Tuesday, August 28, 2012

Bubble to Bubble?


While I am not an avid Elliott Waver, I thought that this interpretation of the wave structure could possibly have some validity. However, I would place very little credence  on this chart interpretation or my ability to analyze anything using Elliott Waves.
If--repeat IF--this was a valid wave count and the market made a high in this time frame at or near this price level, then the wave would be considered a 5th wave failure which would have ominous consequences should the market enter a bear phase. It would not be pretty....and I definitely would not want to be the President during this period.
 

1 comment:

pimaCanyon said...

EW would not consider your chart to be a valid wave count. What you appear to be drawing here is what EW would call an Ending Diagonal or Leading Diagonal. But these wave patterns have the end of the second wave on the same TL that you've drawn thru the end of the 4th wave. In other words. a TL drawn thru the ends of waves 2 and 4 needs to converge with a TL that's drawn thru the ends of waves 1 and 3.

There is a very rare expanding Ending Diagonal or Leading Diagonal and maybe you could make a case for one of those. Draw a TL between the ends of waves 2 and 4 and you'll see that that TL no longer converges with the 1-3 TL, but rather diverges. If this is a correct count, we would expect the last wave to get close to your upper TL.

I believe that the rally from the 2009 low is a complex corrective wave that's difficult to chart using traditional EW wave counts. Glenn Neely has a better handle on it IMO using his enhanced form of EW.