Archive for February, 2011

Here are the daily and weekly bars charts updated from a week ago.  On the daily chart, the first one here, we see that the negative news out of Libya sharply dropped the market, with price breaking down through both the new S2 and S1.  This means that the uptrend that started Jan. 31st has abruptly ended.  Thursday was a sharp Doji reversal candle, with price moving up strongly on resumed volume on Friday.  With such an action, one would expect that price had hit strong support on Thursday, but on this chart we don’t see any support at Thursday’s low.

The situation becomes clear upon switching to the weekly bars chart, the second chart here.  I’ve launched S3 from the late January pullback, and that exactly supported this past week’s price plunge.  Furthermore, we see that the TopFinder, which was originally fit to the early December low, is now also fitting perfectly to last week’s low.  This action strongly reinforces the validity of this TopFinder, which is now 84.75% complete.  It looks like we still have a few more weeks to go before its end.

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I don’t have time to expand on this post but David has two fractionally positioned topfinders on the S&P 500 with very advanced cumulative volume readings measuring the Short Term and Intermediate Term trends in addition to our colleague BoB English’s detrended MIDAS curve’s downward trendline about to be tested by the Dow (www.precisioncapmgt.com). Take your pick: the weekly MACD histogram has been negatively diverging since mid-2009, open interest on the major indices is producing excessive overbought readings on normative COT indicators such as Larry Williams’ COT Index, and junk bond yields have hit an all time low of 6.8 per cent. The Baltic Dry Index, an accurate forecaster of the direction of the Intermediate to Primary degree trend, has turned down since October 2010 and I have a couple of standard MIDAS resistance curves already running on it. I should expand on this post at some stage with the long-term secular degree Elliott Wave count, but for now here’s what I hope is an accurate solution to the Long Term Delta on the Dow.

A five wave Elliott Intermediate trend impulse is about to complete alongside the start of a new Delta cycle. The market is at a very important juncture: either the new Delta move is consistent with a relatively shallow correction of this five wave impulse, in which case the market will continue to strengthen in the second half of 2011 with the next price objective being the 2007 high, or this Delta move will usher in the start of a cycle degree wave C which, in terms of price and time, would be proportionate to wave A (ie, the decline from 2008 into March 2009) according to conventional Elliott Wave theory.

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Figure 1: Dow with provisional Long Term Delta solution (pending confirmation)

Figure 2: close-up of LTD (pending confirmation)

Figure 3: putative wavecount plus MIDAS Displacement Channel

A.Coles, 22nd Feb 2011

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This past week, things have continued along pretty much as described in my last post.  The uptrends on both the short (daily bars) and intermediate terms (weekly bars) are continuing their marches.

In the first chart here, daily bars, I have added a new TopFinder launched from the beginning of this new trend on Jan. 28th and fitted to the small pullback of Feb. 10th.  It’s now 82% complete, projected to end at the horizontal location of that dashed vertical purple line, probably in about a week or two.  This is a very short duration TopFinder, early in this up move, and my guess would be that after a brief consolidation at its end, price will keep moving on up.

In the second chart here, weekly bars, that robust uptrend just keeps rolling on, now 83.5% complete, looking like it’s going to run for approximately another month or so.

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The two charts here are the updates of last week’s charts.  In the first one, the daily bars chart, we see that last week’s nascent uptrend has blossomed into a robust move.  There was a slight pullback on Thursday, from which I’m tentatively launching the new S2 for this uptrend.   I say “tentatively” because that pullback wasn’t very strong.  As the move progresses, we may get a more definitive pullback and may want to re-assign S2’s start to that one.

In the second chart here, weekly bars, we see that the accelerated uptrend that started last August continues to progress nicely, now 78% complete as shown by its TopFinder.  I’ve launched S3 from the pullback of three weeks ago.

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This past week, price broke out of the volatile consolidation it was in, and started a new short term uptrend, as you can see on the first chart here of daily bars.  For the past four days, price has closed above the old R1 curve, and is holding far above the new S1 launched from the low of Jan 28th.

On the second chart here, weekly bars, we see that the sloppy consolidation of the past two weeks on the daily bars chart looks like a weak pullback in price on the weekly bars chart.  I’m launching S3 from the Jan 28th low, although it isn’t quite visible yet on this chart. This accelerated intermediate term uptrend that started last September is proceeding robustly.  It’s TopFinder is now 78% complete, with projected end at the dashed purple vertical line.  If average weekly trading volume continues as it has been, then this trend should end in approximately 7 weeks.  The actual date will depend on how trading volume changes between now and then.  The Fibonnacci retracement level up there at 1362 still looks like a good price target.

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