The Elliott Wave Analysis Thread

[OzWaveGuy]

The XAO wave count hasn't played out as I had envisioned - something is up. There is now a chance that this leg up has completed as the short term wave counts do not make legal 5 wave impulses.

 

[wavepicker]

Following on from the analysis presented in posts 582-584, that SUGGESTED either a low was in place for wave A or we are approaching a low:-

The move up the lows in the SP500 at this stage looks to be impulsive on the 4 hr chart. Red wave 5 on that chart appears to be complted(ing) and we have a divergence on the MACD.
As expected we have had a very sharp move upward to date. In the earlier analysis we suggested that we still wave wave 5 of (5) to complete in the bear market if following the normal EW progression.
However also mentioned that because a number of major of various degrees were bottoming at this juncture and that a low may already be in place and as such any retest of the lows might be a truncation or 5th wave failure.

We need to see what play out in the next couple of days in the SP500 to confirm this, but today (19th) a cycle point high is due using the fixed cycle analysis. Another possibility is the 26th March as well, but as we look like we have a completed impulse today looks like we could start to correct the advances made since March 6th, as such I have closed all my longs at this stage.

 

[Rudy]

Following on from the analysis presented in posts 582-584, that SUGGESTED either a low was in place for wave A or we are approaching a low:-

The move up the lows in the SP500 at this stage looks to be impulsive on the 4 hr chart. Red wave 5 on that chart appears to be complted(ing) and we have a divergence on the MACD.
As expected we have had a very sharp move upward to date. In the earlier analysis we suggested that we still wave wave 5 of (5) to complete in the bear market if following the normal EW progression.
However also mentioned that because a number of major of various degrees were bottoming at this juncture and that a low may already be in place and as such any retest of the lows might be a truncation or 5th wave failure.

We need to see what play out in the next couple of days in the SP500 to confirm this, but today (19th) a cycle point high is due using the fixed cycle analysis. Another possibility is the 26th March as well, but as we look like we have a completed impulse today looks like we could start to correct the advances made since March 6th, as such I have closed all my longs at this stage.

Hi Wavepicker,

We have a slightly different wave count because I have allowed for a truncated wave 5 to complete the down move. So that means that I still have one relatively small move up tonight before we go into a down move possibly to the termination point of wave 4.




As a matter of interest the truncated wave 5 terminated at the same time as the NASDAQ bottomed.

 

[OzWaveGuy]

The XAO wave count hasn't played out as I had envisioned - something is up. There is now a chance that this leg up has completed as the short term wave counts do not make legal 5 wave impulses.

Based on the short term waves, I'm really not satisfied that we're seeing impulse moves upwards in this latest rally. Even though at first glance 5 waves appears unfolding. In any event the answer should be with us very soon.

What may be unfolding instead is a triple combination - three 3 wave moves (with intervening 'X' waves) with a triangle for the last wave. Double combinations are more prevalent on the shorter term waves, so seeing a triple at this scale would be interesting to see confirmed.

Because of the triangle at the end of these corrective waves structures, many analysts will believe a wave 4 triangle is unfolding and expect another leg up.

If the above analysis is correct, we should see the rest of the triangle play out (tomorrow hopefully), and then a strong thrust to the downside once completed.

 

[nunthewiser]

Gday Ozwave ...

personally think a downleg due imminently as in tommorow perhaps . dunno how that fits in the wave count but trading it that way here personally

 

[nunthewiser]

Also hows that BHP count going .... has rentered a short on them earlier today just wondering on how yours and my view compares .

not here to diss just curious

 

[nunthewiser]

ooops please forgive me . sometime i post faster than i read at times . your chart actually in agreement with me on direction ..... no worries your chart has answered my first statement , sorry for the hassle

 

[wavepicker]

Hello Oz, agree with your short term count on the XAO. This didn't look easy to count as an impulse at first glance, but the structure in the SP500 does.
So really need to see what happens on the next leg down to pass judgement.

What was clear, was that we would rally and that presented some good long trades. For now going to kick back and nut out the pattern of trend that unfolds on the pullback.

Just looking at some other unrelated EW cycles studies,they concur with both your EW and the earlier analysis for the SP500 that a pullback is due here.(Price action is at 3 std deviations above nominal as well as divergence on zero lag MACD.)
If this pullback does not make a new low then it's difficult to determine exactly at which level it could end at although the 50% retrace level is always a good place to start. The lower bands of the cycles analysis for the XJO (see chart attached) is about 38.2-50% retrace. But ofcourse the most important clue will be the pattern of trend that unfolds itsef, i.e corrective or impulsive

Cheers

 

[allwave]

There seam to be some similarity between the 1994 bear and this bear, although on a different scale. That bear ended with a diagonal triangle.


Please see attachment.

 

[allwave]

I'd like to add that posts made by me on this forum are only my personal opinions and do not constitute trading or investing advice.

 

[OzWaveGuy]

Also hows that BHP count going .... has rentered a short on them earlier today just wondering on how yours and my view compares .

not here to diss just curious

One day out?

 

[nunthewiser]

One day out?

maybe

 

[CamKawa]

To go off on a bit of a tangent. What are the characteristics of markets that work well with EW?

 

[wavepicker]

Just some EW thoughts on BHP. BHP appears to have completed an impulse wave from it's last low of 26.64. That level was off a completed red wave b irregular or expanded flat. One would be expecting this market to pullback to approximately 38.2-50 %of the last range up along with the broader XAO.

Will attempt to give some timing for this using fixed cycles analysis of the XAO since BHP has such a large weighting in this index. The explanation of the Fixed Analysis Cycle Chart can be found in the following earlier post in the Market Outlook attachment:-

https://www.aussiestockforums.com/forums/showpost.php?p=408248&postcount=582


Red 4 on Cycles chart has come in approximately as expected relative to the blue vertical line in comparison to the last time it occurred on 04/04/08. (Refer maroon arrows)
As such next low (red 5) due approximately April 5-8 relative to blue and yellow lines and to earlier occurrence 14/04/08(blue arrows)

Either way BHP maybe a short term, shorting opportunity this week as it exhausted into a high on Friday, with a stop just above that high @ 32.88, with an approximate target dates for the next low @ April 5-8. Thereafter IF a clear EW ABC retracement coincides with the timing, there maybe a good long setup, but more on that at a later stage, IF the current market analysis is playing ball with my thoughts here.


Cheers

 

[Sean K]

Does the break up through 3300 and then 3400 have any significance to the EW counts and trend at this point?

 

[Rudy]

Just some EW thoughts on BHP.
Either way BHP maybe a short term, shorting opportunity this week as it exhausted into a high on Friday, with a stop just above that high @ 32.88, with an approximate target dates for the next low @ April 5-8. Thereafter IF a clear EW ABC retracement coincides with the timing, there maybe a good long setup, but more on that at a later stage, IF the current market analysis is playing ball with my thoughts here.


Cheers

Hi Wavepicker,

Thanks for that EW count on BHP. I was getting a bit lost on the last impulse wave.

For what it's worth, I also like to look at timing elements associated with my EW analysis. For example we know that the XJO topped on the 1st November 2007. 360 trading days from that market top happens to fall on the 8th April 2009 which coincides nicely with your turn date. I look forward with great anticipation to see how accurately that date plays out.

Cheers

 

[Rudy]

To go off on a bit of a tangent. What are the characteristics of markets that work well with EW?

Hi CamKawa,

As no one else seems to want to answer your question, I'll have a stab at it. Probably best to take an extract out of Prechter and Frosts book Elliott Wave Principle as it is one of the bibles of Elliott Wavers.

"As a mass psychological phenomenon, the market averages unfold in Elliott Wave patterns regardless of the price movements of individual stocks. As we shall illustrate, whilst the Wave Principle has some application to individual stocks, the count of many issues is often too fuzzy to be of great practical value. In other words, Elliott will tell you if the track is fast but not which horse is going to win. With regard to individual stocks, other types of analysis are probably more rewarding than trying to force the stock's price into an Elliott count that may or may not exist.

There is reason to this. The Wave Principle broadly allows of individual attitudes and circumstances to affect price patterns of any single issue and, to a lesser degree, a narrow group of stocks, simply because what the Elliott Wave Principle reflects is only that part of each man's decision process which is shared by the mass of investors. In the larger reflection of wave form, then, the unique circumstances of individual investors and individual companies cancel each other out, leaving as residue a mirror of the mass mind alone.

There is obviously a lot more said in the book but basically he is saying that the larger the number of participants forming the 'mass' the better Elliott Wave will work. That is why indices and broadly traded commodities and foreign exchange markets tend to work best with Elliott Wave. As Nick Radge has already argued elsewhere, some stocks do work well with Elliott Wave methodologies however when they don't then don't try to force wave counts on them that don't exist because you are only deluding yourself.

I hope that answers your question.

Cheers

 

[Rudy]

Does the break up through 3300 and then 3400 have any significance to the EW counts and trend at this point?

Hi Kennas,

As you probably know from reading this thread, the EW methodology uses a process where the analyst attempts to determine where abouts in a pattern the market action currently resides. There are times when the pattern is pretty clear and other times such as the current one that it is not so clear.

During these times we have in mind a number of scenarios that may play out and as the market action unfolds it slowly eliminates many of the possible scenarios. For me the break up through 3300 and 3400 still leaves EW analysts in a bind because there are scenarios that have these moves that range from extremely bearish to quite bullish.

The bullish Elliott Wavers have us in the early stages of a multi-month rally where we have just had wave 1 of that rally and are about to retrace in wave 2.

The bearish Elliott Wavers have us just completing a wave 2 in a downward move and we are about to go into wave 3.

Those treading the middle path like me have us still in an unfolding wave (4) pattern after completing wave (3) on the 21st November 2008.

At this stage of the game I believe that all of the above scenarios have a reasonable probability of being correct and it will take further market action to determine the outcome.

Some critics of EW will say well how useless is all of that but in fact it is no different to any other form of technical analysis where the analyst says if this happens then this will be the outcome however if that happens then that will be the outcome. There are times when we just have to sit it out to see what happens and have our trading set ups aligned to any of the potential outcomes.

Cheers

 

[Rudy]

Is there a chance of a kick up in the XJO today ?

Whilst I believe that a retracement is on the cards for our index in the very near future and may even start today, I do have an EW count which indicates that there may be one wave left to go before the move down.

 

[wavepicker]

Certainly is starting to look that way Rudy, lets's see what happens for the rest of this and next week

Cheers