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Thursday, June 7, 2012

Thursday, 6/7/12 update

I'm afraid I may have thrown some folks off with yesterday's update.  The ES count presented there was an ALTERNATE count, the PREFERRED count is below.  Coming into this week it looked like the odds were 75/25 preferred to alternate, but with the action this week I believe we've shifted to something like 55/45 preferred to alternate.
Hourly count on the preferred has the ES in a minor W4 (red numbers) to the drop from the Mar 27 high.  Minor W2 was a simple zig-zag, so Minor W4 needs to be a flat, triangle or some sort of complex structure.  Unfortunately the point at which a rally would invalidate this count under Elliott rules is at the bottom of Minor W1 (red), which is way up at 1386.25.  However, as a practical matter a continuation of this rally with enough steam to bring those levels into view would make this count dubious.
Projections on the chart are just to show possible form, they are NOT intended as price predictions.

Preferred count - 2 hour bars

Preferred count - Daily bars


  1. HI Al,

    Great charts.

    Your post yesterday started making me think really hard about the possibility of a large move higher.

    As you know, these things are going against the large move higher

    1. Europe
    2. Definite 5 impulse waves to downside
    3. Invalidation of bullish count due to wave overlap (1292 and 1267 were crossed)

    Now here are reasons why it could above 1422

    1. Uncle Ben (He can do whatever he wants and the market will soar)
    2. Presidential Election/Democratic cycle
    3. ECB loans more money

    Funny thing is I believe that the latter has a lot more power.

    Here is what I think:

    Fed let or is letting the markets correct. He would look stupid if he did something when market was at 1422. I think market needs one more move lower. Time is the most important variable here. Let things get a little worse for the next 4-6 weeks then come in like a knight in shining armor announcing to the world that we need more QE. Markets will soar thru the end of the year or maybe even until next April. Then the wheels come off and we see the C wave you mention above and market corrects to below 1000.

    Have a nice weekend


  2.  I like your scenario - it certainly is plausible