Elliott Wave Market Wrap: June 30, 2010

The market sold off  right where we thought it might. However, given the 92.50 point drop from 6/21- 6/29, I was personally looking to add to my short positions where wave C=wave A (1048.5) or where wave C=1.618 wave A (1056). (See earlier - Pre Market and Mid Day Post charts). It was a frustrating day to say the least. To add insult to injury, the late day sell off at 2:30 EST was triggered when Moody's said that it may cut Spain's Aaa local and foreign currency government bond ratings by as much as two levels after a three-month review. The market remained under pressure for the remainder of the session closing at 1024.5. The lower close brings the entire wave count from 1127.50 into question. If wave i (circle) did not end at 1030.25, then wave i may be an extended 1st wave of wave 3 down and is still subdividing wave (v).  I'll attach a chart for this viewpoint. A second, low percentage count would be that the small bounce that terminated at 1043.75 earlier today completed wave (ii) and that wave (iii) of 3 is underway. Both views offer lower prices for tomorrow's trade as long as the pattern doesn't complete overnight. But let's me smart here! Given the decline we have seen over the past few days, a larger wave (ii) would be expected when wave i (circle) completes. We must respect that possibility at this point in the way structure until proven otherwise. Use of a protective stop just above 1043.75 would allow a trader to embrace a greater bearish case. Any break above the stop would mean wave ii (circle) is unfolding.

Best of Trading!

Elliott Wave Mid Day Review: June 30, 2010

From the open, wave i circle of wave 3 down is complete. Opening trade has remained between channel lines, a classical signature of a counter trend rally which should meet heavy selling pressure between 1044 - 1056. Wave ii circle looks like a ABC zig zag that should terminate at 1048.5 if waves C= wave A. Any further subdivision above this level would imply that a larger corrective pattern was developing which would attempt to close the gap from yesterday at 1056 whereas wave C= 1.618 wave A.


Best of Trading

Elliott Wave Pre Market Analysis: June 30 2010

On a short term basis, the overnight session does not appear to be subdividing further to the downside which means that wave i circle is complete. Attached is a 30 minute chart which shows the subdivisions of wave (v) of i (circle, green). Note the divergence between waves iii and v. Divergences between price and indicator(s) often occur at the termination points of impulsive waves. Falling prices, while the MACD was turning up signified that the trend down was coming to an end.

As I mentioned in last nights post, I'm  looking for selling pressure to resume after testing the 1150 area. Let's take a closer look to identify other clusters of resistance There is swing resistance (green lines) at 1044 which is being tested at the time of this post and 1047.25. Additional resistance can be found by using the Fibonacci reverse extension tool. A 1.382 extension is 1049.25. So look for sell signal (a completed ABC) between 1044-1049.25. Rallies above this area would suggest that a larger countertrend rally was unfolding.

Best of Trading!

Elliott Wave Market Wrap: June 29, 2010

The last time I left you, the near term outlook for ES-057 called the decline from 1070.5 to 1037.5 as either wave i (green, circle), or that a small 4th wave would unfold before the resumption of downward prices. It looks to me that a small ABC wave iv (blue) completed, followed by the resumption of the trend down. It is unclear as to whether we now have a complete 5 waves down or if prices are still subdividing. We'll have to see what transpires overnight and early tomorrow.

Now turning our attention to the daily chart, three significant events transpired today that remove alternate counts and confirms that wave 2 (blue) is indeed complete and that wave 3 is underway. Price broke through the previous termination point of B (red) as well as the support area of 1036.75. Even more importantly, the corrective base channel for wave 2 was impulsively broken to the downside which is exactly what we want to see. While this is exciting, I'm calling for current prices completed 5 waves down, followed by a retracement to the 1050 handle (see daily chart). From there, I'll be looking to reestablish short positions for the all important 3rd of a 3rd. The initial price target is 940.50 but prices could go much lower.

Best of Trading!

Elliott Wave Mid Morning Review

As anticipated, price traded to 1038.50 and are now retracing. Whether wave i (circle, green) low is in place or this is a wave iv minor bounce, before resuming the trend down to complete wave i, ... one thing is for certain. Today's early morning move down should be entirely retraced up to 1079.5 - 1083.5 and close the gap ( see chart below).  As more of the price structure unfolds, I will try to nail down the termination point of wave ii with more clarity.

Elliott Wave Pre Market Analysis: June 29, 2010

Good morning.

The overnight session provided clarity to the current wave structure. It appears that scenario 2 is the operative count (see June 28th posts) and that the price expansion that I was looking for has begun to the downside. We should see a large gap at the open today.

Looking at the 240 minute price chart, I have labeled what I believe are the current subdivisions. Prices should complete a small fourth wave ( iv, blue) between 1059.75 and 1064.5, then make a final push to complete wave v of (v) of i (circle, green). Aggressive traders may want to consider this area.

There are several termination points of wave i (circle, green) that are identified by the following Fibonacci ratios:

1. Wave (v) = wave (i) @ 1053.5
2. Wave (v) = .618 (wave (i) - wave (iii)  @ 1038.5 
3. Wave (v) = 1.618 wave (i) @ 1037.25

As long as prices remain below key resistance (1079.75), further subdivisions to the downside are expected.

Best of Trading

Elliott Wave Market Wrap: Part III

Price has moved sideways for the past two days and the current price structure from the high of wave 2 (blue) does not appear complete. Today was an "inside day", indicates possible trending price action tomorrow. While there is no absolute that this will occur, the compression that I referred to in the weekly chart in Part II of tonight's market wrap aligns well with this possibility. Be on the look out for trending price action at tomorrow's open.

There are currently two possible scenarios that must be given equal consideration.

SCENARIO 1: That wave i (green, circle) is complete and wave ii (green, circle) is still unfolding. Under this scenario, the structure remains within the channel lines which indicates counter trending price action.  A break of Friday's high of 1075.5 would reverse the pattern of lower lows and lover highs indicating that this scenario is the operative wave count. Should prices break the channel impulsively, and break 1062.75, then scenario 2 has played out.




SCENARIO 2: That wave i (green, circle is still unfolding)

Elliott Wave Market Wrap: Part II

Turning our attention to the weekly chart, key support is (999.5- 1006.25). I'm using a Dual Moving Average System to identify trend and market compression. Compression, in visual terms, is when moving averages come together and then seperate. The faster moving 13- period sma is just about kissing the slower 26-period sma. The near term implication of compression usually result in the expansion of price. Look for the 13-period sma to cross the 26 -period sma providing a classic weekly sell signal as prices continue the downtrend established from b (green). Another possibility is that the 13-sma slightly penetrates the 26 - period sma, then moves in the opossite direction, as prices rise. Let's see what transpires over the remainder of the week. We have allot of economic data toward the middle to end of the week. 

Elliott Wave Market Wrap: Part I : June 28, 2010

Tonights update will be in three parts. First I'd like to focus on the higher time frames, then conclude the post with a recap of the daily session. From the Monthly chart, I've drawn a blue line on the chart @ 1060. The level of support is significant as I believe this is the bulls last stance! The area has been tested on two prior occassions , as depicted by the blue arrows. On each test, the bears were unable to drive the market lower, a telling sign of a ensuing rally. Also, note the lower shadows on each candlestick gave a visual indication that selling pressure was being somewhat absorbed by the bulls.   

During the month of June, prices are retesting this area as indicated by the red arrow.  A break should bring heavy selling presure.