S&P Futures: Market Wrap for August 31, 2010

My interpretation of whether wave (ii) purple has terminated is still open after another day of trading. market found support and trade has turned back up, keeping the the possibility of a larger upside correction on the table. Yet, prices still have not moved beyond the 1054 mark which would signal that some form of alternate count or sideways pattern was unfolding. While I think the price structure is definitely corrective in nature, as indicated in the light blue box range, until there is an upside break of 1054, I'll favor near term downside pressure.  What may be occurring here is a combination pattern for a developing wave (ii) purple and the market is just marking time before terminating. I'll need to see more of the internal structure before I can confirm such an assumption. Whether the market continues down hard or meanders sideways ,  the operative direction remains down with much further downside potential.

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S&P Futures: Pre Market Analysis for August 31, 2010

The Overnight session is mildly down. There is no change to my forecast from last night. Let's see what develops.

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S&P Futures: Market Wrap for August 30, 2010

From the morning's pre market review I stated that the overnight session reached 1072.75, and closed the open gap. This area was cited as resistance in Friday's week in review. Although price never tested the area again during the day session, my interpretation of whether wave (ii) purple has terminated is still open for the time being.  Currently I can only count three waves down . Counting 5 waves down confirms that wave (ii) had ended. A break below 1037.25 would bolster the bearish view.

For tomorrow, I'm looking for a minor bounce for wave iv, followed by an impulsive decline . In the meantime, I am dead wrong on my count and expectations if price trades above 1054 thereby creating overlap.

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S&P Futures: Pre Market Analysis for August 30, 2010

The overnight session reached 1072.75, and closed the open gap. Whether this is a head fake or a tradeable top remains to be seen. I'll be looking for 5 waves down to confirm that wave (ii) had ended.

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S&P Futures: Week In Review for August 27, 2010

Another week has come and gone and the only thing that the bears can say is that the market lost (6.25) for the week. The last time I made a post, I offered two scenarios for Friday. The upward wave (ii) purple scenario played out after extending the b wave down, re-testing 1037.25 in a flat correction. The pattern is close to terminating. Key resistance levels cited between 1061.75- 1071.50 and the gap at 1065.5 remain. The game plan remains the same, i.e. looking for sell signals at these levels. A break of 1037.25 would have at a minimum a bearish downside potential to 1002.75.

Interestingly, yearly cycle work dating back to the 1987 low confirms the general direction of the market and wave count.  Several yearly cycles anticipate a low by 10/29/2010. The 9-month shorter term 1/2 cycle of the 18-month cycle crested at the top of wave 2 circle purple (1216.75) and is now working down. A bottom of the cycle is anticipated by 1/31/2011. Only the 18-month cycle argues that the market may hold up a bit longer before resuming the decline to much lower levels. A crest of this cycle is anticipated as of 1/31/2011 and pushes out the cycle lows to 10/31/2011.

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S&P Futures Market Wrap for August 26, 2010

In today's pre market analysis I indicated resistance for wave (ii) was between 1061.75- 1071.50. Possibly, we would close the gap at 1065.5, then turn south. I also set critical support at 1044.75. The market traded to 1060.25 and turned south for the remainder of the day. A minor breach occurred at critical support but not enough to conclude that wave (ii) had ended.  

For tomorrows trade, I will be looking at two possible outcomes as shown on the attached chart. If trade continues down in an impulsive manner, we need to see 5 waves down to truly confirm that wave (ii) had ended. A push up and a break of the red trendline would leave the door open for the gap to close at 1066 or any of the above mentioned resistance levels stated from last night.

 

Tomorrow we have the GDP report before the opening bell. I expect some early volatility.

 

Best of Trading

S&P Futures: Pre Market Analysis for August 26, 2010

Not much to go over as the overnight session  is on stand-by awaiting the jobless claims number at 8:30 est. The chart shows the resistance levels for a proposed wave (ii). As I mentioned last night, the wave either compleeted yesterday or will develop in a more complex manner. Therefore, all I can offer at this point is a range of resistance between 1061.75- 1071.50. Possibly, we close the gap at 1065.5, then turn south. Let's seee what develops.

I'm setting critical support at 1044.75. Any trade back down under this level would indicate that wave (ii) had completed and that wave (iii) of iii circle (green) of 3 (blue) had begin.

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Market Wrap for August 25, 2010

In yesterday's Market Wrap post, I mentioned specific target areas that I was looking for today. We hit the first target (1038) and turned tail to the upside. Notice the divergence of the MACD histogram. This is typically found between a 3rd and 5th wave as it confirmed that wave (i) purple was completed.  I must admit, the wave structure would have counted better if there was one more decline below 1038 but I can count a complete 5 wave structure down from wave iv (1080.25). The fact that it didn't results in a slight relabeling of the internal structure of the move down from 1098.5, but  it doesn't change the direction or the overall interpretation which was down going into today's session.

For tomorrow, this sets up a corrective rally that either completed at the close of today's trade or will develop in a more complex correction. Look for targets and further analysis tomorrow morning.

Best of Trading

Pre Market Analysis for August 25, 2010

As expected, selling pressure resumed in the overnight session. See my market wrap posting for support areas at http://elliottwavelive.blogspot.com/2010/08/market-wrap-for-august-24-2010.html

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Market Wrap for August 24, 2010

The market is currently working wave iii circle down and it appears that further selling is on order on a near term basis. At a minimum, wave iii circle = wave i circle at 1038. There are also other potential targets at 1034 and (1030.25 - 1030.5; respectfully, the  .786 retracement and the monthly S1 pivot support). As the wave structure unfolds, I'll revise these targets if need be.

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Pre Market Analysis for August 23, 2010

The overnight session is trading up confirming my "week in review" analysis. There's additional supporting evidence that critical resistance of 1083.75 is a significant area to watch. First, we have two fibonacci  resistance levels at 1086.5 and a 1.382 reverse extension at 1084.25 on the ES1 chart.

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Weekly Wrap for August 20, 2010

A Trading Lesson and Set Up

Last time I posted, I depicted two possibilities for Friday's trading. They were:

#1. That we are working wave i blue of wave (iii) purple of 3 (blue). If this is the operative count, then we should see further selling in the overnight session or into the first part of Friday's trade.

#2. I also have labeled the chart for a W-X-Y, "Double Three" flat pattern that would complete around 1100.75 whereas wave W=Wave Y. This aligns well with the upper boundary of the corrective pattern. I would look for the channel to provide resistance! Should this scenario play out, I'd expect trade to turn tail quickly from today's close as trade can't go beyond 1066.25 for a regular flat correction.

As food for thought, I said that if price exceeds 1066.25, there is still another alternative labeling  that would call for an expanded flat correction. Under this scenario, trade would make a new low, then retrace up beyond 1100.75.

Often when several scenarios present a greater tendency for trade in one direction you have to play it. The odds favored a decline (66%) and a 33% chance that trade would move higher. I'm not going to go over the trade but there were several ways to enter the market to the downside. Let's look at what occurred.

What we got was #1 as price traded below 1066.25.  Indeed the higher percentage played out. Scenario #2 was eliminated on the break of 1066.25 but it is still to be determined if the expanded flat alternative is still in play.

The Trade

Regardless of the current wave labeling, the count suggests that trade continues up from the lows set on Friday. Current price action looks choppy and contains overlap ... a classical signature of countertrend moves.  So the question to be answered it what's the hypothetical trade. We'll, if the current labeling is correct, price can't overlap 1083.75. If it did, the possibly of the expanded flat interpretation may still have some life. Traders should be looking for sell signals against critical resistance (1083.75). The ideal stop rests just above this level (1084). How one accomplishes this is determined by your trade plan with the underlying wave count confirming the completion of 3 wave up from Friday's low of 1061.75.

Best of Trading

Market Wrap for August 19, 2010

The Market took off to the downside right after the negative Jobless Claims number was released at 8:30 EST. Prices traded heavy all day and in an impulsive manner. I have provided a chart tonight showing two possibilities. I realize that there is allot going on in the chart so let me explain. If anyone has any questions,please e-mail me.

First there is a base channel drawn from the top of wave 2 blue. It provided structural resistance at 1098.5. There is also another channel draw which is a corrective channel. Notice the upper boundary crosses 1100.75 (more on that in a minute).

I have depicted two possibilities here:

1. That we are working wave i blue of wave (iii) purple of 3 (blue). If this is the operative count, then we should see further selling in the overnight session or into the first part of Friday's trade.

2. I also have labeled the chart for a W-X-Y, "Double Three" flat pattern that would complete around 1100.75 whereas wave W=Wave Y. This aligns well with the upper boundary of the corrective pattern. I would look for the channel to provide resistance! Should this scenario play out, I'd expect trade to turn tail quickly from today's close as trade can't go beyond 1066.25 for a regular flat correction.

Here's the tricky part. If price exceeds 1066.25, there is still another alternative labeling (not shown) that would call for an expanded flat correction. Under this scenario, trade would make a new low, then retrace up beyond 1100.75.

In conclusion, we have two scenarios calling for a new low and one that calls trade higher. Tomorrow is Options expiration. Let's see.

Best of Trading

Pre Market Analysis for August 19, 2010

After the initial knee jerk reaction to a negative jobless claims number, the market has settled down. There is nothing of significance here. See last nights Market Wrap for working operative wave count and alternatives.

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Market Wrap for August 18, 2010

Interesting day in that what appeared to be the start of something big to the downside fizzled. By 3:30 pm est., the market had clawed its way back up to challenge the near term top of wave (ii).  Until a break of 1089.5, the current wave count stands (see chart). However, the deep retracement does cause some concern that a more complex wave (ii) is still unfolding opening the door to further upward prices (see chart 2). The chart is not drawn to scale for any projections but shows the general direction of an alternative wave structure that may play out. Until 1066.25 is broken, I can't take the alternative count off the board. 

Best of Trading.

Pre Market Analysis for August 18, 2010

There is no change to last nights commentary. The ON (overnight session) is flat.

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Market Wrap for August 17, 2010

Just a short note here tonight. Today may have marked the end of wave (ii) purple right in the area of our Fibonacci cluster points. Getting below 1083.25 would bolster the case that wave (ii) had indeed ended.

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Pre Market for August 17, 2010

Early action in the overnight session is progressing as anticipated in an upward fashion. If the current rally is to unfold in a simple zig-zag, then the target(s) for the completion of wave c of wave (ii) is:

wave c = wave a @ 1087.25
wave c = .618 wave a @ 1081.75 (already reached)
wave c = .,618 wave a past wave a @ 1089.71
wave c = 1.618 wave a @ 1096.25

As a reminder... from last night's Market Wrap, I mentioned possible targets of at the gap between 1090-1096 and the .618 retracement at 1103. Together these represent our "Zone" for the termination of wave (ii).

Let's see what unfolds.

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Market Wrap for August 16, 2010

For the pre-market commentary, I warned about the possibility of trending price action and a reverse during the same day. Examining the move down off the open, it appears that wave (v) has been struck but the powerful reversal never materialized. I have relabeled the wave sub structures to better reflect the size of the decline. Nothing changes the larger degree trend. A failure to hold 1066.25 (critical support) would indicate that wave (i) was still extending.

Minuette wave (ii) is currently unfolding. Since the most common retracement for a 2nd wave is .618, the target is 1103.75 (+/_ ). Attaining this level isn't an absolute requirement.  My minimal expectation is for the gap between 1090- 1096 ( +/_ ) to be filled.

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Pre Market Analysis for August 16, 2010

In the weekly wrap I mentioned, "For the early part of next week, I'll be looking for the completion of wave 1 of 3 (blue), then a retracement for wave 2 of 3."

The overnight session hasn't shown its card but we will be relying on the wave count to provide our directional bias which remains down.  On Friday we had an "inside day" on a daily chart of ES1. Inside days often lead to trending price action. So be alert to this possibility. What a trader needs to be aware of is that trend days can reverse during the same day and lead to a powerful move in the opposite direction.

Examining the current move down, the wave count is mature... meaning that we are in wave (v). Most of the decline is done; therefore, there is limited downside potential and greater risk of a countertrend move.

Best of Trading

Elliott Wave Live: Weekly Wrap for August 9 - 13, 2010

The Market spent most of the week falling in an impulsive manner but it doesn't appear that we have a completed wave 1down from 2 (blue). At the daily chart level, price has yet to break the trendline. Doing so would add the the bearish case. Final confirmation that wave 2 blue has indeed ended occurs on a break of critical support (1053).  

For the early part of next week, I'll be looking for the completion of wave 1 of 3 (blue), then a retracement for wave 2 of 3. There represents a low risk entry for a significant decline of wave 3 of 3.

I'll calculate some preliminary targets early next week. Until then...


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Elliott Wave Live: Pre Market for August 13, 2010

Last night I gave the game plan for today's trade. Price has almost reached 1091.25 but allot can happen between now and 9:30 est. Let's see what develops.

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Elliott Wave Live: Market Review for August 12, 2010

Last time I left you with the following comments, "Odds are that we have a gap down opening and complete the third wave, then look for 4th wave with choppy price action before a final thrust down to complete wave 1 of 3. ". That's exactly what we got.

Here's what I'm looking for wave (iv). I expect that price will retrace to .382 in an impulsive manner, counting 5 waves, followed by a decline to complete wave (v) of 1 (red) of wave 3 down. If the count isn't complete by 1091.25, the possibility can't be ruled out that wave c= 1.618 wave a @ 1099.5.

The Fibonacci targets for the final push lower are provided but are only applicable if the wave (iv) terminated at 1091.25.

Looking at the 15 minute chart, I've shown a zig-zag set up where wave a = wave c at 1091. 25. The pattern should be as symmetrical  in slope as noted by the cloned blue lines. Should the market print below key support, all bets are off.

Let's see what develops overnight. It is also possible that wave (iv) could develop into a more complex correction negating this outlook.

Best of Trading.

Elliott Wave Live: Pre Market For August 12, 2010

The pre market session indicated further weakness as the third wave down looks to be incomplete. Odds are that we have a gap down opening and complete the third wave, then look for 4th wave with choppy price action before a final thrust down to complete wave 1 of 3.

Best of Trading

Elliott Wave Live: Market Wrap for August 11, 2010

I had been calling for a possible move beyond the June peak. It didn't happen. Yesterdays and today's strong selling pressure , the subsequent break of critical support (1103.75) and bearish technicals combined with a bearish ending diagonal ( wedge) have set the stage for a wave 3 decline that should take price to new lows for the year.

Ending diagonals make quick retracements to the origin of the pattern which is 1005.5.  The reason for this quick decline is because with each peak (waves 1,3,5) leading up to the termination point, buyers stepped up. Most bought at or near  the last high  in anticipation of the breakout. Their stops are below each swing low. Each break of a previous swing low traps more bulls as their stops are hit. This should add to selling pressure. I'll be looking for continued selling and confirmation of five waves down at the most common initial retracement for wave 1 of 3 down at 1051.75.

Best of Trading

Elliott Wave Live: Pre Market for August 11, 2010

The market is at a key juncture. The ON (overnight session) is trading heavy and price has reached critical support that I established at 1103.75. A failure to hold support adds to the increasing key evidence that the rally is over. They are:

1. The Dow was the only indice to take out the June high. The S&P and Nasdaq failed to confirm this move.
2. The S&P and Nasdaq exhibit ending diagonal patterns (terminal patterns) that have not significantly resolved to the upside trend line... accompanied by a volume spike and higher breath. Only on rare occasions does a final 5th wave of an ending diagonal not reach the upper trendline or result in a throw over of that trendline.
3. Analysis in both Time Cycles, Fibonacci Time Ratios and Fibonacci Time Extensions provided the following dates for termination at the daily and intraday chart level (+/-) 1 trading day : 8/10, 8/11, 8/16, 8/17, 8/18.

Bottom line - The S&P and Nasdaq markets need to reach new recovery high or a near term top is in. If they don't we'll be looking for confirmation that wave 3 down was underway or if another pattern had developed

Elliott Wave Live: Market Review for August 10, 2010

The early morning call worked like a charm with a move down to 1112, then a large retracement. It remains to be seen if a new recovery high can be struck or if wave 2(blue) has ended. This leaves the current interpretation of the wave count from 1103.75 open but the ending diagonal and its structure is still intact. All Fibonacci targets remain in place.

At this point, I'm moving key support to 1108.25. If prices breach this mark, then something is wrong with my count. I'll set critical support to 1103.75. A break here would add to the near term bearish case.

Best of Trading

Elliott Wave Live: Pre Market for August 10, 2010

Early action is down ahead of the FOMC announcement of US interest rates. There's allot of buzz out there as to whether the FED will confirm that the US economy has slipped. Will they lower rates through quantitative easing programs? Who knows. The wave count is or guide.

Here a possible scenario (see chart) that could play out before the FOMC announcement at 2:15 p.m. A decline to complete an expanded iv wave of v of C (red), to the 1.382 reverse fib. extension (1114.75) or a test of the lower boundary of the diagonal (1112.5),  followed by a rally to complete wave 2 (blue). Allot could certainly happen between the time of this post and the market's open to negate the possibility.

Although less accurate, I thought it might be interesting to post the Fibonacci time relationships and Time cycles for wave 2(blue) and the current C (red) wave. Keep in mind that these projections are +/- (1) trading day.... meaning  the termination of wave 2 (blue) or wave C are +/- (1) trading day for each date given. This information should only be used as a confirming tool, rather than an absolute.

Possible Dates of Termination

Wave 2 - 8/17/2010

Wave C - 8/10, 8/11, 8/16 or 8/18


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Elliott Wave Live: Market Wrap for August 9, 2010

The market continues to advance and there is no change in the near term interpretation... i.e. that the current rally is close to completing. The key to calling the top is counting a completed 5 waves up from b (circle) that terminates near or at one of the Fibonacci targets provided over the past few posts.

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Elliott Wave Live: Pre Market for August 9, 2010

The ON session is up slightly.  The FOMC conducts its policy meetings with an announcement on rates due on Tuesday at 2:15 p.m. Typically the markets are quite before the announcement.

From the weekly review post, the wave count suggests that the upward correction has not run it's course. Here are additional EW Fib levels and color codes created from the intraday 60 minute chart.

Red- wave c =.618 wave a @ 1129.5
Green- waves (i) - (iii) = .618 @ 1133.5 (Golden Section) of the entire wave 2.
Blue- wave c = wave a @ 1145.25
Purple - wave (v) = .618 wave [(i)-(iii)]@ 1153.5

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Elliott Wave Live: Weekly Review for August 6, 2010

A Lazy Affair

The market finished the week on another low volume affair. When we last spoke, I was looking at what appeared to be a triangle forming on the daily chart. The decline that I anticipated carried well beyond 1118 thus eliminating any further possibility of said interpretation.

Corrective waves are always tricky because the pattern(s) and count can be complex in nature. Often, the pattern and count isn't identifiable until the wave structure has completed. Identifying the wave structure from the low of 1006 has been challenging. So stepping back, let's look at the big picture and work or way down to the daily level.

A Head & Shoulder Top?

The first chart is the weekly continuous combined contract for the S&P. I have identified a possible H& S pattern. The right shoulder (RS) appears to be building in a 3 wave structure. Notice that 1146 is resistance where Wave A = Wave C. This resistance is also chart resistance from the high of the Left Shoulder. 

Turning our attention to the daily chart level, I am currently working two scenarios  ( a double 3: W-X-Y) and ( an expanding flat with a wave C diagonal) for the current advance. Here's the charts for both for everyone to review.

I have mentioned them at nausea so I'm not going to review the reasoning behind the labeling of the charts. What's important to know is that it doesn't matter which way you label the chart at this point. Both interpretations have the same implications when completed and offer similar targets for the termination of wave 2 (blue).

Targets For Wave 2 Termination

The key EW resistance levels to watch for next week are: 1136, 1143-1149.25. 1152.85 - 1156.25. I will post the wave C diagonal fibonacci clusters before the market opens on Monday. Together, they should give us areas of confluence that coincide with the larger time frame analysis.

Where Are We Wrong?

On the daily chart level, a break below the lower trend line and a break of key support of 1084.5 would mean that the current wave labeling was incorrect. A break of 1053 would most likely mean that wave 2 (blue) had ended. 

Best of Trading 

Elliott Wave Live: Pre Market for August 6, 2010

There is no change from last nights post as market participants are hesitant to place any large bets before the US "Non Farm Payroll" report. Futures are flat.

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Elliott Wave Live: Market Wrap for August 5, 2010

We didn't get the push up that I anticipated as the market continues to consolidate just below the June high. On the daily chart, the last three days look like a running triangle may be forming. The d wave may have completed at today's close. If so, I'll be looking for a minor decline to around 1118 area to complete the e wave ... setting up the final wave v of C of minor wave 2 advance.

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Elliott Wave Live: Pre Market For August 5, 2010

The ON session tested 1127.75 and failed. The June high was 1129.5 on the continuous contract. Jobless claims jumped by 2,000 and the market sold off.  I'm looking for confirmation that a top is in place... meaning 5 waves down, followed by a 3 wave counter trend rally. Traders may want to consider short positions should this occur.

Best of Trading

Elliott Wave Live: Market Wrap for August 4, 2010

Searching For A Top

I've just returned from my trip to Denver and I"m ready to get after the Market again. If you recall, I offered two wave counts in my July 25, 2010 post. Rather then recreate them, I recommend that everyone read that post again as it provides a game plan for a breach of 1127.5. I feel this level may be taken out tomorrow. The post is found in the July achieve (see the right side corner of bottom of the blog).

One word of caution. The current rally is getting tired as measured by many indicators. It is ripe for failure. Could the market extend further? Yes but 1127.5 is a previous 4th wave, so one needs to be looking for possible failures tomorrow.  If the market penetrates 1127.5 cleanly and with upward thrust, then the next target is in the vicinity of 1136.

Best of Trading!

Elliott Wave Live: Mid Day Review for Aug 2 , 2010

A new month and minor wave 2 on the daily chart hasn't completed. Other market pundits felt that wave 2 ended on July 30, 2010 in a truncated 5th wave of c at 1113. The truncation can best be seen on a 60 to 120 min chart. I wasn't sold on that analysis as it seemed to be a stretch given the overlap of waves down from the peak that followed.

Today's gap up and subsequent rise above 1117.75 removes the possibility that wave 2 had ended. Price remains within channel lines established between 1006 and 1053 (bottom channel) and the parallel upper channel at 1096. This is the signature of a corrective wave. Until the lower boundary is broken, I can't see getting overly committed to the downside here. While I have labeled the corrective structure unfolding as a Double Zig Zag, my confidence in the count is still questionable. Other possible counts exist with upside potential. Therefore, the trend is up and we should not fight it. So plan on further upside potential near term. As soon as a more definative wave count can be established, I will make a post.


Best of Trading!