If this count is correct we should have a minimum of another couple of days of higher prices. The rally from last night's lows into today's highs is clearly an impulsive 5 wave move. However, the sell-off from the AM highs into the afternoon lows also appears impulsive and can be counted as 5 waves. Someone posted the thought on HOB today that the lows last night were actually the end of a "b" wave, and that the rally from there is a "c" wave. He could be right, but that does present a problem. In the above count, Wave 2 (red) is a running flat, so by Elliott rule Wave 4 (red) must alternate and cannot be a flat. So if we've seen a flat type correction since last Thursday it's either a lower degree wave or something else entirely is going on:
Went long today based on the trendline/oscillator system. Prices broke above the down trend line at 5 AM and secondly above a reading of 20.0 on the oscillator at 9 AM (CST). Entry was at ES 1032.00.
A stop and reverse was initially placed under the position at last night's low of 1002.75. Market's almost inevitably retrace a move, the problem is determining what's merely a retracement and what is possibly the resumption of a prior trend. The fact that the sell off today looks very impulsive argues against it being just a retracement. Also, the sell off cut pretty deeply into the rally (70%). If it was just a retracement then we should rally from here up past today's high of 1038.00 without looking back. Thus the stop and reverse was moved to 1 tick below the low of the sell off @ 1013.25. If it gets hit then a stop and reverse on the resulting short position will be established at today's high of 1038.00.
Supporting the case for continued rally from the late day low at 1013.50 is the fact that the 30 minute V Stoch bottomed in oversold territory and curled up about the same time that low was being established:
A couple of housekeeping notes. First, a write up on the trendline/oscillator is partially completed and can be found in the right sidebar. There is a lot more yet to be explained, but it may be a while before I can finish it. Second, I'll be traveling on business Thursday and Friday this week (in sunny California), so I won't be on the market as normal, especially on Thursday when I'm in airports or on planes most of the day. Haven't decided yet how to handle the current position, a lot will depend on what happens between now and tomorrow evening. The Vindicator webcast will be available at HOB as normal, I have someone in my office trained on how to maintain it.
