Week In Review for November 29 - December 3, 2010

ANNOUNCEMENTS:

Gift #1: First off I'd like to thank everyone that reads my blog and to those who follow me on Twitter. To that effect, I am working on a special holiday issue that all my global readers are sure to enjoy reading. The issue is much more comprehensive in nature and provides the technical insight for trading the global markets in 2011. I will publish it on December 19, 2010.

Here's a quick sneak peak of what I will be covering:

• US Market Outlook
• European Market Outlook
• Pacific Rim Market Outlook
• Metals & Energy
• Worldwide Interest Rate Outlook
• Currency Outlook

Gift #2: For those who find reading my blog and Tweets informative, I'd like to make a shameless bribe (favor) to you in exchange for a free copy of Frost and Prechter's, "Elliott Wave Principle", a value of $30  USD (the gift). The book is a great addition to any reading library.
 
So here's the deal: Current follower(s) of my Twitter account at www.twitter.com/elliottwavelive.com  who broadcast #FF that include my account in the tweet between the dates of December 6 - 24, 2010, get their name placed in a box. (1) entry for every #FF. On December 26, 2010, I will draw a name from the box and make make notice pertaining to the recipient of my gift in a general Tweet and also provide a direct message to the recipient. Questions, DM me!
 
Insight:
 

The ES-F and $SPX continues to unfold in what I believe is w.4. Friday's advance was interesting as it eliminated the regular triangle interpretation that I was working as my operative wave count. The minor breach of the high that was made on 11/9/2010 (1124.75) also eliminated the regular flat interpretation, leaving Elliotticians with three possibilities.

   

Elliott Wave Analysis: 

 

As of the close of Friday's session, the following interpretations remain that attempt to describe price movement.

1. Expanded flat
2. Running Triangle
3. W. 4 completed and w.5 is developing

Some readers may argue that in highly leveraged markets, a minor break doesn't negate the regular flat correction. I'm inclined to disagree. Both the ES_F and $SPX made new highs! The rules of EW also dictate otherwise. In my experience placing emphasis upon a wave count that violates a rule almost certainly proves incorrect as more data is added to the right side of the chart.

Attached are the charts for each interpretation including the their wave labeling. With regard to all three charts, my short term bias is higher, possibly to the 1.272 - 1.382 RF (1239-45) for interpretations 1 and 2. Should trade advance beyond these levels, the w.5 interpretation is more likely. Please note that as of this writing, I'm not placing a high probability on the w.5 interpretation because the guideline of alternation would not be met. W.2 unfolded in a sharp correction and therefore the technician should be looking for a sideways correction in w.4. To conclude that w.4 had ended at 1171 would mean that both w.2 and w.4 unfolded in a sharp corrective manner.

Here's the market's position at the close of Friday's trade:

Cyclic Momentum: Weekly is slightly bullish. Daily is bullish and OB. 60 min. is bullish and at the verge of OB.

Pattern: Either a running triangle or expanded flat correction for w.4

Time: no analysis made

Trade Strategy: A top is near but I prefer to remain flat until w.4 wave pattern becomes clearer. There are times to be aggressive and times to let a wave pattern play out before taking a position. This would be the time to adopt the latter and wait until one of the interpretations can be eliminated.  Should w.4 still be developing there is plenty of time to jump aboard w.5.

  

Best of Trading