Saturday, April 19, 2014

4/17/14 Elliott Wave Update

The options in the longer term remain the same but with one addition: an impulse higher following the wave [4] low.  If there is a sideways correction underway since the wave (1) high, it works very well as the 4th wave (last corrective wave) of an impulse higher that began at the 2011 low.  The only other reasonable way of using a correction in this position is as the 4th wave within an impulse higher beginning at [4], but this is a weak possibility due to the lack of proportion between it and the 2nd wave of the move.

The rally last week labeled as [a] now strongly resembles an impulse that is complete or in its final stages.  This wave still gives rise to various possibilities since the last all-time high which are listed above.  The flat higher since W is still preferred over a correction beginning at Y sue to its simplicity.  The triple zigzag wave (4) may seem complex, but structurally it actually works very well.

There is very nice symmetry to the advance since Tuesday where the gap higher on Wednesday was the core of the move.  The wave crossing at the close, and overlap of all waves after the core, strongly suggest the move is complete or nearly complete and a correction will begin.
If the correction moves under support in the 1840s, the correction since the last all-time high is likely incomplete.  If incomplete, this larger correction means prices will move back down to the 1810s, then perhaps under this level.  If the 1810s hold or are broken slightly (maybe 1800 is reached), the ending diagonal options since [4] in the first chart remain in play.  If prices stay under support and wedging is lost invalidating the ending diagonals, look for a sideways correction underway since (1), the January high.  As discussed above, a sideways correction in this position is probably the last corrective wave) of an impulse higher that began at the 2011 low
If there is an ending diagonal underway since [4] or a point after [4], this pattern is probably terminating the impulse higher since 2011.  This is not due to the structure as it can easily be labeled as a termination of a third of a third wave (for example just use the colored labelings above but use [C] of b as the starting point of the impulse).  The reason is that ending diagonals usually terminate patterns of a larger degree than the ones that they are contained in.
It is the sideways and ending diagonal options that clearly stand out as the best options.  While at this point it is difficult to say which is correct, new all-time highs are expected in the near future before any meaningful sell-off.  So there is a very strong long play in this market.  1740 support is the lowest this market should go before challenging new all-time highs again due to a lack of bearish possibilities.

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