Thursday, April 8, 2010



Figure 1-29 and 1-30
Courtesy of Elliott Wave International

Who says you can't use Elliott Wave to forecast. This just might be one example using the alternate count #2 that I have for the SPX. 

In this alternate count, I have presumed that minute [iii] topped at 1191.80. What has followed the top is a clear 3-wave corrective structure. 

Per Elliott Wave Principle,  there are two  main corrective structures; 5-3-5 (ZigZag) and 3-3-5 (Flat).(***For this example only since the third  is a triangle but that is not in play at the moment. More on that below***)

Since it is a clear 3-wave structure off 1191.80, the presumption is that a flat corrective is in progress. Since we know that flats consists of 3-3-5 wave structures and the first 3 has completed, we should expect a second set of a 3-wave structure up as I have highlighted in red in the closeup chart.

We will know very shortly if this is the case. As I have labeled on the closeup chart, wave a of (b) is complete or nearly complete. A pullback in the form of wave b would be expected before a final wave c up to complete (b)

The (b) wave in flats typically retrace (a) approximately 90%.  If we see this occur and then price reverses down, that will be another strong tell that this is a flat corrective. One additional caveat to this is the expanded flat. I won't go into details about that unless I see it happen. But just remember that I mentioned it here.

 ** As mentioned above, a triangle is another corrective structure that consists of five 3-wave structures as depicted in the figure below:

Courtesy of Elliott Wave International

I won't address this yet but I will certainly keep it in mind if we begin to see multiple 3-wave structures converging.

And guess what, if we end up seeing a flat or triangle develop, this implies that a final minute [v] is most likely to come with new highs to come.

Stay tuned!


  1. Grand,

    I like your proposed count. It is the perfect recipe to frustrate traders on both sides of the trade. So you have a 3-3-5, with a zoom in as :
    3 = 5-3-5
    3 = 5-3-5
    5 = 1-2-3-4-5

    Great job Grand.

  2. Interesting work. I've just recently been following your blog and I'm impressed with your counting and your ability to set aside any bias you may have (as opposed to so many others who let a bearish bias affect their work negatively).

    Thanks and keep it up.

  3. Crush and Onlooker.

    Thank you for reading and the kind words.

    Onlooker. i will admit it is a challenge to set aside the bearish bias but u are right, i admit that was a fault of mine early on with this blog.

    GL to u both!