excuse me..bearish wedge???
Yes, the 60-minute chart of the SPX shows that a rising or bearish wedge has developed since July 3. In Elliott Wave parlance, the SPX began a 5 way rally on June 29 that will probably culminate in highs on July 17. Wave 5 of this 5 wave rally is an ending diagonal. If you look at the 5-min chart, the 5th wave ending diagonal is very clear. Also, on Friday, July 14th, the SPX rose and closed above the upper trendline of the ending diagonal. This is called a throw-over. A rising, ending diagonal is bearish and is usually followed by a sharp decline.
the SPX was trading sideways for a solid 2 months..look at a daily candle chart...end of May thru now...it was range bound...
it simply broke out of this trading range to the UP side...the OEX has the exact same chart...
The SPX bottomed on 5/24. On the 60-minute chart, an inverse head and shoulders pattern developed. On 5/24, the SPX began a 5 wave rally into the high on 6/2. At that point a corrective wave ensued, which you refer to as a "trading range." The SPX corrected in a "running flat ABC correction" into the lows on 6/29. At that point another inverse head and shoulders pattern developed on the 60-minute chart. On 6/29, the SPX began another 5 wave rally that will probably culminate in highs on 7/17. I agree that the OEX has an almost identical chart and wave pattern as the SPX.
when we get a pullback to solid support at 1480 which was serious resistance..this will be on contracting volume and become a BULL Flag...
My minimum target for a pull back next week is about 1475 on the SPX and about 795 on the OEX. Again, referring to the rising, ending diagonals (small rising or bearish wedges): A rising, ending diagonal is bearish and is usually followed by a sharp decline retracing at least back to the level where it began. The ending diagonal is the 5th wave of a 5-wave impulse. So, price should retrace back to the beginning of wave 5. On the SPX wave 5 began at about 1475 and on the OEX wave 5 began at about 795. Incidentally, if the neckline of the aforementioned inverse head and shoulders pattern is extended to the right, it is at about 1476 for the SPX and at about 797 for the OEX. I don't know whether the pullback will result in a falling or bullish wedge.
the INDU broke a desending triangle UP, it has risen above the 200-20-40 day mva...it's clearly on the move higher...
The diamond formation is still in effect on the INDU. Also, the INDU has approached (using theoretical prices) the top of its 21-day 3 1/2% band, which is a strong resistance area. On its daily and 60-minute charts the INDU is overbought and appears ready to turn down.
the COMPX broke out of a pennant formation beautifully...after trading in the same pattern as the SPX etc for 2 months...each index is moving UP, not down...
On daily and 60-minute charts the the COMPX and NDX are overbought and appears ready to turn down. Also, the COMPX and the NDX are approaching a 61.8% retracement off their lows. This may prove to be impenetrable resistance.
look at a daily OEX same as the SPX only it broke out and up off a bullish pennant...draw the lines from the May23/24th bottom stick up to the bottom of the June and July sticks...
then across the top from around the Apr 25th time frame straight across the top thru July...this is a solid pattern..
My analysis of the SPX, as stated above, is the same for the OEX.
while we may have a small short pullback from Tues thur Fri options exp week.. i look for a resumption of this rally to start on the 24th right thru the 31st...maybe even breaking out over these current highs...
as each index moved up instead of down..this to me signaled the selling was over..they could have sold off the other way...but buyers appeared at all lows...
Jerry, this is the $64,000 question: Will this be a brief correction followed by a renewed rally or will it take out the May, 2000 low?
Some Elliott Wave practitioners believe that the market has much more downside. Under Elliott Wave principles the market advances in five waves (Waves 1, 2, 3, 4, & 5) and corrects or moves down in three waves (Waves A, B & C). Here's a chart that illustrates these principles:
home.swbell.net
Now, look at the right half of this chart -- the Corrective side. Notice that there is a large downward [A], [B], [C] corrective wave. After the market peaked, we entered this corrective wave. Here's where the real difference of opinion surfaces. Some people feel that the market has already traced out the entire [A], [B], [C] correction and that the bull market is back (upward movement in impulse mode or 1, 2, 3, 4, 5 waves). Others do not share this opinion.
Robert Prechter (http://www.elliottwave.com/index.htm ) has a different, more bearish view. I believe Prechter is saying that the market is in corrective mode and that it is now approaching the top of wave (2) on its way down to wave [A]. In Prechter's view, the market has much more downside. In fact, Prechter is calling for a major stock market low in 2003-2004.
I don't know where the market is in the overall scheme of things. However, I do believe that on a short term basis the market is at or near the end of a 5 wave rally and that a correction of some degree is imminent. Again, here's my chart of the SPX:
home.swbell.net
the COMPX ADX on the daily has a buy signal with a rising ossilator...the first real buy signal since Mar...
I don't follow the ADX closely, so I'll concede on this point. However, note that the COMPX and the NDX are approaching a 61.8% retracement off their lows. This may prove to be impenetrable resistance.
and for the bellweathers CSCO-INTC- et all...they really broke out too...
No break out on CSCO, yet. I think CSCO has to clear 69 5/15 to constitute a break out. However, I will admit that CSCO looks pretty bullish. CSCO had a MACD buy signal on 7/13. You had a definite breakout on INTC a few days ago and a MACD buy signal back on July 6. Let's see how INTC does after its Tuesday earnings announcement. There could be a sell-off and that could result in a double top in INTC. Remember, GE sold off after its earnings announcement.
so all in all this was a bull move with major implications to the shorts and bears...the real money to be made was on the long side...
I agree that there has been at least a short term bull move and that since June 30th the real money was made on the long side. I went long on June 6th, which was the beginning of wave 3 up:
Message 14002482
So, all in all, Jerry, I guess we agree that there is going to be at least a short term pull back this week. From there, you are bullish. I don't know if the pull back will be brief and shallow or whether it will be deeper. We'll just have to wait and see. Good luck! |
