Tuesday, July 27, 2010

SPX LONG TERM - An Alternate Option For P3 Followers [UPDATED- Line Chart]

Here's a count to ponder. This is the long term count for EWI up to the end of Primary 1. (I believe this is correct).

What I propose in this count is that Primary wave 2 may have room to run in a large zigzag. This would help explain the structure up from the March 2009 low as a 5 wave structure.

Call it what you will, it may not be an impulse but from the weekly long term view, it surely looks like a five wave structure.

Now look at the pullback  from that rally to date from Apr 2010 high. It nailed the 38% Fibonacci retracment in what I still believe is a corrective pullback.

So say we climb higher in an impulsive fashion to complete Intermediate wave (C) where would that take us? The yellow Fibonacci ratios on the chart represent the length of Intermediate (A). Using the typical wave relations of C to A, Intermediate (C) = .618*(A) at nearly 1350. Haven't we heard pundits and analysts mention this number?

Where are they getting that from. This level also falls pretty close to a 78.6% retracement of the 2007-2009 decline. Though this would be considered a pretty steep retracment for a wave 2, it is not a rule breaker.

Perhaps it makes sense in the government's final attempt to support the market and this is as far as the rally goes.

Keep in mind, this is but a mere option of several options out there. Some argue where I have labeled Primary 1 as only Primary A and this rally is Primary B before a final Primary wave C down.

So if your in the Primary 3 (down) camp, this is something to keep in mind.

Td12 in the comments section reminded me of a technique that RN Elliott used quite often according to Prechter in EWP and that was reviewing closing prices to get a sense of the waves without all the noise.

I believe the line chart mimics the same technique. Here is the same chart as above using a line chart.

I would imagine back in the 30s-40s Elliott did not have a nice PC with really nice charting tools. I believe the charts were hand drawn and probably analyzed on a daily (maybe hourly?) basis and up.

So looking at the line chart above. The structure off the March 2009 lows can be roughly counted as 5 waves. This is also the case on the daily chart.

Check out Gooner70's blog from today's comments. Gooner has some interesting comparisons.
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