Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Elliott Wave Analysis, Bear Rally?

Stock-Markets / Stock Markets 2011 Jul 04, 2011 - 04:31 AM GMT

By: Dr_John_Trapp

Stock-Markets

Best Financial Markets Analysis ArticleThat is the question. Is this a Wave 2 or Wave B or a deeper or much deeper correction, or is this the beginning of a Wave 5 that will take us to new heights. My bottom line position is that this is the beginning of Wave 5 that will take us to a new high. I base this in part on looking at other indices, but will show you both sides of the argument.


The first chart I want to show y'all is the Dow Transportation Average. This index is traditionally considered a leading indicator. The chart is a bit of a dilemma in that it could be read two ways. First you will notice that it is making a long-term double top and second, it has barely reached new highs as it peeks above the old high of 2008. It could still be considered in the resistance zone of the old high, IMO, and another substantial move above its present level will be telling.

Dow Trasnsports

So, what does the ES Weekly chart look like? And what scenarios can we anticipate? On this chart, I did something a little different with the GET software. I localized the Elliott count to the beginning of Wave 5. You will notice that at this time frame it is calling for our more Bullish count (Black numbers) where we make one more high. I have as a primary scenario, W4 of W5 completed and a new high our next objective. Note how close ES came to my typical minimum retracement of W3 (38.2% - the red Fib level). As a secondary scenario, I have depicted with the dashed arrows, W4 of W5 not yet completed, but in Wave B of W4. I see the second scenario as a possibility if the double top on the Dow Transportation Average provides resistance and a short-term pullback.

ES Weekly

Here is a shorter term view of this scenario and the beginning of W5. This demonstrates the completed W4 (Black). In support of this count is the fact that W3 (purple) has gone beyond the 162% projection of W1. That is the typical maximum projection for a Wave C in a corrective pattern. Therefore, it is safest to regard this as a change in trend with the initiation of an impulsive move which typically are in the direction of the major trend.

ES 240-Minute

Now we will look at the more Bearish scenario. Even with the long-term settings for the Elliott count turned on for the GET software, it counts W5 (the whole wave) of the rally from 6March2009 as complete. You will notice that it is counting the rally ending Friday as Wave B of the countertrend move after a completed impulsive wave. But this isn't just the end of this W5 impulsive wave, it is the end of the entire impulsive rally from 6Mar2009. That means that typically this correction should minimally correct to the beginning of this whole impulsive wave (1002.75) or from 50%-62% of the entire rally from 6Mar2009. Why does the GET software count the Daily data as a completed wave and the Weekly data as just beginning W5? It has to do with the way that the counts are calculated by the software. The software uses an Elliott Oscillator to arrive at its count. Fewer bars will change the histogram of the oscillator. When I want to tweak the counts on the data to agree with my count, I will alter the time interval that is being calculated. That's why you need to know more than the software. The software is great for speeding up analysis, but it isn't the Holy Grail!

ES Daily Globex

What does this scenario look like on a Weekly chart? This is our Sky-is-Falling scenario. The red-dashed arrow is for the end-of-the-world scenario where we go into a double dip recession and make new lows. That scenario is low on my list.

ES Weekly

I hope this hasn't been confusing, but I couldn't think of any more simplified way of presenting it. This is a study that is worth going over until you understand it, because it should be useful in days to come. Have a Happy 4th and good luck next week.

If you like what you see here, wait to see how MortiES's analysis can assist you in your everyday investing or trading strategy! Go ahead, check out my track record and Click on "Subscribe to MortiES Premium" and give it a try! I am offering a 30 day free trial period.

Dr. John Trapp a.k.a. Mortie for Value of Perfect Information who offer stock market commentary, fundamental & technical analyses on the financial markets. Try MortiES' 30 day free trial.

© 2011 Copyright Dr. John Trapp - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in