Thursday, May 6, 2010

5/6/10 - SPX EOD [9:22 PM Update: A Road To 1228]

[9:22 PM Update: A Road To 1228]

My first post on this chart above was titled "A Road to 1228". This is where I started turning a little bullish.  Read here to follow along. 

Notice where the reaction low hit? That's the long term bear trendline. Makes you wanna say, "Hmmm......."

Wow is all I can say. I'm sure the blogosphere is busy tonight with all the possible bearish counts and a resurrection of P3.

One thing that makes me a little suspicious of all this is the rapid buying frenzy once it was determined what had occurred. Why would that have happened if people really wanted out of the market? I guess we'll know tomorrow for sure if we see a follow through.

All this frenzy created  a large hammer candlestick, which one could also argue may not be a true one since this was an anomaly.  Perhaps if the selling was steady  throughout the session without the panic we may have seen a long steady candle.

Well I'm almost a believer that a major top is in, but not quite yet. Technically, we still have only three waves down, which, believe it or not allows this combination corrective to still work. I have the entire leg off 1205.13 as a protracted zigzag to complete minute [y]. (c) is nearly 2.618*(a) of minute [y].

Wave ratios are still in play and the fact is, wave Cs  act like third waves according to Elliott Wave Principle. 

Look at the second chart. Notice the green ascending trendline? It has provided support for the past two corrections that we all thought was the beginning of P3. Look at where the candle closed today minus the shadow (which was a result of the "glitch", wink, wink).

So this would be my basic argument to serve as a heads up to the bears to not get too excited just quite yet. Remember, ""ool me once. Shame on you. Fool me twice..."

The bears will have to follow through tomorrow and I would like to see 5 decent waves down. If the bulls can put in a green print, that large hammer could act as a reversal candlestick. Notice that the last two larger corrections also ended with reversal hammers so something to keep in mind.

I'll try to post more later but this is all I have time for at the moment.


  1. Hi Grand, nice post. One comment: I don't think it would be correct to draw your trendline from tails or wicks of two data points and then take the body from today. That's having your cake and eating too. Doesn't work like that.

  2. Anon. thx for the feed back. that's a good point but the purpose of my chart with the candles is to show clearly (versus using a bar chart) that the market "closed" above that trendline.

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  4. "Fool me once. Shame on you. Fool me twice..."

    I may have to ask George Bush, who is the world expert on these sayings, but is there a saying for the fourth and fifth time?

    I think your caution here is wise. That rebound, the failure to break below early Feb lows, and several X wave rug-burn scars make me want to see some follow through as well. Only the French CAC made a lower low than Feb 2010, and that was a squeaker. NO US index did, nor have the FTSE, SMI, or DAX - so far.

    Having said that, I DO think the possibilities favor this being [3] versus yet another B or X wave. We'll see soon enough.

  5. One more observation - I wonder how much of that insta-rebound was just machine driven buy stops that hardly anyone expected to be triggered in this manner, and may be regretting now.

  6. Blankfiend. thx for visiting and commenting brother!

    ya. i hear you. we've been waiting for this type of move, i just want to see follow thru. good pt btw about the buy stops.

    we'll see what happens tomorrow. i'd like to see a green candle to confirm the hammer reversal. GL!

  7. Grand, I admit I was with you on the last drive through end of May to a new high. I think its still possible but it needs to start Monday. What do you think after a down Friday?