Hi Don. I do feel like I'm going "nutty" counting these waves. I feel like I'm being a pest by posting messages about it. I'm sure that I'll miss a wave count and be banished from SI. I guess I'll have to go to Yahoo! <gg>
Counting waves in rallies is fairly easy. Counting waves in corrective mode is difficult because there are all sorts of corrective wave patterns besides the simple A, B and C. Also, in corrective mode, several ABC corrections can be strung together to form combinations. Its not easy. Its pretty subjective and there's lots of room for error. That's why Ewavers are always talking about alternate counts, etc.
I'd say that if the SPX/OEX take out the 4/17 highs that would probably negate the wave count that I've been using. (Note that each index and stock is unique and has its own wave count.) In such case, I'd probably want to say that the 4/17 top was the top of wave 3 and that the recent low on 4/19 was wave 4. That would put the SPX/OEX in wave 5.
I use Elliott Wave analysis as an adjunct to traditional technical analysis. For example, I had a pretty good idea that the OEX would bottom out in the 795 to 800 area yesterday. This was based on the fact that 795 to 800 was the area of the prior wave 4 (7/11). After the top on 4/17, I counted the waves down. Sure enough, the OEX ended with wave 5 down at yesterday's close. (Note that under my corrective mode theory wave A down is composed of 5 sub-waves). Traditional technical analysis also confirmed this support area and that we were near a low. So armed with this knowledge, and anticipating corrective wave B up, a trader could have bought OEX calls at yesterday's close.
On final thought. Don, I've been following your Class buy and sell signals for at least a year. I've studied the three day pattern that you talk about -- down hard, flat, down hard. I've noticed that the pattern is very recognizable on the 5-minute chart. There seems to be a repeating price and momentum indicator pattern. I've also noticed that the pattern doesn't necessarily last exactly three calendar days. It could be a little longer or shorter. Your three day pattern also seems to fit nicely into a 5-3-5 ABC correction wave. Anyway, just thought I tell you that.
I look forward to your next Index Update. |
