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« Investment Roadmap: Stocks | Main | Powers That Be Declare Victory as Market Starts Fall »

Tuesday, May 05, 2009


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I hope this helps:


Forkoholic Serge of Elliott Wave Forkology

Tonight's EWF review : current SPX count
What 30-year Treasury bonds and $VIX have in common?
New 3x leveraged ETFs


We will continue going higher. The bullish triumvirate of Geithner/Obama/Bernanke will NOT allow this market to go down.

Bernanke will print money and use it to buy stocks if the market looks weak.

I will buy calls in the morning and get my next dose of free cash.

Bernanke wil protect me from losses.

This is the best cash anyone can ever make, so easily.


7 handle on SPX will *never* be seen again

Mamma Boom Boom


Submit to the 'Forkoholic'. He is the supreme ruler!



7 handle on SPX will *never* be seen again

Posted by: anon | Wednesday, May 06, 2009 at 06:00 AM

Yeah, it's gonna feel like that when we're down around 550, but don't give up hope. The bear market will hit a low end of 2009/2010.


Yikes! The bear market evaporated quickly!


Why are people so surprised that the rally continues? Anecdotally, people are way too hestitate still. 1200 S&P here we come.


DG: Would you be able to give me brief tutorial on today's Neowave trading report.

Neely's assessment is that Based on Fibonacci relationships, wave-E is likely to rally +40% off this year’s low. Do you know how this +40% was derived? I know that wave-E must be the largest in an expanding triangle, but can't figure out how he got +40%. Is it simply that this is an estimated number that gets wave-E to be larger than wave-D (the next largest wave)?

Also, I believe that wave-E in an expanding triangle must be the longest in time. I am not sure if this is a rule or a guideline. At any rate, wave-E is the same time length as wave-D (the next longest wave) on May 7 - ie tomorrow.


Hi Tartan,

According to Neely, waves A and E in Expanding Triangles typically exhibit 1.618 to 1 ratios, so the 40% is the 1.618X the A wave length of 24.4%. But, as you note, you'd want E to be larger than D, so that 40% is probably too little, given that it wouldn't take us above the top of wave D.

Yes, you are right about the time aspect. It really is ripe and if this count is correct, she's gonna blow to the downside shortly.

I've still got my doubts about the absolute particulars of the count, but even so, from a trading perspective my count and Neely's count both have us topping here and putting in a price top that will last at least until the end of the year, although mine doesn't have us having the upside potential his does.


Interesting formation on the Nasdaq Composite. Using intraday cash data, going from Monday (5/4) at 12:30 EST til close of trading today, it looks to be forming a mini-expanding triangle. Anyone else see that? You need to draw a trendline connecting the lows over the past three days to make it clear.

On the S&P and Dow, I am seeing lots of overlapping waves using intradata day the past day and a half even as the indices make higher highs. If it happens at the end of an exhausted trend, the move the other direction has the potential to be quite violent if we break here.


Rally will exceed last quarter's high (Jan.)

Forkoholic Serge of Elliott Wave Forkology

Turning points Elliott Wave Forkology May 6th update
Everyone is looking for some sort of a top here. Have you notice how people become nervous around turning points?
It's probably because they already positioned themselves for a turn or not yet exited their previous positions. You can watch this phenomenon by increased number of posts/comments on many popular trading blogs - I guess you can even make sort of a turning days sentiment indicator out of it. lol :) Even Larry Pesavento is a bit nervous, today was saying if we not gonna top today or tomorrow the next turn is on May 19th. Today is actually a Puetz's TUCT cycle day as well. And as you may remember my calculator has May 9th as 123 calendar Lucas days from January 6th, 2009 top.

Reviewing today's action on SPX you can see we gapped up in the morning to 915 area, when set abc correction down to 906 and again started corrective wave A up to 914 with nice fork guiding advance of wave c of A, when we corrected down again in B to 908 and started 5 wave impulsive wave C up to 920ish area ending the day of corrective down note at 912 but not before rising in probably wave B of ABC down. Overnight we should correct down more to 908ish area or lower with tomorrow's opening is anybody's guess.


We just simply continue to go higher. Buy calls in the morning, sell them at the close.

The government is handing out free cash, only a fool wouldn't take it.

And any clowns who speak of "resistance" or "A-B-C waves" need to quit complicating things and just get LONG.

Prediction for tomorrow: green

wow that was difficult.

anon on March 9, 2009

We just simply continue to go lower. Buy puts in the morning, sell them at the close.

The government can't do anything to stop the market from going down, only a fool would think otherwise.

And any clowns who speak of "support" or "A-B-C waves" need to quit complicating things and just get SHORT.

Prediction for tomorrow: red

wow that was difficult.


hahahaha! you go ahead and follow that approach. by 4 PM, you will be feeling Bernanke's FIST full of DOLLARS in your REAR quarters. HAHAHAHAHA

Neo Guy

Bernake can't force people to lend or borrow. Bernake is an agent with unique tools at his disposal but he is also subject to the influence of other forces, notably mass moods such as anger, frugality, complacency, confidence, and scaredshitlessness. There may come a day when they helicopter cash but the effect might be to scare people into socking it away under the mattress.

This is complicated stuff. There are generally no cause-and-effects here.

Account Deleted

DG Sir,

Every day u keep on calling for a top and the market rallies even more.How long dear ? Dont u think one should accept ones mistake if he/she has gone wrong in any analysis.Its not wrong becos market does wht it does and so u cant help it.Wht matters is acceptance that yes wave count has gone seriously wrong and its time to mend your ways and look for correct count.

In good Spirit



We've barely broken over the top channel line on my chart, so I don't know how you're quantifying "seriously wrong", but unless we have a trend day up today, we're still within the limits of what I was thinking the count is. Two of the three short trades I've made over the past two weeks have worked and my long hedge trade has kept me basically flat from April 23rd, when I said a triangle was probably ending. Yes, I am looking for a top to go back to fully short, but, anyone applying NeoWave in real-time could have gotten the same "go long" signals that I got when moves up where followed by clearly corrective formations and hedged their shorts, regardless of what their count was at the time. Again, I keep telling you that you need to make a distinction between "forecasting" and "trading". If you don't, you won't understand how to make money in the short-term when you are wrong about the forecast. Also, see the end of "Mastering Elliott Wave", where Neely discusses "localized progress label changes" and how they impact a working wave count. I can't do your homework for you, though.

As you probably know, Neely was calling for a rally to 1000. How is that wrong? Neely might have the right count and I was wrong.

Also, it's easy to be in a position to criticize others when you don't put forward your own forecasts.


My forecast is that the SPX will stop around the 200 day MA sometime in May 2009. Let's see if I am correct based on this simple as pie trading system.

Account Deleted

Dear DG sir !!

My Preferred count is tht Double Failure FLAT In S&P500 from 840-1007 from 10/10/2008 to 05/11/2008 was the X wave.Thereafter we are in a Neutral Triangle and we are currently in the D leg of tht Neutral Triangle from 672 onwards.This Leg will end slightly higher than 944 and thereafter we will have the E leg which will be shorter than D leg and then a breakout.The structure would look like a Inverted Head and Shoulders pattern.




Good for you.

vipul garg

VB, so we are looking at the end of the great bear rally pretty soon as in a couple of months..
thats as bullish as one can get..!!!!!( ad infinitum)

vipul garg

VB, so we are looking at the end of the great bear pretty soon as in a couple of months..
thats as bullish as one can get..!!!!!( ad infinitum)

anon on March 9, 2009


I hope you followed my advice. Man, I loves me some free money!!!

Mamma Boom Boom


Like I said in my last report "THIS IS A VERY DANGEROUS PATTERN, as it ends in a CRASH"

Now the bond market is starting to come unglued. Will it come to pass? Tune in next week for the next thrilling episode. Oooooooooooo!


DG, today's decline was 2.87 SPY points in less than 6 hours, so that triggers the end of your x-wave triangle from April 20-23rd, correct? Good call on your 900-930 target back then.

Do you have clarity on whether wave E of this expanding triangle MUST be longer than wave D, or is that just a typical relationship? Neely sent out an update after we crossed 875 saying that reaching 950-1000 is a possibility but not a requirement. However, going over Mastering Elliott Wave, at the bottom of page 11-30, he says that "ONLY wave b or d can fail to exceed the end of the previous wave." Today's decline looks to have traced out a possible leading diagonal, so depending upon how strong prices pull back tomorrow, I might short with a stop above yesterday's high.


Also today's high makes wave E exactly 161.8% of wave A if you apply the percentage returns he labeled in Wednesday's trading update.


anon: you must be kidding, i bought some calls at the first sign of red in the S&P, and take a look at the futures, its already way up !

like i said before, the markets are completely protected by the government, they will print money and buy stocks if necessary.

one day you will realize what i'm saying. in any case, tomorrow will be a huge up day, Geithner and Obama are my riskless hedge.

i am also long a few ESM9, i buy every time we dipped below 900 this week, which wasn't often. Candy from a baby.


Listen to EN! Shut the wave noise! EN, May and 2nd quarter also "count" well in the Fibonacci sense, yes?

Kevin Smith

Wow. This is a great read so far. Look forward to reading each segment over Saturday morning coffee.




I was watching today's decline hoping it would be larger and faster than other declines and it did meet that standard. However, it could still be an x-wave (yet another), which would allow for new highs. As much as I want to discount that possibility, with this market it seems that most things are possible, as long as they mean higher prices.

We did come right back into that channel I have mentioned before, so it is also possible that today's high was an "overthrow" above the top channel line and that we are done to the upside. If one is shorting or short already, the stop should be at 91.93. No need to be a hero in here. A dip below 89.84 would be a much better sign of a top.


i needed some new shoes for the weekend, so i picked up some ESM9 on yesterday's little dip, because i have a government guarantee that i will make a profit.

this morning i just closed the contracts for a $1600 profit!

I know for a fact that next week, my profit would be more, but i wanna pick up these cool shoes, and probably a new camera as well.

next week, if i need cash for some clothes, or a new TV, i will just wait for a red day in the S&P and do this again.

they say money doesn't grow on trees but jeez, this is just as good!


I don't know Elliott Waves intimately, but technically, what is the highest the S&P before the bear can be declared dead? I personally believe that the biggest drop since '29-'32 will be followed by the biggest 2nd wave bounce as well.

Up to 1200 S&P or around there?


cjmorris - look at the chart here: ... it has lines of resistance - the 61.8% line is about as high as the S&P is expected to get (SP1229)

Common Sense Dude

Unless we are headed directly to new highs, which might well happen. In that case there is no "high" the S&P is expected to top out at.



Technically, the first wave of a wave 2 can retrace 99% of wave 1, BUT the second wave of wave 2 has to then retrace most of wave 2 and then the third wave of wave 2 has to end before it retraces more than 61.8% of wave 1.


Sell in May and go away works well in bear markets. I intend to go 3X short at the 200 day MA and go on vacation for the summer. Relax Mun . . . no waves . . . no cry!

I can't help but wonder: This Yasi sounds pretty hot . . . Well, is she Yelnick?

199 day MA Trader


You're crazy!! Everyone knows the 199 day MA is where it's at!

You are right about one thing, though. The first thing I was thinking when I read this post was, "Is Yasi hot?"

Forkoholic Serge of Elliott Wave Forkology

SPX & hint of $NASDAQ Elliott Wave Forkology May 8th Update

Today we review medium term Elliott Wave Count on $SPX 15 min chart. Since April 21st $SPX is in a corrective Wave C inside pink fork's channel. As you can see price action never seriously violated median line which confirms corrective nature of the wave. So what is this 123 stuff you ask? If you look inside blue fork it is still corrective but one glimpse on Elliott Oscillator at the bottom reminds somewhat of 12345 action so I'm stretching it to possibility wave C subdivides into something which resembles 5-waves-like structure. The only problem - there is no fork which contains all 5 waves inside plus none of the price action ever reaches upper fork channel which is corrective by EWF definition. It's all fractal anyway.

Looking at daily $NASDAQ composite we see it poking slightly out of the channel. It is not unusual for Wave 4 to poke a bit out of the channel as market participants become more and more bullish before final Wave 5 starts. Any significant breakout upwards from here will make a case for preferring ABC count vs. 12345 count we use now.

Mike McQuaid

S&P 500 started Super Cycle wave 5 on March 6. The previous wave 4 flat correction spanned March 2000 to March 2009. The worst of the housing/credit crisis is history. The market is discounting the residual news and actively taking new positions to get a return on investment and eager to get in while the blood is in the streets. The chart is relentlessly quelling a current wave 4 scenario. The nail in the correction scenario coffin comes from a counter-clockwise lograthmic spiral starting and centered on the first intermediate 5 wave decline at October 2007 portraying the fourth ring at March 6 2009 and smack on it.
March 6 onward on a 60 minute chart reveals the intermediate and primary degree patterns and channels to label primary wave 1 and a running primary wave 2. This is a definitive chart. The trend is up. Primary wave 3 started April 23 and as per wave 3's it is powerful.


Mike McQuaid

You could also point out that price is now approaching a previous ring of the spiral from below which should stop the advance in its tracks shortly. Your primary 3 also looks very weak (especially on a log scale) if primary 2 was indeed a running correction. Accept these 2 observations and it doesn't look quite so good for your count.

vipul garg

the problem with us chartists is to us,as maximum of us are traders -intraday or swing, , things look good on smaller time frame charts -60 mn, 30 mn, 10mn, 3 mn or lower!!
but things should look good on weekly, monthly, quarterly or higher and which unfortunatley they dont.


anyone who thinks this market is ever going down again needs some serious help

I need serious help

Lately I've been thinking the market will go down again at some point. What's my problem? Is it that I don't believe that governments can manipulate markets indefinitely?

government manipulation

Regarding government manipulation, how does it exactly work? government let several trading desks to buy stocks and/or index?

If they purchased index, they must exit longs before the contracts expire. massive sell before June contract expire?


Your primary 3 also looks very weak (especially on a log scale) if primary 2 was indeed a running correction. Accept these 2 observations and it doesn't look quite so good for your count.

Posted by: G2 | Saturday, May 09, 2009 at 01:17 AM

Exactly. In the first 12 trading days of "primary 3", the SPY has advanced 11.5%, whereas in the first 12 trading days of "primary 1", it advanced 21.6%. With a real "running correction" between them, those numbers would be reversed.


government manipulation,

the government probably sells their contracts once they have engineered the breakout by printing money and buying futures. they know poor shorts will be forced to cover and then the uptrend begins.

its free money for anyone who wants it, courtesy of the taxpayer and the shorts. they can also roll over the contract indefinitely if they wish.

you can either play along, or fight it and lose.


Since a 17-month decline is unlikely to be corrected in 2-3 months, this rally probably makes it to the .382 retracement or less, then we correct big-time for a few months, followed by the "c" rally leg, which could go as far as early 2010. Only then does it maybe get back above DOW 10K, don't you think?


the government probably sells their contracts once they have engineered the breakout by printing money and buying futures. they know poor shorts will be forced to cover and then the uptrend begins.

Why didn't I think of that?

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