Big Tease is Back!

The rally Thursday got the Dow back over 10K, but volume was anemic, suggesting investors have gone to the sidelines. Indeed, it is now clear that the "buy the dips" mentality is leaving the retail investor, who might rather be "selling the blips" (see the red trend dropping in the first chart). 

We have been following three scenarios for stocks: 

• Summer Rally: new highs!
• Big Tease: after a dip, back to Sp1150!
• June Swoon: Dow9K!

The Big Tease seems most plausible right now. Carl Futia finds a pretty good bottom has formed and now sees a run to at least Sp1140, which is the minimum to satisfy the recent reverse head & shoulders. Without having to buy into his Sp1300! exuberance, the wave structure may count best as a first wave completing at the flash Retest bottom of a couple of weeks ago (Flash Crash is wave iii, Flash Bounce iv and the Flash Retest is v completing the first wave down). 

The June Swoon's swan song may have been today, as the triple nested 1-2s went away, but Robin Landry has come back with an alternative wave count which maintains the nested 1-2s and points to an end of this inside wave ii around Sp1105/Dow10300 (see chart). What you would like to see in a nested 1-2 is that the inside waves are smaller than the outside. The second 1-2 are both shorter than the first, by are longer in time, so not perfect, but plausible:

 

EWI's alt count in the STU yesterday come to fruition today. In that count, the Flash Retest is the end of the first wave down, and we are in a wave 2 that is breaking in a more complex way, but it still remains a June Swoon count. It first needs to go above the recent wave A high at Sp1104, but if A=C, it should end around Sp1106-7. It would have traced out a nice flat correction, and the June swoon would then loom. 

We can put aside the leading diagonal as today busted above the upper trendline. As MarketThoughts put it, dies is kaputt, but it may be setting up a bull trap:

Comments

[twitter.com/DrBubb]

Thanks for the comment. I'd be interested to know if you agree with this count, Y. (If not, where have I got it wrong?):

Here's my own Elliott Wave count:

SPY : http://img812.imageshack.us/img812/4893/xxx.gif

The 5-waves down consumed 21 days.

If the market peaks today (let's say at/near Spy-111) that would be 12 days up, and if next Thursday (at/near Spy-115) that would be 16 days up.

[Chabazite]

Dr Bubb - As you know I am not an expert at EW, but the pattern seems to hold for the FTSE 100 too. http://www.biancatrends.com/FTSE.php

[twitter.com/DrBubb]

Thanks.
And we could get there rather quickly.
I live in Hong Kong, so it is not easy to do, but I may want to be watching the market around the time of today/Friday's close, to see if the market is up filling the gap it left behind when the market plummetted after the Jobs Data came out.

Interesting times - Big opportunities?

[Chabazite]

I have been reflecting on your post for the past hour or so and would like to offer a small caveat. At the moment I subscribe to Yelnick's 'nested h&s' theory, which is actually a repeat of what was seen at the top of the 2007 bull market. You might find it useful to check back on the s&p daily charts between the months of Sep 07 - Sep 08 in which you will see a non-volatile h&s pattern following the peak, but before the Lehman collapse send the markets the markets tumbling. I drew up a chart which shows the current projection for the FTSE100 a few days ago which can be seen here. http://i46.tinypic.com/scdhyb.jpg So the first 5 of your down trend would hold, but the ABC leg would be nowhere near through yet. Infact we may still be in the 'a' leg and the 'c' leg probably won't be through until July / August time and that would correspond to the 'rh shoulder / head'. Hope this makes sense.

[Chabazite]

Another little snippet of 'bear fodder' which should keep some readers happy. http://news.bbc.co.uk/1/hi/business/10290933.stm By the way - in the Footie tomorrow my projected score is England 23 - USA 0.

[cloudslicer]

Yelnick,

I knew that the 'flash crash' was going to create a 'goat rodeo' of wave counts.

If you look at the WLSH using closing prices only it counts much better.

[Account Deleted]

SP 500 Fibonacci levels in daily chart
http://niftychartsandpatterns.blogspot.com/2010/06/sp-500-fibonacci-levels-in-daily-chart.html

[Account Deleted]

Dow jones ascending wedge had negative divergence
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-ascending-wedge-had-negative.html

[JT]

Another "broken" count by Binve and all the other Elliott Wave perma-bears?

Give me a break.
These guys couldn't "count" to 5 correctly if a gun was pointed at their head. They've been fitting one "broken" count after another to their charts since last August!

[Econ 101]

Consumer Sentiment the highest since January of 2008.

[Trader 123]

Yelnick, here's the better question:

Did anyone here on Planet Yelnick BUY the opening this morning?

[upstart]

I see Mr. Rogers is still short.

[twitter.com/DrBubb]

He's not overly tall, if that is what you mean.

[Roger D.]

Yes, I am short and coming under 10050 in the dow and 10K would be extremely bearish. The USD/EUR is key as the USD looks to have tested the apex of it's large ascending triangle and put in a bottom. If that is indeed the case my wave "E" in the Dow is probably correct and we should thrust down.

Just have to see.

Roger D.

[Mamma Boom Boom]

>Give me a break.
JT<

Breaks have to be earned. You haven't earned enough points, around here, to get a glass of water.

[Wave Rust]

chabazite
"in the Footie tomorrow my projected score is England 23 - USA 0."

good call but I'm sure that's a typo, so i'll correct it for you

England 2 - USA 3

right then.

wave rust

[Steven_737]

+++++++

[Wave Rust]

"Did anyone here on Planet Yelnick BUY the opening this morning?"

just ot the gap cover of the 9:55 gap

idiots buy openings following a top tick close

wave rust

[Wave Rust]

hoping everybody believes landry's count and forecast, and continues to think Futia is idiotic.

i have buy signals confirmed across the board.

S.A. & Mex tied. bullish on Mex

wave rust

[Roger D.]

The Dow

http://www.screencast.com/users/parisgnome/folders/Default/media/f87a4263-118f-4aec-9243-ffc8c6c7b3fb

[Oraclelurker]

Well I continue to think futia is idiotic but actually agree with him for the time being.

[Min]

"idiots buy openings following a top tick close

wave rust"

That's right.

Also option premiums are always jacked up under these circumstances. Not a good entry point usually

[Min]

Buying today's opening would've worked out if you then sold close to top tick, but who knows ahead of time how much move you'll get —only Santa and he ain't telling.

[Wave Rust]

problem with bullish counts being unbelievable is that wave 1's are accumulation waves. much harder to buy in and also sleep at night.

staying bearish is much easier until the middle of wave 3 ,,, then the pain starts to keep you up at night. :)

imo, this is a wave 2 from april high. it should really get deep into wave 1 later this year ,,, like 78% retracement type deep

wave rust

[Min]

Potential cup and handle on QQQQ 1 min chart forming. I'm probably not going to be able to trade it because I may have to leave, but for the squiggle traders out there, here's a bone.

[Min]

Ignore prior post looks like it just aborted

[Mr. Panic]

I am buying more TZA here along with the insiders. Pretty much every index has tagged its 20day average and yesterday's monster short squeeze obliterated most of the bears ala Sept 18,19 2008 so there isn't any cushion left to provide squeezes.

[Trader 123]

"idiots buy openings following a top tick close" - wave rust

Once again, it's obvious that there are no "daytraders" on this blog, or traders that know what they are doing.

After a strong close, any DOWN opening is bought with the highly probable outcome of the "gap" being closed within the first half hour. The same is true in reverse fashion of a gap higher being sold and faded after a huge downside day, the previous session.

[upstart]

How come nobody ever mentions Dick Diamond anymore?

[Wave Rust]

trader 123,
the opening is a moment
not the first 15 minutes, or whatever you choose.

it's the opening price set at 9:30:00.00

any trader knows that to buy at the opening, one must have setting order in before the opening, or simply click the button at that moment to buy "at the market".

next time, when you want to ridicule people because they aren't daytraders (cough cough), maybe you can ask a better and clearer question.

wave rust

[Chico]

I knew that the 'flash crash' was going to create a 'goat rodeo' of wave counts.

As I've pointed out in the past, wave analysts are wasting their time counting waves and applying fibonacci relationships to what was clearly an aberration.

[Wave Rust]

chico
thats what they said after the '87 crash too
same thing after the march and august '07 crashes

price is not aberrant but it can be psychotic

wave rust

[DG]

As I've pointed out in the past, wave analysts are wasting their time counting waves and applying fibonacci relationships to what was clearly an aberration.

I've got a count that works the "aberration" in just fine. I initially thought it was an Impulse wave, but post-pattern behavior didn't confirm that.

The main problem I see with EVERY wave analyst whose work Yelnick posts here is that they see Impulse waves where there are none. Despite what everyone seems to want to believe, May 6th was NOT an Impulse wave. At a fine-enough level of detail, it was most likely a Elongated Zigzag, which is the closest a Corrective wave can come to acting like an Impulse.

If they would take the time to read "Mastering Elliott Wave" Chapter 5 until every rule necessary to differentiate Impulse waves from Corrective waves was memorized, they'd avoid ~90% of the issues their counts face. If a wave doesn't meet the Impulse criteria Neely sets out in that chapter, it is a Corrective wave. I don't care how fast it was or how big, it's a Corrective wave.

If you can't differentiate Impulsive from Corrective, you should not be doing wave analysis at all. Or, if you are, you should only be trading those analyses with other people's money.

[Roger D.]

The Euro needs to head down here.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/82641ea4-c67a-4038-ab77-98e28ccb2a92

[Trader 123]

Initial Russel Rebalancing additions/deletions announced today at 6PM Eastern.

$139 Billion is benchmarked by index funds to the Russell 3000.

[Chico]

thats what they said after the '87 crash too
same thing after the march and august '07 crashes

price is not aberrant but it can be psychotic

Those declines were completely different (real), in my opinion. After the Flash Crash, analysts are looking for something that doesn't exist. Some people also dedicate their entire lives searching for Big Foot.

[Chico]

The main problem I see with EVERY wave analyst whose work Yelnick posts here is that they see Impulse waves where there are none.

That is so true. Most wave counts are a complete joke.

[Account Deleted]

Dow jones consolidation will be resolved soon
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-consolidation-will-be.html

[Steven_737]

"analysts are looking for something that doesn't exist"

Instead of criticizing others, post a chart and your understanding of what is going on, as well as where prices will go.

otherwise you sound like a Monday morning quarterback ...

:)

[Roger D.]

If my volume counter is right 660 million so far,the banks are the only players today and it shows. So far it's tracking the in & outs of the Euro.

[DFerguson]

Is Dick Diamond even a trader? from what I understand he makes his money by fleecing suckers at $4000 per course.

I dont think I trust someone charging $4000-$10,000 to learn the same indicators that are in a book you can get at Barnes and Noble for $29.95

[Roger D.]

This market is totally illiquid right now. You could see some very wild moves from here up or down.

Roger D.

[Mamma Boom Boom]

>the banks are the only players today and it shows<

Ya think? I was thinking just the opposite. Seems like the big boys played yesterday and the little boys are playing today.

[Trader 123]

Nice A-B-C-D-E triangle that should provide a decent push UP into the close.

[Steven_737]

"Nice A-B-C-D-E triangle that should provide a decent push UP into the close."

by the time you posted that I was out of my Long mini trade.

Of course targeta are ES at 1088.75 and NQ at 1853.5
but I could not resist the urge :)

[Account Deleted]

Dow jones consolidation resolved on the upside
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-consolidation-resolved-on.html

[Whitebear]

There are people who keep saying what a disaster the housing market in the US is. But, when you look at selected areas like San Francisco proper, you will think the goldilock is still alive.

http://www.trulia.com/home_values/for_sale/CA/San_Francisco/94129/1090088629/
Check “Recently Sold Homes”
Check item 2, 11, 17, 19, 24.

They are still in the neighbour of > 1.5M.

Why is that the case?

[Whitebear]

Those perma bear like Pretcher keep praising how there is deflation this and deflation that. How come we are not seeing such deflation in the San Francisco area?

http://www.trulia.com/sold/San_Francisco,CA/x_map/price;d_sort/37.726466,37.787536,-122.502525,-122.378438_xy/13_zm/

Look at how these transactions > $2M are so typical these days on tiny lots in the San Francisco area. You can easily see how many houses were sold at more than $1000/sq ft recently. Where is the deflation????

[Mamma Boom Boom]

Anyone that would buy, and any bank that would finance, $1000/sq ft, deserves to have their face kicked in.

[Trader 123]

"Nice A-B-C-D-E triangle that should provide a decent push UP into the close." - Trader 123

"by the time you posted that I was out of my Long mini trade." - Steve 737

Duh.

There was no interest in "timing" on my part with my post since no one really daytrades on this blog. Just thought I'd point out an "intra-day" wave pattern that no one seemed to notice amidst all of Roger's posts of "Doom & Gloom".

LOL!