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« Market Entering the Danger Season | Main | Double-Dip Watch: GDP Report Was Mixed UPDATED »

Monday, August 02, 2010


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There has been a negative divergence between the Nasdaq and Dow Industrials. While the Industrials topped the June high, the Nasdaq is well below it. In fact both the Transports and Nasdaq are below their highs set just two weeks ago.

Sherman "double long" McCoy

funny how you identify "nested ones and twos" on the way down, but ignore them on the way up. Any 3 year old can see We're in the 3rd of a third, highlighted by today's opening gap. But that doesn't fit with your herd view, does it?

Daniel  - Taz

A "3rd of a third" to the upside is impossible.

The rally of the July low is taking about three times as long to reclaim the June high as the drop from the June high into the June low.

Impulses are high conviction moves. if it was a legitimate impulse, the rally would have already reclaimed that high. The low momentum of the move makes it corrective.



As always, Taz, right on point with the comment.

The only thing I would add is that if you look at the first wave up as a "1" and the correction of that wave as a "2" (not that I think they are, but for the sake of argument), the "2" corrected 47.7% of the "1". Then, if you look at the "nested 1 and 2", you see that the second "2" corrected 51.2% of the second "1", which is a logical no-no if the market is gearing up for a "3rd of a third". The second "2" HAS TO retrace less of the second "1" than the first "2" retraced of the first "1".

Man, I wish I had a dollar for every time I've had to correct someone from making that mistake.

Attention to detail is the only way to make sure your wave counts are even in the ballpark.


Sherman, nested 1-2s usually get busted. I thought they might work a couple of weeks ago, but no such luck. A low odds formation.

Michael Wagner

Yelnick, thanks for a most informative summary of what is going on in E-Wave Land. I don't know where you find all of the time to do this . . .Excellent work!


Great stuff Y, thanks.

Dent is also on board. Sees a last stab up to 10700-10800 late this week after a slight pullback. Then down.



This morning, I found "Roger" over at Daneric's blog with all of those other "Perma-Bear" losers . . .

"There is a topping fractal in place that occured in April. This market is done."

Roger D.

Hank Wernicki

yep, wavelets are all pointing Down


Euro now up to 131.90
Dollar bulls getting crushed!


I've noticed that the PERMA-BEAR blogs like Kenny and Daneric have seen their posts totally dry up. Perhaps all of the kids that frequent those blogs are getting ready to return back to school and no longer have as much time to post, or follow the market.

Glenn Loser Neely


I've noticed that too, so I am not so sure that they are as good as a CONTRARY sentiment indicator as they have been in the past. It seems as though after Kenny had his latest "temper-tantrum" and crying about no one making any donations to his blog, all of his followers left him for good and went over to Daneric's site.

That's the biggest BEAR DEN that I have ever seen! It's amazing that anyone has any trading capital left after the last 12 months in this market. Losers... each and every single one of them.


Why couldn't we be in "B" of a bullish triangle (that will take up most of the rest of the year) as easily as any other interpretation you would come up with?


Upstart, there are several triangle scenarios that are bullish. The most prevalent is that the Flash Crash was wave A and the sideways move since is a wave B triangle, which is in leg E and is about to end. If so, it implies a drop in wave C. Since A went 180 pts, if C=A it targets 1150 (if we get there in the next couple of days) down to 970, then a resumption of the up move. If C= 1.6x A we go down towards Sp850 before resuming the upmove.

Erasmus B. Dragon

This is good analysis. Thanks. We had lots of short term bears in early July saying "the down ramp is here", and the one thing they did not expect was a head fake towards 1150 to 1180. We have to remember that we are still in a secular bear, however.

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