Saturday, September 18, 2010

9/18/10 - How Would R.N. ELLIOTT Count This?



Line chart
This is a follow up / continuation of a post back in July. See here.

I wanted to take a look again at the wave structure since the late 2007 decline up until the present day. Back in the day, I do not think R.N. Elliott was counting the "squiggles".  I believe he reviewed daily charts and higher and used closing prices. So there wasn't room to stare at trees. I'm sure he basically had to label what he saw at those degrees.

So without the benefit of the squiggles, what does the structure "look" like overall? Since 2007, we can count 5 waves down and since the 2009 bottom, it appears we have 5 waves up. Many will dispute this but really, just look at the structure. It "looks" like five waves. It's that basic.

The basic Elliott Wave corrective patterns are 5-3-5 and 3-3-5. So assuming the bounce off the 2009 bottom is a corrective retrace, we have only seen 5 waves up. Therefore what remains is the 3-5, which means 3 waves down and then 5 more waves up.

Based on my chart above, we are in the middle of that '3' now, which is represented by waves A and B. Wave B may not be complete yet and can easily retrace back to the start of A to form a flat. If so, B will complete near A, which is approximately 1010-1000. 

If it is not a flat, than B may complete a little lower say in the 900s.

Once B is put in, we should see the final 5 that represents wave C blue.

Now all the above assumes that this is a corrective wave off the 2009 bottom. I'm still no longer sold on a Primary wave 3 down. Until I see 1000 break (and I will only become slightly interested), this may also be counted as a new bullish impulse off the 2009 low.

So what am I trying to post here? The bottom line message I'm trying to convey is that since the structure can be counted as a "five" wave move off the 2009 low, we should anticipate some more upside to come after the correction off the Apr high is complete.

I point out again that we have had a weekly MACD centerline crossover, which favors one more push higher for at least a wave C.

For all the perma-bears out there, what are you going to do if this turns out to be a larger impulse up to complete a 5th wave at the Grand Super Cycle degree (yes, that is something I have pondered)?

Because, really, how do we know that the longer term counts are even correct? EWI, Neely and all those in blogosphere (myself included) can't find a consensus on a count over the past two years. Don't ya think there would then be room for errors in the count over the longer term? Just something to think about.
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