The market made little progress in either direction today. This was expected as the wave pattern suggested that last Friday's close was a mature w.3. Today's price action either began a complex w.iv decline or it ended at the 1214.75 low. I have attached the 60 min chart to complement the weekly chart level that was presented in the Week In Review. Note that I have designated two sets of w.iv's. Since today's price action may not have completed w.iv, I can't project any w.v of w.3 of w.b termination targets. Regardless, once the correction is done, a new high should follow that will earmark the end of w.3, followed by a w.4 decline and another fresh high for w.5 of w.c of w.b (See Week In Review weekly chart archive)
One thing that clear is that the FED has manipulated the market again much like it did in late 2002 and 2003. The thought process is clear. Inflate and kick the can (the bigger problem at hand) further down the road. In the meantime, investors and traders alike love the backstop. They say, "Don't Fight the Fed". While this certainly has merit, the wave structure tells another tale. However, let me digress for a moment. It's true that most Elliotticians saw what was to be the largest collapse since the Great Depression go up in smoke. That's not poor technical analysis, it's market manipulation and now we have to deal with it. Bottom line: The decline that began as Primary w. 3 down has evolved. When market's evolve, as technicians we must transition from one pattern to another. We accomplish this by looking at alternatives and making our assumptions based upon what we are sure of. Here's what I am certain of based upon Elliott Wave Theory (see weekly chart) :
1. The decline from 1590.5 that terminated at 665.7 is a 5 wave structure.
2. Five wave impulse waves are always followed by three wave corrective structures that when complete are fully retraced.
Given this, the only question to be answered is how far the market will travel before the larger downtrend will resume. In the upcoming posts, I hope to provide some answers to this question.
Best of Trading
No comments:
Post a Comment