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« The Psychology of This Market | Main | Doubling Down on My Lost Bets: We Are Not There Yet »

Friday, October 16, 2009

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This morning, DJIA came down in a sharp impulse wave. Then it spent rest of the day rallying in a A-B-C correction, where B is a triangle, and wave 5 of C is a diagonal triangle. Going into the close, DJIA completed the A-B-C correction, retracing slightly over 61.8% of the decline. Then it put in another small impulse wave down right into the close.

http://www.google.com/finance?q=INDEXDJX:.DJI

If this wave count is correct, DJIA is slowly setting up a series of 1-2 waves and subwaves downward. What this means is that Monday will be slightly negative, but mid-next week, there will be a third wave down. We all know what that means.

See you next week, DJIA.

min

Jing good observation but NDX is usually the first to faint in these situations.

If Dow is heading south first, odds are higher that this is a correction with more upside to come.

No disrespect intended just food for thought and something to keep an eye on?

twitter.com/Frac_Man


The Open today was a Top as posted. gapped 14 points down ( top tick at the close from Thursday )

Oh btw, I'll being discussing my new revolutionary indicator on Ike Iossif Interview this Saturday.

The audio will be posted here.

Topic is the "The Wernicki Fractal."

Hank

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Min:

You are right. The COMP (Naz) wave pattern does not look impulsive on the way down and I cannot count any decent 5 waves down without resorting to 5th wave truncation. I guess my previous DJIA wave count is probably in jeopardy now.

I guess I will look at COMP wave patterns more, in addition to DJIA.

And no worries. This is a place for everyone to share and learn. :)

Thanks

min

Sure thing.

Don't throw away your DJ30 count just yet though. Look at it with that other data point in mind instead. NDX could morph into something impulsive yet. I've seen stranger things happen.

Only thing you could say for sure is the DJ30 count is somewhat weakened by this at this moment. NDX could be at the start of a 1-2, 1-2 ready for a gap down on Monday. One step at a time with caution and you'll stay safe and on top of things.

I personally don't care if I miss wave 1 down and wave 2 up. Would rather wait to jump in at start of a wave 3. A lot safer and you save a lot of bad/costly false alarms. Catch my drift?

Good to know you are open to learning and that idiots like Dorkoteo are an insignificant minority.

Account Deleted

Min:

Thanks. They are all good points to think about. I have some positions in currency markets, so I won't go into stocks until P3 is well under way. :)

As you can probably see from Yelnick's latest blog entry and the comments there, at this moment, long-term Elliott Wave patterns are kind of unclear, to say the least. This actually makes sense, as it is generally hard to map out a corrective wave, as there are just too many variations. At this moment, it is probably best to stay out and let the market complete the wave pattern. Hopefully it will be clear soon.

In the meantime, I have resorted to studying show-term wave patterns, hoping to gain some insight on near-term moves. That is why I posted my thoughts this week.

Along the same line, I have been looking intently at the breadth charts. There are some breadth divergences such as Bullish Percentage Index, McClellan Oscillator and Summation Index etc. But NYSE A/D line is confirming and holding up very well, though Naz A/D line is flattening out and weakening. What does all this mean, considering that Naz is the leading indicator and has been dropping harder along with RUT on recent down days?

I think what this means is that the rally is aging, and its days are numbered. But for NYSE A/D to weaken enough, we will probably need a nasty correction and then another top.

I am somewhat disappointed that people have been arguing about wave counts on this board, while completely ignoring technical indicators, which are essential to evaluating validity of wave counts. For a wave count to be valid, it will have to fit into all the technical indicators very well.

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