E-Mini S&P Elliott Wave Discussion: July, 2010

[EWT]

Quote from EWT:
The first chart is the weekly continuous combined contract for the S&P. I have identified a possible H& S pattern. The right shoulder (RS) appears to be building in a 3 wave structure. Notice that 1146 is resistance where Wave A = Wave C. This resistance is also chart resistance from the high of the Left Shoulder. [/B]

Turning our attention to the daily chart level, I am currently working two scenarios ( a double 3: W-X-Y) and ( an expanding flat with a wave C diagonal) for the current advance. Here's the charts for both for everyone to review.

What's important to know is that it doesn't matter which way you label the chart at this point. Both interpretations have the same implications when completed and offer similar targets for the termination of wave 2 (blue).


Targets For Wave 2 Termination

The key EW resistance levels to watch for next week are: 1136, 1143-1149.25. 1152.85 - 1156.25. I will post the wave C diagonal fibonacci clusters before the market opens on Monday. Together, they should give us areas of confluence that coincide with the larger time frame analysis.

Where Are We Wrong?

On the daily chart level, a break below the lower trend line and a break of key support of 1084.5 would mean that the current wave labeling was incorrect. A break of 1053 would most likely mean that wave 2 (blue) had ended.


Best of Trading

 

[EWT]

Quote from EWT:

Turning our attention to the daily chart level, I am currently working two scenarios ( a double 3: W-X-Y) and ( an expanding flat with a wave C diagonal) for the current advance. Here's the charts for both for everyone to review.

Sorry, here's the charts in the next two posts

 

[EWT]

final daily chart

 

[EWT]

Quote from EWT:

I will post the wave C diagonal fibonacci clusters before the market opens on Monday. Together, they should give us areas of confluence that coincide with the larger time frame analysis.

[/B]

Here are the additional EW Fib levels and color codes created from the intraday 60 minute chart.

Red- wave c =.618 wave a @ 1129.5

Green- waves (i) - (iii) = .618 @ 1133.5 (Golden Section) of the entire wave 2.

Blue- wave c = wave a @ 1145.25

Purple - wave (v) = .618 wave [(i)-(iii)]@ 1153.5

 

[EWT]

Price came within 2.5 points of the inital target of 1129.75. It remains to be seen if a new recovery high can be struck or if wave 2(blue) has ended. The current interpretation of the wave count from 1103.75 is open but the ending diagonal and its structure is still intact. All Fibonacci targets remain in place.

I'm moving key support to 1113.25. If prices breach this mark, then something is wrong with my count and or the diagonal interpretation. I'll set critical support to 1103.75.


Best of Trading

 

[EWT]

Quote from EWT:

Price came within 2.5 points of the inital target of 1129.75. It remains to be seen if a new recovery high can be struck or if wave 2(blue) has ended. The current interpretation of the wave count from 1103.75 is open but the ending diagonal and its structure is still intact. All Fibonacci targets remain in place.

I'm moving key support to 1113.25. If prices breach this mark, then something is wrong with my count and or the diagonal interpretation. I'll set critical support to 1103.75.


Best of Trading

Correction: Key support was 1108.25.

For today, the market is at a key juncture from an Elliotticion's point of view. The ON is trading heavy and price has reached critical support that I established at 1103.75. The significants of this level and the implications of a break have already been mentioned.

A few other points of consideration to supplement the previous analysis:

1. The Dow was the only indice to take out the June high. The S&P and Nasdaq failed to confirm this move.

2. The S&P and Nasdaq exhibit ending diagonal patterns (terminal patterns)that have not significantly resolved to the upside trend line... accompanied by a volume spike and higher breath.

3. Analysis in both Time Cycles, Fibonacci Time Ratios and Fibonacci Time Extensions provided the following dates for termination at the daily and intraday chart level (+/-) 1 trading day : 8/10, 8/11, 8/16, 8/17, 8/18. On an intraday basis, wave 1 (down) lasted 29 days and wave 2 (up) has lasted 76 days for a time ratio of .382.

As always, draw your own conclusions.

Best of Trading

 

[EWT]

I had been calling for a possible move beyond the June peak. It didn't happen. Yesterdays and today's strong selling pressure , the subsequent break of critical support (1103.75) and bearish technicals combined with a bearish ending diagonal ( wedge) have set the stage for a wave 3 decline that should take price to new lows for the year.

Ending diagonals make quick retracements to the origin of the pattern which is 1105.5. The reason for this quick decline is because the with each peak (waves 1,3) leading up to the termination point, buyers stepped up. Most bought at or near the last high (wave 5) in anticipation of the breakout. Their stops are below each swing low. Each break of those swing lows traps more bulls as their stops are hit. This should add to selling pressure.

I'll be looking for continued selling and confirmation of five waves down at the most common initial retracement for wave 1 of 3 down at 1051.75.




Best of Trading

Quote from EWT:

Correction: Key support was 1108.25.

For today, the market is at a key juncture from an Elliotticion's point of view. The ON is trading heavy and price has reached critical support that I established at 1103.75. The significants of this level and the implications of a break have already been mentioned.

A few other points of consideration to supplement the previous analysis:

1. The Dow was the only indice to take out the June high. The S&P and Nasdaq failed to confirm this move.

2. The S&P and Nasdaq exhibit ending diagonal patterns (terminal patterns)that have not significantly resolved to the upside trend line... accompanied by a volume spike and higher breath.

3. Analysis in both Time Cycles, Fibonacci Time Ratios and Fibonacci Time Extensions provided the following dates for termination at the daily and intraday chart level (+/-) 1 trading day : 8/10, 8/11, 8/16, 8/17, 8/18. On an intraday basis, wave 1 (down) lasted 29 days and wave 2 (up) has lasted 76 days for a time ratio of .382.

As always, draw your own conclusions.

Best of Trading

 

[EWT]

First up - I made a typo last night. Regarding " Ending diagonals make quick retracements to the origin of the pattern which is 1105.5" The level should have been 1005.5. Sorry.

The pre market session indicated further weakness as the third wave down looks to be incomplete. Odds are that we have a gap down opening and complete the third wave, then look for 4th wave with choppy price action before a final thrust down to complete wave 1 of 3.



Best of Trading

 

[EWT]

Quote from EWT:

The pre market session indicated further weakness as the third wave down looks to be incomplete. Odds are that we have a gap down opening and complete the third wave, then look for 4th wave with choppy price action before a final thrust down to complete wave 1 of 3.

That's exactly what we got.

Here's what I'm looking for wave (iv). I expect that price will retrace to .382 in an impulsive manner, counting 5 waves, followed by a decline to complete wave (v) of 1 (red) of wave 3 down. If the count isn't complete by 1091.25, the possibility can't be ruled out that wave c= 1.618 wave a @ 1099.5.

The Fibonacci targets for the final push lower are provided but are only applicable if the wave (iv) terminated at 1091.25.

I'll post the 15 minute chart next.




Best of Trading.

 

[EWT]

Looking at the 15 minute chart, I've shown a zig-zag set up where wave a = wave c at 1091. 25. The pattern should be as symmetrical in slope as noted by the cloned blue lines. Should the market print below key support, all bets are off.

Let's see what develops overnight. It is also possible that wave (iv) could develop into a more complex correction negating this outlook.

Best of Trading