Saturday, September 20, 2014

Uptrend Not Yet Complete

Today I am posting my full Elliott Wave Update as it appears on  Please visit the site for the analysis of others as well as our consensus opinion while taking advantage of our free trial for new members!

As explained in prior updates starting here, since the 2011 low there are two good possibilities being watched.  The first is a sideways correction underway since the wave [3] high.  This wave count in color above is the strongest due to the better use of the structure in the wave 5 region and implies a 3-wave move is underway since (A).  The second possibility uses an impulse from 4 to 2014 [iii] which is not ideal and suggests a 5-wave sequence is underway since (A).  This 5-wave move is perhaps more likely an ending diagonal, not an impulse due to the strength seen during the first part of the wave and the shallow ensuing pullback.

However ending diagonals most often have sharp 2nd and 4th waves.  It is very rare to see sideways corrections.  With this in mind, if an ending diagonal is underway since (A), it is most likely that its 1st wave terminated at A, [b], or is still underway.
The structure of A works best as an impulse but can be squeezed into a double zigzag with 'w' to [iii], [x] to (w), 'y' to A or a rarely seen triple zigzag with 'w' to (i), 'x' to (ii), 'y' to [iii], 'xx' to (w), 'z' to A.  These two possibilities are the options if wave '1' of the ending diagonal terminated at A, '2' at [a], and '3' underway.
Wave '1' of the ending diagonal can also be underway or complete at 'b'.  If this is the case, a double or single zigzag higher should be underway beginning at (A).  Even if a new high is reached, the structure of [b] looks very corrective which will be explained below shortly.  So a zigzag higher from [a] to [b] can be paired with zigzag from (A) to [iii] for a double zigzag higher.  The problem as mentioned in prior updates is that [iii] to [a] does not count well as any correction.  Then due to all the evidence, it can be said that a double zigzag higher to [b] is unlikely.
A sideways correction underway since impulse A as shown above in color is a good option.  The sideways wave can be 'b' of the 1st wave of an ending diagonal, but this seems overly complex.  A test of 1980 or lower might be enough to recharge the market to make a 3rd wave run higher where an impulse is underway since (A).  Also using the corrective features of [b], an ending diagonal higher beginning at [a] with 1st wave complete is a good option.

The weakest of the possibilities from [a] worth mentioning are a triple zigzag underway where the structure is the same as above, or a sideways correction from a of (w) underway.  An impulse higher from [a] is also weak as it requires b of (w) to [b] to be an impulse wave or leading diagonal.  Leading diagonals are hardly ever seen and one after another first wave (like an ending diagonal not terminating a larger wave) seems unusual.  An impulse in the b or (w) to [b] position works poorly and is hardly worth considering.  (x) to the high of b is required to be the 3rd wave so the 3rd wave is not the shortest in the impulse.  Clearly the structure of that wave is questionable at best.
An ending diagonal in the b of (w) to [b] position gives life to the double zigzag possibility since (A) but otherwise has no benefits to the option in color.
Final Analysis:
The discussion above leads us to believe that if a 5-wave pattern higher is unfolding since (A), there is an ending diagonal from (A) with wave '1' to A and '2' to [a], or an impulse is underway where a test of 1980 will complete a 2nd wave sideways correction since A.  If a correction is underway since [3], a zigzag higher from (A) is underway where an ending diagonal 'c' begins at [a] or a sideways correction is still completing from A.
If a new high is seen above [b] early next week, a triple zigzag or impulse is likely underway since [a].  This new high is not expected however due to the weakness of these options.
Also on the short-term bearish side is the impulse-looking move down following [b] on Friday.  A move back down to 2006 will make the move look larger than a to b of (w) which will weaken the triple zigzag and impulse possibilities since [a].  A break of ~2006 support can stop at various points.
If an ending diagonal is underway since [a], 1993 should be about the maximum retracement.  Getting under this level suggests something sideways is underway since A like a flat, triangle, or something more complex.  1960 is about the lowest the market should reach with a bottom around 1980 perhaps more likely.  Assuming the market does not make new highs first, these levels serve as very good buying opportunities for short-term long trades as there is no sign of a complete wave higher since (A).
short-term (hours-days): bearish
medium-term (days-weeks): strongly bullish
medium-long-term (months): bearish
very long-term (years): bullish

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