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Saturday, September 5, 2015

Saturday, 9/5/15 update

Probably the most difficult aspect of Elliott Wave is the fact that at any given market juncture there are usually multiple possible alternates.  Right now that is the case.  The preferred count on this site is that of a double zig-zag into the ES 1831 low of Aug 24.  That low could have marked the bottom for Primary Wave IV.  However, EW allows for up to three zig-zags in a multiple zig-zag sequence, so there is the possibility of further bear market.  So was that it at 1831?  The pattern since that low suggests that it wasn't.

An adage in market analysis is that markets develop tops and make bottoms - i.e tops tend to be rounded formations and bottoms tend to be V's.  That's definitely been the case in the ES/SPX since the 2009 bear market bottom.  The final lows in corrections during that time have tended to kick off sharp and sustained rallies for a couple of weeks or so.  That's not what we're seeing since the Aug 24 low.  So the preference has to be given to that of an "X" wave in progress (or a 4th wave, see below).  In fact, it's possible that an "X" wave was complete at the Aug 27 high labeled as an Intermediate Wave "A" in the above chart.  If that's the case, we should continue downward from here.  It should be noted that the proposed "X" wave can take a number of forms and the projected labeling shown is only one of those possibilities.

Another alternate to be considered is that the entire drop from the mid-May all time highs is a developing "A" wave impulse of a simple zig-zag:

In this alternate the sequence since the Aug 24 low is a Minor W4.  As can be seen, this alternate portends quite a bit of volatility yet to unfold.  As usual, the dotted lines in the chart are there to represent the structure needed to complete the pattern and ARE NOT price and time projections.
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