3 replies to this topic

[samsung]

Have we hit resistance at the trendline, just taking a pause and going on up, or will indicator past history prove too be right and another decline is in the works ?? The trend seems too be UP,, so I am not betting on this signal till I see more evidence.... What do you think ??

[samsung]

I intended too add this chart also and forgot.

[PorkLoin]

Have we hit resistance at the trendline, just taking a pause and going on up, or will indicator past history prove too be right and another decline is in the works ?? The trend seems too be UP,, so I am not betting on this signal till I see more evidence.... What do you think ??

Hi Samsung,

We certainly got up to the trendline, but in my opinion the move up from the May low looks best as three waves, not five. If we're overall bullish, then I think we make a wave 4 now, and later a 5 up. After that I'd expect a correction down or sideways, and then a larger third wave up.

The intermediate term indicators have made a huge gain, there was a mighty positive breadth thrust, etc., and it's hard for me to discount the bullish case here. In the Dow Industrials, which had the clearest count from this year's high, we haven't technically busted the pattern from the April highs which I was going by.

However, we came within 20 points or so on Friday of doing that -- overlapping what I was counting as the bottom of a first wave down from the April high -- and the long duration of the rally from the May low makes me discard the "one more low" expectation within the move down from April.

In the Dow, I see the bullish case as a completed ABC from the year's highs, at the May low, and now we're going up. The (very) bearish case is two series of waves 1 and 2, down to the March low, up to April, then down to the May low, and we're going up in the second wave 2 now, or have completed it.

In the Russell, it sure looks like five waves down from this year's high, and only three up so far. Looks bearish to me, despite the market internals. While unlikely, based on past market behavior, the internals could turn negative just as fast and hard as they turned positive.

There are times when I think being long or short is a low-risk proposition, and now is not one of those times. If we decline correctively -- in a choppy and overlapping manner -- then I think the best bet is to be long. No guarantees, of course, but if we're bullish from the May low, then I think we'll have some more days to get positioned long at current or lower levels.

On the Russell and five waves down, we could have made an orthodox top in Jan., then an A wave to the late-Feb low, and a B wave to the April high, then a five-wave C to the May low. An "irregular" or expanding correction. Counting this way is usually well after-the-fact, and frequently useless for trading in the current time. Elliott is no Holy Grail. You do see such patterns once in a while, though, and thus five waves down does not necessarily mean the larger degree trend is down.

On going short here, I would wait until one's indicators confirmed the turn along with the chart pattern. Five waves down and a corrective bounce would be a nice setup. While the chart is the real deal, I don't expect that.

Best,

Doug

[samsung]

Hey Doug, Thanks for the comments and the update on the possible wave counts. I don't understand much about the waves, still trying too learn about them. Even though the indicators are moving too the negative, as you mentioned, that can change very quickly. Think I will give it a day or two and see what happens.