Wave count – Nasdaq 100

Looking for an irregular terminal pattern C wave – $35 to $36 is inflection zone.  Overlap prevents the C wave from being classified as impulsive.  If correct, this count doesn’t mean that the bear market necessarily has to resume.   This could merely be an A wave of a larger flat or triangle.  I do have a more traditional diagonal alternate, but time proportions don’t favor that count in my eyes.  Getting stopped out a few times before catching  the next down wave should be viewed as operating expenses.  Stop loss will keep those expenses low.  Also, below I have posted an impulsive variant.  Depending upon which waves are classified as “hidden threes” creates the variance.  I don’t like the time dimensions of the large 2 wave on the impulsive count.  However, this would come as quite a shock to a lot of people if it were the case.  In a wave 2 scenario, the public would feel like; “here we go again”, which would seem reasonable should the next wave start retracing.

11:40 AM

Updated @ 12:40 PM

FSLR wave count

In the post below, there is a link to the April 8th post of a double three corrective wave count in FSLR.  Here are a couple of comments I made from that post:

- “Here’s what I’m thinking in FSLR, everyone automatically thinks continuation when they see the triangle, but this mixed corrective three count shows that such isn’t always the case.”

- “E wave could end anywhere above 101.46.  I would expect confirmation of the count to come via a high velocity break of the B-D trend line…”

Neely’s method of modernized Elliott Wave allows for trending corrective waves to end in a triangle (i.e.- zig zag to triangle connected by an X wave).  FSLR has illustrated one such real example.  The “high velocity break” I mentioned came in the form of a huge gap, which made it difficult to catch the whole move.  However, you could have played the intraday momo, as it rallied +6% into the end of that 3 or C wave.  I intended to post an early version of the updated count, as I mentioned here, but FSLR already gapped before I could post it.  Although it was a shallow E wave, once the triangle has resolved itself and put in a nice looking impulsive wave up ( “1 or A” in the smaller chart), one could have taken a chance at a long there comfortably.  Interestingly enough, look at the small “a” wave of that E wave triangle; It is pretty much a fractal of the longer term count on a much smaller scale.  That kind of symmetry can sometimes clue you off to big moves prior to their occurrence.  And when you are wrong, risk management keeps you from getting lit up too badly.

10:15 AM

FSLR long term count was right on!

Well I didn’t post on FSLR in time.  Basically the longer term count posted here was spot on.  The ”e” wave that I was waiting to complete in that count ended up being a small triangle itself.  Hopefully some of you were at least aware that it was getting ready to turn.  I have been AFK today, studying.  But I promise I will try to get some counts going tomorrow.  Thanks for all the kind words folks…

3:43 PM

Market update

I expected more price correction, but now that its breaking new highs I’m just going to stand aside.  I’m thinking we’re looking at a complex correction (double three or three) higher. 

 

10:44AM

 

*3:06 update – did I miss the impulsive C wave?  Looks like I have.  That’s ok, there should be ample profit opportunity coming soon.

Mid-day update

the 33.90 level represents the top before the last and the .786 retracement from Monday’s high to this morning’s gap low.  I am still anticipating more downward correction in time and price, as I did this morning.  Should it break out to new highs, we are looking at a complex corrective up wave for Wave 1 of terminal pattern C.  This could make Elliottician’s heads spin. Also, look for an FSLR update later, the waves appear to be coming together…

- Let me try to elucidate my view of the bigger picture, because it is confusing when everything is being called a “Correction”.   The current bear market is a corrective wave of the grand bull market that has occured since the birth of the US stock exchanges.  The current rally from 3/09/09 is an upward correction of the larger bear market correction.  And what we have labeled as possible “2″ of “c” is a downward correction of the upward correction of the downward correction.  LOL… corrections inside of corrections are what makes Elliott Wave a lot harder than Prechter would have you believe in his book, where real world examples are limited.  Neely’s book Mastering Elliott Wave will give you a more sophisticated and nuanced view of EW.  Not to mention Neely concedes that market patterns can evolve over time, while Prechter is confined to the monotony of essentially the same 13 patterns.

11:37 AM

Futures heading lower

Everything is looking down at this point in the futures, which means option 1 is looking more valid (option 1 from here).  Interestingly enough, there is nearly a 1:1 price ratio between the A and C waves.  Today we need to watch what the VIX does near 40 and whether the QQQQ ETF can stay above 29.  I am using the NDX-100 ETF as a wave counting proxy for the general market because it is highly liquid, and the composition of the waves seem to speak to me more clearly than the SPX.  Taking a low risk trade above 29 seems plausible.  Now that the impulsive C wave scenario looks to be invalidated, a 2 wave of a terminal pattern could very well take its time and retrace .618 or more of  A-B-C up.

7:02 AM

(edited @ 7:10)

EOD update

The impulsive C wave count is not dead.  Should the action continue upwards tomorrow, the correction time would be roughly 2.2 hrs vs 3.2 hrs in the prior correction.  The move since 2:15 (not counting an artifact posted on some charts) certainly looks junky, but sometime a W1 can appear to be corrective at first in the form of a leading diagonal or an expanded flat W2.  The VIX came back and almost nicked that 40 level again as well. A runaway on Tuesday would imply we still need a 3-4-5 for this C wave, if my posted count is accurate.  Any meandering around or drops would put scenario one (from yesterday) in the forefront.  I dumped the remainder of the 32.80 long call this morning and am still waiting to see what happens.  No sweat of my back if I miss a little bit of a move to ensure that I’m on the right track.

4:09 PM

QQQQ short term wave count update

4-5 looks to have finished today, a little later than predicted (12:10 today instead of late Friday).  Now we need to figure out which degree the current corrective wave is part of.  For the impulsive count to remain valid, W2 of the smaller degree needs to end before 3:22 pm today.  Otherwise something else (terminal pattern or otherwise is occuring).  Also, keep those horizontal price levels in mind.  One would expect ~33.45 to be at least tested in this downmove (or at least tested first).

1:39 PM

QQQQ wave count update

Working from the same count posted last week, I have outlined two of the more likely scenarios that can play out.  Each count has an invalidation point for price denoted by the blue horizontal lines.  The impulsive possibility requires that the smaller wave 2 complete by 10:56 AM on Monday to remain in proper time proportions with its wave degrees.  Both possibilities will have to be reassessed should both blue lines be violated.  Should the markets just continue to rally straight away on Monday, modified versions of both counts would still be possible.  I am expecting at least a slight correction due to the smaller 5-up from Friday’s action.  The best position to be in from the previous long prediction (4-22 count and 4-23 prediction ) would be to have taken partial profits and trailing the remainder.  Profit taking strategies like these coupled with smart risk management allow an astute trader to take the most out of these volatile markets while protecting their capital.  Best wishes next week!

2:57 PM

Small 5 up finished Friday…

Recent action in the Q’s looks to have completed a small 5 up.  This 5 wave segment represents +4% in 2 days for the NDX-100 ETF, and +60% on the May 32 calls.  I want to take profits here; hopefully anybody that followed my advice already did so on Friday or at least has a trailing stop in (I said it looked like a good spot to get in at 32.80).  Gloom and doom has ruled the day and nobody, save for myself and a few others, expected it to grind higher.  Keep your eyes on the  ball next week, this post was certainly timely.  We may be in 1 of 3 for a bigger “C” wave, or more likely wave 1 of an ending diagonal or terminal pattern.  I will post some possibilities Sunday.

4:59 PM