4/25/14 Elliott Wave Update

The longer-term options remain unchanged.  Testing a new all-time high will signal an ending diagonal is probably underway since 2013 beginning at [4], B, or (2).  If this happens, the sideways correction option since (1) is still possible, but not very strong.

There appears to be either a zigzag or impulse higher forming since the 2009 low.

Because 1875 resistance was broken last week and there is now a large retracement of the (4) down move, the possible flat higher since W option has lost a good amount of strength.  A flat higher from Y is quite weak because it is so off balance and its waves lack so much proportionality.

An impulse higher unfolding since (4) is possible, but it requires a flat down since A in February.  This option is really a stretch of the imagination.

A flat lower underway since the (3) high is possible, but as mentioned on Wednesday, this would be a very rare corrective wave within an ending diagonal.  A flat in this position would work best as wave 'x' within a double zigzag higher since (2) which is the 'b' wave of sideways correction since the [4] high from 2013.

There are two good possibilities to describe wave action higher since 4/15: an impulse (in color above) or a zigzag.  Wave [x], since it was so close to exceeding A, makes the waves down since A look like a correction.  Really the entire structure from the 22nd-24th high is a very corrective statement by the market.  Even though support around 1870 did not hold, waves down since A should be a correction of some kind, probably a flat or double.  A sideways correction in this position works well with the idea that a zigzag-family pattern higher is unfolding since the (4) low, the theme of this post no matter what the correct wave count is.  This is because second waves are usually zigzig-family corrections.

Bottom Line:

The short-term waves look bullish and a test of ~1900 resistance is likely to happen within the next week or two.  A continued correction since A is possible, but prices will likely simply move higher.  The sideways option since (1) in January 2014 is not strong but is still acceptable if there is a new all-time high in the short-term.  The best view is an ending diagonal higher unfolding since [4] in 2013 or later where prices will exceed 1900 to challenge the upper red line in the first chart.

An ending diagonal would likely complete the impulsive move higher since the late 2011 low of [C] or b.  What happens after this impulse wave terminates is not clear, but at least a 5% or 10% correction should happen no matter which wave count is correct.

short-term: bullish

medium-term: bullish

long-term: bearish

very long-term: neutral

Note:
The next update will be Friday 5/3.