Anonymous said... Hah! You're EW theory just got fu*ked. See??? News trumps all!!!First, profanity is out of place on my blog and I will not tolerate it. If I have to go back to moderating comments, so be it. Second, one rally is inconsequential to the Elliott Wave Principle and even less meaningful to my analysis. Let's review.
Here in relevant part is my analysis from last week:
Monday, February 2nd:The common thread, which is unchanged, is that the market continues to flirt with major support and it is when that support fails that a vicious third wave decline will take hold.
Once the counter-trend rally is complete, we should see another sharp decline to well below 825.
Tuesday February 3rd:
As Dylan so eloquently put's it, "It's not dark yet, but it's getting there."
Wednesday February 4th:
Watch the 812 level on the SPX, it represents the previous low, if it gets taken out with conviction, the floodgates should open to the downside.
Thursday February 5th:
The significance here is that a break of the wedge to the downside should lead to another fast 100+ point decline. It can happen at any time, tomorrow, next Monday, a week from next Monday. Until it happens, prices can play all they want inside the wedge.
Here is the wedge I posted on Thursday night, ahead of Friday's rally:
My observation was that it will take a break down out of that wedge to trigger a significant decline. Now let's look at the same chart, adding in Friday's rally:
See the difference? Hardly. Friday's rally is a mere blip, an elongation of last week's candle that isn't even threatening the top resistance line of the wedge. My analysis is unchanged, when and if the wedge is broken to the downside, expect a massive decline, a mini-crash, or worse.
Here is a closer view of the wedge, basis the 120 minute chart:
Take a look at the False Bar Stochastic indicator at the bottom of the chart. It has again reached the Overbought top area of the scale. The previous time it did this the market suffered a significant decline the following day. It is again poised to signal a move lower.
In summary and as I wrote on Thursday night, prices can play around inside the wedge long enough to shed bull and bear alike, before making a definitive move out. My analysis is steadfast that this definitive move will be to the downside. Only an impulsive move above the top of the wedge, well above the 900 level on the SPX, will call this analysis into question.
Finally, I don't mean to merely chastise a flippant comment made in response to one of my posts. Instead, I want to point out how important it is to keep the bigger picture in mind. We are waiting for prices to signal that a significant move lower is imminent. As markets do, this one is teasing it's participants with fake-outs to the downside, followed by fake-outs to the upside. There is a real move coming and to be aware of the big picture, alert to the wedge forming on the weekly chart, is to be prepared for whatever comes our way.