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Thursday, February 16, 2012

Thursday, 2/16/12 update

Updated preferred Elliott count has the ES still in Minor W3 with a Minute W4 flat type correction bottoming at last night's lows.

The Vindicator Buy/Sell continues to flop around.


  1. Hi Apple Al,

    I was reviewing your ES charts and below is my understanding ((Thanks for these charts. They are informative and eye-opening)

    #1. ES hourly chart shows end of Minute wave 5 (of minor wave3) between 1364-1368 followed by a move down Can the Minor wave 4 move be approximated? What would the value be? You are showing 1300. I read that minor wave 4 retraces 0.236 to 0.382 of wave 3.

    #2. ES hourly chart alternate shows top @ ~1372 (end of Major B) followed by major C (target: At or below 1100 (October lows). If this plays out, how did you estimate end point of wave?)

    #3. ES hourly alternate#2: Major B, Intermediate C, Minor 5, and/or minute 5 all end at 1368. Correction to below November low. 

    #4. ES daily chart shows we are still in wave 3 from end of November low. Wave 3 is predicted to end near 1368 followed by wave 4 (end: 1300) and wave 5 (end: 1373). A large C wave down to below 1000 would follow.

    #5. ES daily chart alternate: Wave 3 does not end in 1364 to 1373 range instead moves toward 1480-1500 (No wave 4 then wave 5)

    #6. ES daily chart alternate#2: Major B, Intermediate C and/or minute wave 5 should end near 1373. Correction to 936 area

    CONCLUSION: 5 of 6 scenarios shows up waves ending near 1364 to 1373. Only one shows continuation of up move above prior mentioned region (1364-1373)

    Bottom Line: If price exceeds range then we are most likely going up to 1500 region before any major correction (>10%). Is this a safe assumption?

    I just love your charts. They allow me to see just enough ahead in the future to be able to avoid a large move down.

    Personally, I feel #1 seems more likely. If so, how could I determine end of Primary wave 5?

    My strategy: Be in cash until 1364-1373 region is eclipsed. If >1373, I will go long. If <1373 (market tops out) then I will short until 1300 then wait and see if 1300 holds.

    Thanks for spending the time to read and answer my post.


  2.  #1. Yes Minor W4 can be approximated.  4th waves have a tendency to bottom at the low of a 4th wave of lesser degree.  In this case, and if the Elliott count is correct, Minute W4 bottomed at 1334.25 and Micro W4 of Minute W3 bottomed at 1296, so those would be two "natural" areas of support.  Also, from a fibonnaci standpoint, if Minor W3 tops at 1368 then a .236 retrace falls in the 1328 area (very near Minute W4 bottom) and a .382 retrace comes in at the 1302 area (Micro W4 of Minute W3 was at 1296).  The absolute limit for Minor W4 would be the Minor W1 top at 1268.

    #2. Hourly chart does not show target, downtrend line drawn just to indicate direction.  Daily chart has potential C wave target at 936, which is a .618 retrace of the entire bull market from March '09.  Targets for a possible selloff of this magnitude are HIGHLY problematical at this point, so I wouldn't hang your hat on that target.  If a C wave does develop it's best to wait until the pattern is well developed before starting to estimate targets.  But just for yucks, the other fib retrace levels are 1103 (.382) and 1020 (.500).

    #3 & #4 yup

    #5 There would be an Intermediate Wave 4 & 5 to follow the projected Intermediate W3 top in the 1480 - 1500 area.  That Intermediate W3 top is also highly speculative, so to then project ensuing Intermediate W4 and W5 targets would be over the top, which is why I didn't bother.  Please understand that markets and Elliott wave analysis of those markets are very fluid creatures, an analyst must constantly be assessing and readjusting.  So although I do try to guesstimate targets for waves, those targets didn't come down from the mountain with Moses.

    #6 yup and see above

    I agree that the 1370 area is a critical line of resistance, it marks the area where the market turned south last May.  So it's important to watch what happens here, if the ES/SPX significantly penetrates this barrier then there is a fair chance that prices will make a run towards that 1500 area without a lot of resistance.  But again, be aware that these assumptions could be entirely off the mark.

    As to your last question, how to determine the end of Primary W5, there is no easy, quick answer.  One clue would be a clear 5 wave impulse down, but past that it's just a matter of judgement and experience.

    Finally, posted updated charts yesterday, if you look at them you'll note that I've modified the short term Elliott count based on last week's action.

  3. Thanks Apple Al for the work you do.

    I fully realize that the market has a mind of its own. This is why I separate my money into 10 positions which vary based on strategy of each. I will attempt to follow one with EW. I only have 2 years of investing/trading under my belt, so I am learning everyday.

    The only thing I cannot do is make up for a huge loss.

    Keep up the good work.