The market bounced off S&P 1292 on Friday's "Faceplant Day". This is a key level, since it marked the peak of the initial Wave 1 rally off the October 2011 bottom at SP1075. This mid-day alert chart from AllAboutTrends shows the bounce:
A lot of the doom-and-gloom Elliott Wave crowd were expecting it to break, confirming (in their counts) that the long-awaited and dreaded P3 wave down had begun. If we had broken it, the rally since last October would no longer be countable as an impulse wave since wave 4 (the current wave) would have breached into the range of Wave 2 (the wave after that 1292 peak). If we now hold above, the current wave since last October looks like a classic C wave, which breaks as an impulse in either a Flat or Zigzag correction.
If this holds, we should expect my predicted final leg 5 up to new highs (since 2009), and a Triple Top at SP 1550 +/- (going back to the peaks 2000 and 2007). If this leg 5 mimics leg 1, it should run for about six weeks and go around 220 points, putting it above 1500. Structure isn't optimal, as we would have expected wave 3 to extend (ie go 1.6x wave 1 or 5). Also, historical patterns would point to a peak in August not July, to be followed by a September/October market drop, so this may run up more slowly than wave 1.
The doom and doom gloomer also has a rarely shown alternate count which could make a little more sense than the much maligned P3.
I agree the triangle is probably the top count as far as looks go,
but what about this:
2003 to 2007, rather than being a "b" of a flat as EWI would have it or a "b" of a Yelnick Wave triangle,
really was THE top. 2007 to 2009 would be an A wave down. That would put us in the B wave now (or just done, depending on the internal count) with a nasty C to follow. It looks better in the Dow. B retraced a fibonacci 88.6%, close enough to flat territory so C would likely be over 100% as long as A, maybe even fibbing out to Prechter's target.
5th waves can be as ugly as corrections sometimes. There are couple ways to count 2003 to 2007 not as a three legged B wave but a five wave terminal.
Posted by: Virgil | Monday, May 21, 2012 at 08:17 PM
A very clear and a probable wave count.. Thanks for sharing this.
Posted by: Account Deleted | Tuesday, May 22, 2012 at 03:55 AM