S&P 500 ~ Weekly Non-Log Scale

In wave parlance, we should be at the tail-end of an Intermediate (B) wave within Primary -C-, right in the middle of Cycle Wave <IV> which began in late 2000. Given the idea that we¶re in a (B) wave, it¶s worth remembering these words from Prechter:
³B waves are phonies. They are sucker plays, bull traps, speculators¶ paradise, orgies of odd-lotter mentality or expressions of dumb institutional complacency (or both). They often involve a focus on a narrow list of stocks, are often ³unconfirmed´ but other averages, are rarely technically strong, and are virtually always doomed to complete retracement by wave C.´
³c´ ³a´

-B(Z)
³e´

9/1/2000

< III >

(Y)
³c´ ³d´ ³b´

INDEED!
(W)
³g´ ³e´

³a´

(X)

³b´

(B)
³y´ c ³a´ a

(X)

³c´

³b´

(X)
³f´

³w´ ³x´ b

(W)
³a´ ³d´

(X)
³b´
This is a ³diametric,´ a seven-legged corrective pattern that takes the shape of either a ³bow tie´ or a ³diamond.´ The ³diametric is a probably a morphed Orthodox ³double zig-zag.´

(C)

(Z) (Y)

-A³c´

-C2012?
(A)

Andy¶s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Weekly Non-Log Scale
One of the axioms of wave counting is this: ³If there is way for a wave to take longer to complete, assume it will.´ This has been especially true of this current (B) Wave. Notice how long it has taken the S&P 500 to take back the 1255 level from its lows. It took only 24 weeks to drop 590 S&P points while it has taken 95 weeks to take it back. The point is that both the structure of the move off the lows and the time it has taken to rally, relative to the previous drop, are all strong clues that this rally is a corrective (B) wave.

(B)
³y´ c
-5-

1313 1255

Critical Inflection Zone
a
-3-1-4-

³w´ ³x´
-2-

b

alt: (A)

³c´

(A)
Andy¶s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Daily with RSI
a
-3-

³y´ c
-5-

(B)

³w´ g ³x´

-1-

-4-

e

-2-

c

f

b

a b

d

This is as sharp of RSI Divergence as we have seen in quite some time. There is only one inescapable conclusion: We¶re about to see A LOT of volatility. Because, this sort of situation will only be resolved by a severe acceleration higher (which sets a new high on the RSI) or an imminent puke out.

(A)

Andy¶s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Daily
I¶m expecting this Minuette Wave -5- to conclude within the first several trading days of 2011 as we have now reached equality in time with Wave -1-.

(B)
³y´ c
-5-

a

Wave -5- Targets: 1261: 61.8% of Wave -31267: 78.6% of Wave -11291: Wave -5- = -1(b)
(3)

(b)

-3(5)

[a]

(d)

[b]

(c)

(e)

-1-x(3) (1) (5)

(1)

(4)

(a)

-4-

(2)

(a)

(4)

³x´
(2)

(c)

-w-y-

-2-

b

Andy¶s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ 180 min with Weekly Support and Resistance
-5(3)? (1)? (5)?

(b)
(2)?

(4)?

[a]

(d)

-3(5)
[b]

(3) (1) (4)

(c)

(e)

-4(a)

-1(5) (3) (2)

(1)

(4)

(2)

While I am expecting some sort of peaking action this week, it continues to be prudent to WAIT for some sort of ³sign´ from the market that it¶s ³ok´ to begin shorting in earnest. A breakdown below 1233 would constitute that ³sign´ for me. Alternatively, any impulsive move lower on the 60 min. charts will force me into fresh shorts.
-2-

-y-

b
Andy¶s Technical Commentary__________________________________________________________________________________________________

Dow Jones Industrial Average (Monthly Log Scale)
The Dow Jones Industrial Average has become flawed (for wave counting purposes) over the years as it is an ³average,´ and not a true index of stocks. It is for this reason that we don¶t model the DJIA. However, the DJIA has a much longer history than the S&P 500 and is useful in getting our ³bearings´ on the longer term wave model.

2000 < III >
-V-

-B-D-

REPRINTED from 9/7/2010
-A-C- III - IV -E-

< IV > 2018-2030
This period looks congestive/correcitve. The Wave -V- did not start until the beginning of 1995.

1966 <I>
-V(X)

-I-X- II -Y-W-

1929 <X>
-B-D-I-

- III (Y) (W)

- IV -

< II > 1982

- II -E-

<Y>
-C-

II
The Supercyle Wave II, which began in 1860, concluded in 1949.

-A-

Andy¶s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Weekly Non-Log Scale
This is my preferred long term model. The ³crux´ of the count is that the Primary - B - concluded on 12/11/2007, after the ³absolute´ high of the same year. It¶s ³possible´ that the -B- even concluded as late as May 2008, when the Transports actually peaked. Because of the prolonged nature of the -B- wave relative the -A-, the -C- wave MUST last at least as long as (A+B)/2, about 3.5 years. Therefore, the current Primary -C- wave will not conclude for at least another year.

-B2000 < III >
(Y)
This is was a ³failed fifth´ terminal diagonal conclusion to the technology bubble. ³c´ ³b´ ³d´ ³c´ ³a´

(Z)
³e´

REPRINTED from 9/7/2010

(W)
³g´ ³e´

³a´

( X ) ³b´
³a´ ³b´

( B )? ( B )?

(X)

³c´

(X)
³f´

(W) (X)

³a´ ³b´

³d´

This is a ³diametric,´ a seven-legged corrective pattern that takes the shape of either a ³bow tie´ or a ³diamond.´ The ³diametric is a probably a morphed Orthodox ³double zig-zag.´

(Y)

(Z)

(C)

-A³c´

-C2012?
(A)

Andy¶s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Daily: The ³Bullish´Case
(B)
a -3-1d -4e

REPRINTED from 9/7/2010
b An ³orthodox´ wave counter should be able to come up with this exact wave count by labelling the ³w´ an µabc¶ move up--it¶s actually easy to force that sort of count. e a c f

³y´
c
-5-

³w´ ³w´ g
g

³x´
c b A ³Contracting´ triangle here would explain the ³thrust´ and why the ³thrust´ concluded where it did (the apex of the triangle.) -2-

d a b

We¶ve dubbed this the ³bullish case,´ even though the µeffective¶ price action could be the exact same as the ³bearish case´ where the (B) wave has already peaked. The important distinction here is that the Intermediate (B) wave has not yet concluded. In this model, though, we should get an ³impulsive´ c-wave from the b-wave low. Because of the depth of the Wave -2- correction, we¶re anticipating a ³terminal´ diagonal shape to this c-wave.

(A)
Andy¶s Technical Commentary__________________________________________________________________________________________________

DISCLAIMER WARNING DISCLAIMER WARNING DISCLAIMER

This report should not be interpreted as investment advice of any kind. This report is technical commentary only. The author is NOT representing himself as a CTA or CFA or Investment/Trading Advisor of any kind. This merely reflects the author¶s interpretation of technical analysis. The author may or may not trade in the markets discussed. The author may hold positions opposite of what may by inferred by this report. The information contained in this commentary is taken from sources the author believes to be reliable, but it is not guaranteed by the author as to the accuracy or completeness thereof and is sent to you for information purposes only. Commodity trading involves risk and is not for everyone. Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading: Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.

Wave Symbology "I" or "A" I or A <I>or <A> -I- or -A(I) or (A) "1³ or "a" 1 or a -1- or -a(1) or (a) [1] or [a] [.1] or [.a] = Grand Supercycle = Supercycle = Cycle = Primary = Intermediate = Minor = Minute = Minuette = Sub-minuette = Micro = Sub-Micro

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