Saturday, May 10, 2014

5/9/14 Elliott Wave Update

The structure higher since 2009 works best as a nearly complete zigzag higher or a developing impulse wave.  The pros and cons of these options were discussed in the first part of an earlier update in April here.
Regardless of which longer-term wave count is correct, we are almost certainly watching an impulse wave higher that began in 2010 or 2011 wind down.  An ending diagonal higher since the 2013 low of [4] or B is the strongest option.  Weaker due to the subwave proportionality is a sideways correction underway since (1).  Something impulsive higher since [4] or B is a weak option due to the lack of strength and subdivision the market has shown; this would be a complex impulse wave and as the next chart shows, the subwave structure makes it questionable.

If the market is still drawing out impulse waves higher (e.g. an impulse wave higher since [4]), as explained in earlier updates, there must have been a sideways pattern from A to (4).  This is a weak option as many parts of its structure are real stretches of the imagination (e.g. an ending diagonal from (3) to (4) is required).
The best possibility above is a sideways pattern unfolding or complete since A.  A complete triangle looks best because of the complex set of zigzag waves chopping in a tight and contracting range.  The triangle does not have great symmetry, but this option is preferred a bit over an ongoing sideways correction.

The chart above shows in more detail just how complex (and perhaps boring) the action has been over the last few weeks.  Look at all of the zigzags and double zigzags in this tight range!  It has been the choppy 3-wave moves lower followed by the 3-wave rallies nearly retracing all the preceding swings that make the action look so bullish.
If the triangle option is correct, wave [e] may not be complete.  There can be a sideways correction in [e] forming (or another wave within a sideways pattern underway), but this is a low probability possibility.
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