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Wednesday, April 20, 2011

Wednesday 4/20/11 wrap up

Go long or be wrong.  Doesn't seem reasonable, does it?  But yet, there's no denying it at this point.

ES - hourly

ES - daily

Monday, April 18, 2011

Monday 4/18/11 wrap up

It looked very much like the ES had turned up late last week, but SURPRISE!!  Anyway, the bearish alternate discussed recently now appears to be the case (see "2nd alternate" on weekend post and Tues, 4/12 & Thur, 4/14 updates).  Not only is that bearish alternate not out the window, it's sitting in the middle of the living room couch hogging all the popcorn.

That count assumes that the Major Wave 2 (blue) correction that started in mid Feb is still in progress.  Major Wave 1 lasted seven months and traveled 340 points, if Major W2 were done at the mid March low it would be only about a month in duration and around 100 points in length.  So it's not unreasonable for it to have more time and distance yet to travel.  Also, as was pointed out last week, the underlying technicals of the mid March to early April rally were on the weak side, more typical of a B wave than a 1st wave kickoff to a significant bull run.
If Major W2 is in fact still in progress, then the ES put in the A wave from the mid-Feb top into the mid-March low, the B wave ran from mid-March into early April, and the C wave is currently in progress.

ES daily chart - bear alternate

ES hourly chart - bear alternate 

The AUD/US$ has quite possibly seen the top of a bull run that started in late May of last year.
 Five waves up are apparent from a low established in mid-March to the high print of last Friday.

 AUD/US$ - 2 hour bars

In turn, that five wave structure appears to be Minor W5 of the bull sequence dating back to last May.   If correct, that concludes an Intermediate Wave 1 and thus Intermediate Wave 2 has commenced with today's sell off.

Saturday, April 16, 2011

Weekend Update 4/16/11

Looks very much like the bull alternate presented in Thursday's update has won out. 

ES - hourly 

At this point the most viable alternate is that Intermediate W2 (purple) is not yet complete.  In this case, the low of last Thursday would be labeled as a Minor Wave "a" with Minor Wave "b" in progress.  Most likely we're looking at a flat type formation being traced if this alternate is correct.

ES - hourly - alternate

Finally, the hyper bear alternate presented last Thursday cannot yet be ruled out.  If the ES keeps rallying through next week it does become less and less likely, but it bears (no pun intended) keeping in mind.  A print above ES 1329 reduces the probability of this alternate by about 95% and a print above the recent high of ES 1336.50 eliminates it.

ES - hourly - 2nd alternate

Thursday, April 14, 2011

Thursday 4/14/11 wrap up

Two radically different alternates on ES at this juncture:

Bear alternate

Hourly chart

Daily chart

Bull alternate

Hourly chart

Daily chart

Wednesday, April 13, 2011

Wednesday 4/13/11 update

Current count on ES (hourly chart):

Tuesday, April 12, 2011

Tuesday 4/12/11 update

ES - daily - alternate count

Following up on the alternate ES count from last night's post, the internal count on the rally from mid-March through last week counts better as a three wave move than a five. Thus the thought of that being a "B" wave in an ongoing correction from the seven month rally that ended in mid-Feb fits well.  It also makes sense from a duration standpoint - seven months of steady bull market would seem to need more than one month of correction.  A further thought is that the correction is currently labeled as a Major Wave 2, 2nd waves typically cut much deeper than the 30% that was achieved at the Mar 17 low.

ES - hourly - alternate

Finally, as I mentioned last week, the underlying technicals of the rally from the mid-March lows have been much weaker than would be expected for a 1st wave up off a major low.  Following is a chart of the daily NYSE against an 8 day MA of total daily volume.

And another one, daily NYSE against 21 day daily tick.

Monday, April 11, 2011

Monday 4/11/11 wrap up

Despite all my sparkling logic on the post over the weekend it looks like the ES has rolled over and that Minor W5 (and thus Intermediate W1) was in fact done at Friday's high.  EW count in that case looks like this:

ES - hourly

There's another more bearish possibility, and that is that the rally off the mid-March lows has only been a "b" wave in the correction to the seven month rally that ended in mid-February.  In that alternate, we've just rolled over into the final leg of that correction.  This would then be a "c" wave which could possibly carry down to the original target for that correction in the ES 1175 area.

ES - daily - alternate count

Sunday, April 10, 2011

Weekend Update 4/10/11

Preferred count is that the 6 day sideways grind into Friday's close was a Minor W4 triangle which concluded at Friday's low.  Why not call the overnight rally into Friday morning's high Minor W5 and thus designate it as a short term top?  Three reasons :  that rally looks more corrective than impulsive - it's much better counted as a three than a five;  the rally is quite short in relation to Minor W1 and (especially) Minor W3; next week is op ex week which is almost unfailingly bullish.

Minor W1 carried 33.50 points, so from Friday's low of 1318.75 Minor W5 = Minor W1 @ ES 1352.25.

Like a lot of other markets geared off the US$, which has been in a steady bear market, the EUR/US$ has been on a bull run.  The EUR put in a major long term low in Jun 2010 that is labeled a Primary Wave B (red), and an interim long term low in early January that is labeled a Major Wave b (blue).  Projecting targets for Major Wave c and thus Primary Wave C there is a fibonnaci confluence in the 1.5272 to 1.5357 area (all prices based on the (EUR/US$ futures contract).  Major Wave c is equal to Major Wave a @ 1.5272, and Primary Wave C is 1.236 x Primary Wave A at 1.5357.

 EUR/US$ (futures) - daily

Within Major Wave C: Intermediate W1 and W2 (purple) were complete at the high of Feb 1 and low of  Feb 14 respectively, and Minor W1 and W2 (red) of Intermed 3 were done at the high of Mar 7 and low of Mar 11 respectively.  Since Mar 11 there has been a continuing sequence of Waves 1 & 2's into a low last Tuesday Apr 5, so that at the moment the EUR appears to be in a 3rd of a 3rd of a 3rd of a 3rd of a 3rd wave of Major Wave C.  In other words, right smack in the middle of the run.

EUR/US$ - 2 hour bars

Thursday, April 7, 2011

Thursday 4/7/11 wrap up

ES continued it's sideways grind today.  On a daily chart it looks like it wants to roll over, but on the hourly chart it's been all three wave moves in both directions and in a very narrow range since last Friday.   So the best interpretation is that we're seeing a correction to the uptrend and not a change in trend - at least not yet.  Current count has this as a 4th wave, so a stab up would complete the rally from Mar 16 and then more serious selling can be expected.  Next week is op ex week which is usually a rally week, so a 5th wave next week would make sense.

ES - hourly

Wednesday, April 6, 2011

Wednesday 4/6/11 wrap-up

ES looks very much like it's forming a top.  There are several ways to label the action over the last few days, but the bottom line is upside momentum has quite obviously waned.  The ES sort of looks like it has been forming some type of ending diagonal, but at this point that's only a possibility.

ES - hourly

Silver has continued it's strong ascent after the short correction of early March.  That correction is currently labeled as Intermediate W4 (purple) of Major W3 (blue) which started in Apr 2009.  But it's also possible that Minor W5 (red) is extending and that the March selling was just Minute W2 of that move.  Either way the trend is up for now and there's a distance yet to travel.
If in fact the March pullback was Inter W4, then a likely target area for Inter W5 is 42.615 (2 x Inter W1) to 42.851 (.382 x Inter W3).

SI - daily

On the hourly chart it appears that a Minor W1 & W2 followed by a Minute W1 & W2 are complete since the mid March low.  That would put SI in Minute W3 of Minor W3 which means that more powerful bull action is still likely.

SI - hourly

Tuesday, April 5, 2011

Tuesday 4/5/11 wrap up

It's possible that the ES finished a Minor W4 (red) triangle at this morning's low and is in Minor W5.  However, on the SPX the pattern looks more like a flat in progress with the sell off this afternoon being the "c" leg of that pattern.  A case could also be made for a flat being in progress on the ES, so there is uncertainty here.  In the ES, if Minor W4 was in fact complete this morning and Minor W5 is in progress, then the selling that began this afternoon should not carry lower than the Minor W4 low at 1323.  If that happens, then either Minor W4 was not done at this morning's low or Minor W5 and thus Intermediate W1 was complete at today's high.  Since Minor W1 carried 33 points and today's rally was only 11 points, odds are that Minor W5 is not done or is yet to occur.

ES - hourly

The EUR appears to be in Major Wave c (blue) of Primary Wave C (red) of a long term cycle dating back to the fall of 2008.  Major Wave C commenced at the lows of early January.  The best initial target is a little past the highs of Primary Wave A which was in the 1.514 area.  Some Fibonnaci projections point to 1.5272 to 1.5357 as a potential area for a top.

EUR - daily

Since the Major Wave b low of early Jan the EUR appears to have completed Intermediate W1 at the high of Feb 1 and Minor W1 and W2 of Intermediate W3 in early March.  That would put the EUR in Minor W3 of Intermediate W3, so some upside power should be in the offing.

EUR - hourly

However, since the lows of mid-March the EUR seems to sputtering rather than powering up, at least so far.  Which brings up a possible alternate count.

EUR - daily - alternate

In this alternate Primary Wave B is still in progress.  Major Wave a of Primary B occurred in Jun last year and Major b is in progress and is taking the form of a triangle (a double zig-zag is also possible).  If the EUR should start picking up steam and power past the Nov 4 high at 1.4276 the triangle becomes invalidated and the thought of a double zig zag becomes less likely.

Monday, April 4, 2011

Monday 4/4/11 wrap up

ES has been right on track with the preferred wave count.  There is quite possibly a triangle forming since Friday's high which would work quite nicely as Minor W4 (red), after which there should be a stab higher for Minor W5 to complete Intermediate W1 off the mid-March lows.  If Minor W4 stays in the 1324 - 1334 range we've had since Friday, then Minor W5 would have a target in the 1350 - 1360 area to be equivalent to the travel of Minor W1.

ES - hourly
Over the weekend I did some review of the underlying technicals of the rally since mid-March, and they are not as strong as has been seen in the past for a 1st wave kick off of what should be a significant bull run.  So although the mid-March lows are currently marked as the end of a Primary W2 and thus Primary W3 assumed to be in progress, this market has yet to really prove itself in my mind.  But it certainly is unfolding in an impulsive manner, so the trend is definitely bullish for the time being.

Here's a daily chart for some perspective.

ES - daily