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Tuesday, December 21, 2010

Tuesday 12/21/10 wrap up

ES is still grinding upwards.  It's possibly putting in an ending diagonal Minute W5 (green) as the last leg of Minor W5 (red) which is itself an ending diagonal. 

If this count is correct the ES shouldn't go up past 1252.50.  This is because Minute W1 was longer than Minute W3.  Elliott rules say a 3rd wave can't be the shortest, so Minute W5 (now in progress) can't exceed the distance of Minute W3.  Adding the length of Minute W3 (11.75 points) to the low of Minute W4 at 1240.75 gives a limit of 1252.50.

There is another possibility here.  Intermediate W1 lasted 25 trading days from Jul 6 to Aug 9 and took the form of a diagonal.

If Intermediate W5 were to run the same length of time it would terminate on Dec 31 - just about perfect to accommodate the normal holiday/end of year buying.  Also, Int W5 already has an overlapping tendency, and it can be counted as a diagonal in progress going back to it's start at the lows of Nov 29.  A projection based on these thoughts looks like this:

Note the similarities between the chart of Int W1 and the projected Int W5 - both start out with about 7 days of strong rally followed by a choppy overlapping upward drift.  Interesting.

Quick update on the Elliott count on the EUR.  It appears to be in a 5th wave to the move down from the Nov 4 highs.


  1. Thanks Al. EUO, the double EURO short was my best position today. Thanks for the EURO charts. The EUO and YCS (Yen short) both have cup and handles forming on their daily charts going back to the summer.
    Long term bonds were a roller coaster today and the ES...well...
    Plan to sneak out of work on Thursday to iceboat in NJ with my younger son, and then will need to figure out which positions to let ride while we're climbing volcanoes & looking for birds in Costa Rica. The ES's pulse has been difficult to monitor, the long term bond decline has reversed for a bit now...I guess long live the dollar!

  2. I'm short via TZA. I'm not going to pretend that I've found "the top" but I think we're very close.

  3. I think we're close as well but would be surprised to see any real down move before January.

  4. ES has been very difficult since the July lows, and it's not getting easier. Although it is following "normal" end of year bullish tendency. I do believe there's a correction in order after 6 months and 33% up, but probably not until January.
    NJ (?!) - yecch.
    Costa Rica - COOL
    be careful on those mountains dude, talk to you when you get back

  5. TZA has made two white candles in a row. This is possibly a wave 4, with a shallow retrace to $SPX 1240ish, and then a last squiggle up to 1260+. DOW put in a new high today, but Dow transports did not.

    Volume won't return until January, so we might just zigzag (wave 4 triangle?) in a tight range until then.

  6. Just posted an update for today which basically agrees with your idea.