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« Another Line in the Sand for the Bears | Main | Presidential Stock Cycle Analogy »

Tuesday, February 15, 2011


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1500 should be the next stop for SP500, by the end of march - buy and hold


Up 13% in a month?????????

It appears to me that transports are at or near a double top. If they do break down first through the MA - that should mark the begining of a correction point - probably.



Yelnick, I'm rusty on my Elliott. You were saying 2000-2009 could be an A-wave, which is an EXPANDED flat? Can that be? What am I missing? Also, is there anything in the long term picture that would rule out 2007-2009 being A of a flat, now in B possibly even to a new high?

I saw a pattern of tops that pointed to February but that looks less and less likely. There is a pattern of 7-month tops that targets March though, which fits better with what Futia and others are seeing.



upstart, yes, 2000-9 is an expanded flat and can be the A wave of a larger ABC. The fractal nature of ewaves means they are self similar at all degrees. This means an ordinary expanded flat, say one over several weeks, can have within it a variety of "3s" including flats, zigzags and triangles. In a flat, a 3-3-5 structure, the A wave is often a little zigzag, the B a triangle and the C a five-wave impulse; but A and B can also be flats. If you look at how EWI labels waves, you will often see expanded flats as little A or B waves of larger flats. So the 2000-9 flat is but the same thing writ large. 

Your second question, is 2007-9 an A of a flat, is interesting. Or did you miss-type, and mean 2000-9? The wave down from Oct07 to Mar09 looks like a classic five-wave impulse; it even has an extended wave in the middle (wave 3) and a gap in the very middle, wave 3 of 3. A bunch of ewavers try to count it as a "3" not a "5", ending it in Oct or Nov 2008, rather than counting the Jan-Mar 2009 wave as a wave 5. One thing they have going for them is the wave 5 had a very truncated waves 4-5, something last seen at this scale in 1937-8. But then we get a very oddball wave B from Nov2008 to now: smallish waves AB and a huge wave C. Occam's Razor says call it what it is, a five-wave impulse that is wave C of the expanded flat.

If 2000-9 is wave A of an even larger flat, yes, this wave B could go to new highs. Wave A would be an expanded flat inside a larger expanded flat. There is nothing in the long term picture that rules this out. Think of the fractal nature of waves again. The expanded flat so far has barely nudged out of being sideways. The Dow went higher than the S&P, but the S&P at the scale of 30 years looks like a double top. Let's look at numbers:

The bull run from 1982-2000 (or 2007) went from 102 to 1576 It corrected down 62% to 667 or almost exactly the 38% level!  A wonderful Fib hitOut recent bottom at 1011 was also spot on the 62% level between 102 and 1576It could easily go 23.6% above and get to 1900 and still look like a modest expanded flat

On an inflation adjusted basis (using gold or the Dollar Index for example, since the CPI is almost meaningless to measure since the housing bubble was removed from its calculation), the market since 2000 looks like a zigzag down, NOT a flat. Even a run up to 1900 would be below the adjusted 2000 number. (In 2000 the DX was at 120; now it is below 80, meaning the real value of the market is a third lower than the nominal value, and even lower against gold). 

My bet is the market has a MINOR correction in late March, and then we continue up into June before any serious drop occurs.  After that we triple top around 1500 in 2012. When that B wave is done, we go down to retest the 2002/2009 lows.  My target for the next interim top is Sp1361, where I believe A=C counting the wave off the end of August (a count I might flag in a post after STU opines on Wed). 


Very good, Yelnick. Well done on digging that one out and sharing it with us.

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