gem-x's Elliott Wave Forecast: Feb 14, 02
Today the NASDAQ broke the .500 Fibonacci retracement level at 1858, from the percieved Wave 3 down from 1942 to 1772, and closed above it...Wave 4's rarely retrace more than .500 of the 3rd wave down, so the chances of the move we've been seeing being an upward Wave 4 in a downtrend are diminishing...again, there was dip buying, and the entire day consisted of a large move up in the morning, and than an a-b-c-d-e ascending triangle that closed near it's high on the COMP...the MACD on the Dow is positive, the SPX is getting close, as is the MACD on the COMP and NDX. New highs expanded dramatically vs. new lows, and the breadth was strong. Again, the only problem was the fact the the volume didn't increase noticeably on the move up, and that's getting frustrating.
From what I'm seeing on the NASDAQ (from a bullish perspective) chart is wave 1 being the move from the bottom of the percieved ending diagonal from 1772 to 1847, Wave 2 the drop from 1847 to 1818 (exact .382 fibonacci retracement) and Wave 1 of a possible Wave 3 being the move from 1818 to 1862, than a Wave 2 ascending triangle we saw for most of the day....if this is the case, than there's a good chance of a Wave 3 upmove starting, possibly getting as high as 1942 in the next couple days. The most telling sign if this is a new bullish upmove is if the next wave up is a strong and significantly more dramatic move on strong volume (over 2 billion shares on the NASDAQ). The MACD should turn positive tomorrow on the COMP and NDX, and is usually an indicator that a new up move is starting. The NASDAQ has created a pretty clear channel up from 1772, and the past couple days, that channel has been tested and rallied on. BUT, since the volume has been ve
Because the volume has been light, which, to me, is one of the most important, if not THE most important indicators of a new rally, or sustained upmove, I, like many traders are pretty skeptical. I did pretty well today, scoring a 16% move on NTAP and a 10% move on OVER, BRCD moved up 6% (but got wacked after hours), QLGC NVDA and EMLX were basically flat for me. But since I'm still skeptical, I placed stops that are pretty close to where they closed today. The action has had all the characteristics of a new sustained bullish wave, but the volume is just not cooperating, and that VIX keeps sinking. But I've seen this kind of skepticism last fall when the NASDAQ rallied 700+ points....and the put/call ratio is showing it...the other day, the put/call ratio hit a high of 1.15, and today, the put/call ratio hit as high as .79. The 10 day MA and 21 day MA's on the p/c are still very high, and very bullish from a contrarion
So, something's really gotta give quick, and I sure hope it comes tomorrow...
(If you didn't get this e-mail this morning around 1PM, here it is..a lot of good observations..:)
This morning we broke the .500 fibonacci retracement level of 1858 from the percieved Wave 3 down from 1942 to 1772, which is decreasing the odds that the move we've seen since 1772 is a Wave 4...rarely do Wave 4's retrace more than .500 of the Wave 3 down, and now the NASDAQ has been sideways to down since 10:40, holding gap support, from this morning, and the clear uptrend channel from 1772 is still intact. I'm watching to make sure 1845 holds...that would be a channel break..This morning the fast stochastic hit 100, bought that overbought condition has leveled off....what's looking pretty good is the MACD on the NASDAQ...it's creeping up, but not quite positive, but there's an upward channel on the MACD, and very very close to a bullish divergence. The DOW's MACD is solidily positive, with a clear bullish divergence in the past 2 days, and the SPX is very close too. It appears that there's stealth dip buying....even though volume is light, it's more because of a skepti What would be especially great is if the MACD turns solidliy positive tomorrow or this afternoon, and rallies on mega strong volume...
But today, the volume, again has been light. but just in case, should we get another one of those big 3PM drops, I put my stops near the profit level from where I bought the shares. The NASDAQ has had a few white candles up since 1772, and the odds that my ending diagonal call from last Friday could be a signal for a new upwave. Ending diagonals appear at the end or termination points of double three corrections, and there were 9 candles down on the A wave from 2099 to 1879, and 9 candles down on the C wave from 1959 to 1772, so the zigzag may have completed on Friday. Flat, X Wave, Zigzag than an ending diagonal.
But the chances are still around 60/40.
The NASDAQ needs to close strong, instead of having a 3PM tank.
Ending diagonal (possible bottom) chart from last Friday at 3PM:
photos.yahoo.com
For newbies (esp. to rlandry): My long term DOW and NASDAQ wave counts:
From photos.yahoo.com
photos.yahoo.com
photos.yahoo.com
(I'm having a really hard time sending e-mails through AOL in real time, mostly due to the size of the e-mail list, and the fact that AOL e-mail is terrible.....some of my e-mails have been cut off...It would be easier if I used my MSN account, so if you have the chance just reply to this e-mail to gemxwave@msn.com, so I can start a new address book there...e-mails go through much easier on it)
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