, Good question, not such an easy answer. Yes, there will be a second wave retracement, but from what level? More importantly, from what level will the killer wave 3 begin? Could be higher then current levels, could be lower. In your shoes I would be no less then 50% short right now, adding more incrementally on any rally.

Re:NNVC Holding up very nicely in this down leg, seems to be mostly do to lack of sellers. If true, I can't begin to tell you how bullish that is.....although maybe I just did.

A

Anonymous said...

allan,

ACTC has attracted a lot of buying. i mentioned it at 0.02, its now sitting at 0.075 after hitting 0.09. i think more to come...
see link:
http://med.stanford.edu/news_releases/2009/january/obama.html

dk

Allan said...

Re: ACTC I remember your recommendation, my bad, colored by my bearish bias for general market, but the article linked and the potential for this stock to be a ten bagger has my attention, will look at it now (better late then never) and post my analysis if I can confirm it's potential.

A

Anonymous said...

Allan:

Accounting issues with NNVC....from yesterday....

http://biz.yahoo.com/e/090113/nnvc.ob8-k.html

I don't see any major misques yet, but it does spark some interest in the past and current values of NNVC. I would think that this may cause a slight setback in value, which may spawn a buy-fest (at least from me).

What's your take from this article? It seems like it's mostly based on the 'opinion' of the accounting firm and the lack there of. Maybe I am interpreting this wrong, but I did at least want to point it out on this forum.

- PSU Eric