Monday, March 30, 2009

Price collapsed, but likely more upside tomorrow

Well, the market sold off starting Sunday p.m. and when the U.S. session opened Monday, price had already had quite a run. We spent most of the day back and forth with some lower lows that were finally reversed the last hour of trading. Futures seem strong since the close, so if we close above SPX 791 on an hourly basis, then we are likely done w/ our first wave a and are starting a wave b. I would expect price to have trouble around 800 and trying to get above the 34 SMA on the hourly chart, which will probably land in the same area by the time price gets there.

I ended up labeling this whole move as simple zigzag with our c wave being an ED. With this labeling C ended up being .786*A, which is a nice EW relationship. I just couldn't get an impulsive move out of the whole thing w/o breaking my rules.

One thing that is hard when you are first doing Elliott Waves is getting the subdivisions right. I'm starting out assuming we have a simple a-b-c to the 740-760 area, which is why I labeled my first wave a at that degree. If things subdivide, then I'll likely drop these waves down a degree and go from there.


  1. While I enjoy you posts, what you are posting here really isn't EW. The endless series of A-B's just doesn't jive with true EWT counts.
    But hey, if it works for you.

  2. string, I'm glad you enjoy the work even if you don't think it is EW. Here's why I think it is. I expected Primary Wave A to be a double zigzag or one very large zigzag. So, that means I was first looking for either an impulsive wave A (1-2-3-4-5) or corrective wave A (a-b-c). Since the wave ended up not having enough waves to be impulsive, I switched it to a-b-c. Now c waves are supposed to have 5 waves, and this one did as I counted it as an ED which is a valid c wave structure. Some people will label EDs as a 1-2-3-4-5 with overlapping waves. Since EDs are really 3-3-3-3-3 structures, I like to label them a-b-c-d-e like a normal triangle. That is why there are so many a-bs going on. Whether you like it or not that is what I would expect during a primary wave B.

  3. I guess being of an engineering background, I like to stick with standard notational conventions. I.e. those outlined by EW and discussed in Prechter's book.

    I've got us currently in iv up of c of (2) of [2]
    I'm expecting a turn down in this 806-807 range to finish wave c
    ~770 +/- on the SPX

    Thanks. Keep it up.

  4. Rich..Kid Flare in Wilm, NC and to all the readers. I encourage you to vist a web site called
    Click on Blog
    Look to the right side and under Featured Posts, click on "Two Competing Elliott Wave Interpretations." Has charts and explanations..very good information

  5. string - excellent point. I relooked at the EW Bible (Prechter's Book) and you are absolutely correct. I thought I had seen him label EDs a-b-c-d-e before, but apparently I was mistaken. I've updated my chart accordingly. Thanks!

    kidflare - he needs to update his charts as we have already overlapped w/ the low of w1. Not sure how he would reconcile that.