Coffee Update and a Review of Wave Personality

After a volatile month of July, a review of the the decline from 192.2 has not yet proven itself. One could come to the conclusion that this market remains under pressure and you would probably be correct in your assessment. To what extent?

If the pressure truly remains to the downside and 150.10 will be surrendered, price action over the next two trading days must exhibit the personality of a third wave move.

From the 240 min chart, I have labeled what type of price action represents a third wave move AND what would not constitute one. In a third wave, we should see several days of heavy selling as price extends to the downside in long bars. This would bolster my labeling and my interpretation offered in my personal trade plan.You can read more about that trade plan at :  Elliott Wave Live: Coffee Anyone?

If we don't start seeing this market extend and see what I have described as "Not This", the possibility exists that either the bottom is already in or a more complex corrective move may be unfolding.

In conclusion, the correct use of Elliott Wave balances price with wave personality (structure). So make sure that you apply the applicable rule of wave personality to your wave labeling efforts. You'll see better results!

I hope you found this education tip helpful and...

Best of Trading


======================================================================

ElliottwaveLive is not an investment advisory service or broker dealer. None of its contributors are registered investment advisors, licensed stock brokers or CTA's. The author may hold short term and long term positions in the futures, stocks and ETF's discussed herein. The author may also trade around those positions which may be in direct conflict with your positions. Complete trade disclosures of the contributor’s holdings are posted at www.elliottwavelive.blogspot.com. See Trader Disclosure. 

Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blog site.   

Flash Update: ES_F

Last night I told readers that 1228 was the key downside level to watch. Based upon the ON session, the opening gap and the fact that price has traded below 1228  increases the odds are that the triangle interpretation will be eliminated and the other working interpretation ( a fifth wave decline) has prevailed.

At the 60 minute chart level we can see how price has touched the lower boundary of the price channel and that I'm working a w.iii circle count. However, just because I count it as such doesn't mean that I can confirm it due to the fact that price has yet to confirm the presence of a third wave i.e. by pushing through the lower boundary of the channel. Once it does, odds are that the internal structure is properly labeled and that an initial target of 1066 should be reached.

Let's see what happens.

The Market Pulse

In yesterday's edition of Heard on the Street , I detailed a likely scenario for the Nasdaq, that I think it is worth reviewing, in that, the market and it's wave structure was clear to me. My point being, why do traders struggle and beat their heads against the wall trying to figure out what a particular market's position is? Why not trade by finding easily recognizable patterns and then trade your plan?

Let's quickly recap the call and what transpired before moving on to the S&P.

Above is the chart that I left readers with looking for a decline to 2252.50. Prices decline to 2254.25 and then rallied to new highs. The new high fulfilled the minimal requirements for w.(v). The fact that price has broken back below the w.(iii) crest could be problematic for achieving any further upside, especially as the DOW and S&P do not confirm such behavior, yet....



.... at this juncture we can't rule out the possibility based upon this chart. I"m not going to rehash the material and the case for further upside (See Heard on the Street for more detail). Breaks below 2254.25 would most likely indicate that w.(v) of w.2 red had completed.


S&P

A Triangle

Today's price action didn't bring any clarity to the picture. Several interpretations remain, the top two being that w.5 is underway or a w.4 triangle is still unfolding. The above chart shows the triangle interpretation. Notice that I've identified the wave structures in 3 waves where w.(c) of w.d circle = w.(a) at 1170.25. This is my minimal target expectation with further downside to 1148 where these first three legs would represent a larger a-b-c consistent with the 240 min time frame (see below).

A Fifth Wave Move

The move from the w.ii crest can also be counted as a perfect impulsive wave. I haven't labeled the internal subdivisions but w.iii = 1.618 w.i and w.5 = .618 w. {i-iii} if you do your homework.

Regardless of which interpretation is correct, both views continue to look down, consistent with yesterdays call. At the time of this post, the market is down 8.25, a good sign. The next move down will determine which count is right.

If the w.5 count is correct, then the ON session and tomorrow's trade will be relentlessly down on fast turnover. If it isn't, then odds are that the triangle count is more likely.

The key takeaway from each interpretation is that eventually, price should carry below 1097.

Let's see what happens.




Best of Trading

Before The Bell: $ES_F

The following chart shows my preferred wave count where w.v is now underway. Yesterday, in the ES1 contract, the market made an initial five wave decline to complete w.i circle.

Likewise, the September contract also completed a five wave decline.

Although the market is down in the ON session, both charts have me looking up in w.ii that should take 2-3 trading days to complete. Of course there is always the possibility that the wave count is incomplete and w.(v) of w.i circle could continue to subdivide. I can make a case for another push down. So allow for further downside risk before w. ii of w. v circle begins.  

In order to evaluate each scenario, the following are my key levels for today's trade:

SEPT CONTRACT:

Below 1117.5 : Negates immediate upside for w.ii development and the count would need to be revised as well as the retracement levels for the termination of w.ii.

Above 1117.5 : Critical support for current preferred wave count and short term bullish bias.

ES1 CONTRACT:

Simply, the opening print must be above 1128.25 to maintain current preferred wave count and short term bullish bias.

Let's see what develops.

Best of Trading

Heard On The Street : Panic and Chaos

ATTENTION: New readers and loyal subscribers....

...Imagine the chaos and panic that may hit world markets --

 then decide how you'll protect your money on Monday...

Traders,

The past week has certainly been challenging to say the least and after the S&P downgraded U.S. debt, any glimmer of hope that traders had at Friday's close may evaporate.

What if the market is unable to catch a bid come Monday morning? Watching the market free fall without a plan to protect yourself won't be fun. After all, most portfolios haven't recovered since 2007 and the losses could be much greater this time around.

Since my July 17, 2011 call , I’ve been warning readers that the end of the bear market counter-trend rally was coming. In fact, my 2007-2011 analogy of the emini S&P demonstrated the fractal nature of the market, how the pattern would progress and the targets associated with the call. In fact, I've sent out multiple updates on Twitter and through my Monday- Wednesday-Friday blog posts keeping you abreast of the markets. 

I'm guessing that subscribers like you either protected yourself from the market's recent carnage or were already prepared to discuss it with your investment advisor and take advantage of it as a result of my forecasts ...

... but if my forecast didn't raise your eyebrows because you don't realize the benefits of Elliott Wave Analysis I can only hope that the events of this past week will change your mind.

Thursday’s 512 point Dow and 60 point S&P loss was just part the beginning, not the end. And if you are a bull, the losses you’ve taken so far could get much, much worse. 

What if you had know in advance, like my readers, that my target level for the S&P was 1166? What if you had that number in your pocket since the July 30, 2011 call and that the level was briefly surpassed on 8/4/2011 before staging a minor reversal.

It’s not too late for you to realize the educational benefits that I provide and the power of the Elliott Wave Principle. Sitting on your hands and waiting for the Central Banks around the world to come up with another ingenious plan is the worst move you could make.

Introducing Signal Watch RT  ® -- a premium service -- providing insightful, real - time intraday elliott wave analysis

There's one request that I've heard from readers again and again and that's more live, hands - on real-time wave analysis. Now if that sounds like something you might want to hear more about, Signal Watch RT ®, may be the solution you're looking for. You'll know what the market is likely to do and when it is likely to do it.

Next month, watch for a complete list of features and benefits and pricing but today I want to thank you personally for joining our community of  Elliott Wave Live readers. Roll up your sleeves, lock the door behind you, watch the video below NOW, then peruse my achieves (lower bottom right fold) and join my blog if you agree that my work is insightful.

Best of Trading,

Mike Sinibaldi 

Before The Bell: $ES_F

Today's positive Non Farm Payroll data has lead to the following price movement. My labeling shows  how I am viewing the move.

Price has reached the 1.618 extension that is typically the limit for any corrective move UNLESS a complex correction develops. I have no way of determining this at this juncture. If a simple a-b-c took place, then we should not see a new high and the move will be fully retraced.

Conversely, we must be aware that the market is severely oversold, that I can identify divergence and that a larger rally should be in order that moves prices much higher than current levels.

Note : A break of 1202 confirms a corrective wave interpretation ... not the resumption of the bull trend.

Best of Trading