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Sunday, April 27, 2014

Sunday, 4/27/14 update

The ES will go up if it doesn't go down first.

Now there's a market analysis that's sure to impress and amaze.  With the analyst's stupidity no doubt. 

But actually, that's about where we're at.  Coming into last week I was inclined to think that the ES/SPX was almost certainly going to make a run to new highs off the Apr 13 lows without major interruption.  True, the count was for wave 3 of an ending diagonal, so only a marginal new ATH was the expectation.  But the action last week was somewhat tentative, and the Thur/Fri sell off cut deep enough to raise questions about the correct count.  And the fact is that under EW rules the near term bearish alternates on deck the last couple of weeks have not been definitively ruled out.  Those alternates had an impulse forming and in it's early stages, with the 1st wave bottoming at the Apr 8 low and an irregular flat 2nd wave working it's way out since that time.  Since a 2nd wave is allowed to travel almost completely to the start point of wave 1 under Elliott rules, then the bear counts cannot be eliminated until the ES/SPX rallies to a new ATH.  So here's an updated hourly chart of the near term bear case:

The near term bullish alternate has the ES forming an ending diagonal at Major wave degree starting at the 1732.00 low of Feb 5.  Intermediate W1 of that ED topped at the 1892.50 high of Apr 4, Intermediate W2 bottomed at 1803.25 on Apr 13 and Intermediate W3 is currently in progress.  Possible targets for Intermediate W3 are at 1902.50 and 1929.50, which represent .618 and .786 multiples of Intermediate W1 respectively.  In an ED the 3rd wave should be shorter than the 1st (and the 5th wave shorter than the 3rd).  These targets are not real high confidence, but if the count is the correct one then they probably aren't far off.  This alternate can be ruled out if the end of week sell-off continues next week and leads to a drop down through the ES 1803.25 low of Apr 13.

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