Tuesday, 2/14/12 2nd update

The Wave 4 flat idea from earlier today is blown out of the water with the pop up in the ES tonight. Back to the ideas presented in Monday's post, i.e. 5th wave in progress, target in the mid 1360's. Short position from earlier today was protected with a stop and reverse, so now net long 1/2 position.

Tuesday, 2/14/12 update

Looking at the Elliott counts after lunch I noticed that Minute Wave 5 and thus Minor Wave 3 can be better counted as complete at last Thursday's high than as still in progress - a nice little channel can be drawn around the move up from the Jan 30 low into that high. That channel is broken by the price action late last Thursday and into Friday. Further, the move down into the Friday low has three legs, and the move up from there into today's high can also be counted as a three. We may well have already seen the "a" and "b" legs of a 3-3-5 flat formation. Minor Wave 2 was a zig zag, so this idea fits in terms of alternation. If all this is correct, the ES is in the "c" leg of that correction. A 1st target would be the .236 retrace of Minor W3 at 1315.75.

One final note, a sell signal was issued by the Dynamic Oscillator system on the SPX earlier this PM and if the ES stays below 1342 for the next six minutes there will be a sell signal there as well. (currently 1:54 PM CST)

Monday, 2/13/12 update

The ES/SPX appears to be in a 5th wave of the rally off the lows of late Jan, and that move is itself a 5th wave of either Intermediate or Minor degree ( more on that in a bit). Buying pressure as measured by the Vindicator Buy/Sell has been visibly waning with a series of lower peaks since late January (buying pressure is represented by the green line in the chart) which supports the idea that a 5th wave has been in progress:


In fact, 5 waves can be counted in the move up off of Friday's lows, so it's entirely possible that a top of some significance was established at today's highs, but if so that will need confirmation which isn't yet evident.

Whether the ES/SPX is going to put in a Intermediate or Minor degree top is also an open question. The two pertinent alternate counts are as follows:

Intermediate degree

Minor degree

The Minor degree alternate seems more likely, the move up since the Dec 19 lows looks like a unit to me. Also, in the Intermediate degree alternate Minor Wave 4 did much less damage (34 vs 73 points) and was much quicker (3 days vs 8 days) than Minor W2. The difference is significant - if the ES/SPX is on the verge of a correction of Minor degree it will be much more shallow and short lived than an Intermediate degree sell off.

Tuesday, 2/7/12 update

The ES still looks to be in the 5th wave of the move up from the Dec 19 lows, but that 5th wave appears to be extending. A possible target for Minute Wave 5 (green numerals) is where it's length equals that of Minute W1. Minute Wave 1 traveled 68.50 points, adding that to the Minute W4 low at 1296.00 yields a target of 1364.50.

Saturday, 2/4/12 update

Pretty strong up day on Friday. What looked like a slow uneventful grind earlier in the week sure livened up. That old saying "never short a quiet market" was right on in this case.
The Minor W3 top that seemed apparent a week ago looks to be negated. There haven't been any sell offs of more than a day or two since the lows of Dec 19, and the ones that have occurred have been pretty shallow, so the most likely case is that Minor W3 is continuing to extend. Best guess right now is that the ES is in Minute W5 of Minor W3, so a top should be fairly close at hand. But caution is warranted, this thing could just keep chuggin'.

Tuesday, 1/31/12 update

There's no push behind this market from either side as witnessed by the flat line in the Vindicator Buy/Sell for the last few days.

The expectation was for a flat or triangle type correction in the ES, this looks like a triangle developing - and the lack of bull or bear conviction fits that scenario pretty well. So the most likely path is more choppy and uneventful action for the next few days or so followed by a shot up towards the highs of last May.

Monday, 1/30/12 update

Sell signal on the ES overnight and on SPX this AM. But we are oversold on very short term momentum indicators on a number of time frames and from a number of different standpoints, so a short trade right here is riskier than waiting for a bounce IMHO. Of course, momentum indicators can go oversold/overbought and just stay there while the market runs, but I (generally) prefer waiting for a retrace.