Elliott Wave Update ~ 12 September 2012

Wednesday, September 12, 2012

Elliott Wave Update ~ 12 September 2012 [Update 6PM[

[Update 6PM]
Bond count on 10Y 
Along with extremes being registered in stocks and commodities, we have bonds which may on the verge of a wave three up in yields. Question: Are rising yields good for a $16T national debt?  Hmm, ask Greece, Spain, Italy that question.

A break up and over of the downtrend line is of course bullish for yields (bearish for bond prices).  Yields also happen to be in a falling wedge pattern just like stocks.

During P[3], I surmise that stocks and bonds will sell together hard at many points in time. We have seen this in Spain and Greece.  Where all "assets" are sold.  The net receiver of this? Of course King Dollar.

ORIGINAL POST
We may have yet another triangle developing - likely to be resolved by the Fed's announcement tomorrow afternoon.

Using the Wilshire5000 for form:

We can see that the market has been triangulating since its June low as a way of consolidating price gains.  Each successive triangle (well we have only 2 so far for sure) has been of lesser degree than the last (as it should be per EW theory).

I still give the market the benefit of the doubt to reach toward its upper wedgeline. That is about 1450ish SPX if it were to occur this week.

Wilshire weekly - and another way to label the rise since 2009. Its a tough count. But one thing that the count is not - is an impulse. And what the count is not is sometimes just as important of what it may be.

SENTIMENT MEASURES:

Another big pullback in Sentiment for the US dollar.  Via Sentiment Trader

Will our wave count work? Its starting to not "look" correct. This correction has been pretty deep. But we'll see what happens. Certainly excess bullishness was worked off thats for sure in a short amount of time no less..

One sentiment survey that has been fairly consistent with indicating intermediate-type tops has been the NAAIM (National Association of Active Investment Managers) survey. Again via Sentiment Trader this is the data as of last week (6 September). We'll have new numbers tomorrow and it could well be higher in bullish sentiment. Don't let anyone say things are "too bearish". This chart directly refutes that notion.

Via Elliott Wave International, as of last Friday, Gold Daily Sentiment Indicator was 90% bulls for gold, and 92% bullish for silver (via Trade-Futures.com).

So bullish sentiment is certainly frisky on a number of fronts (and bearish on the dollar).  Things are again setting up for a big turn.

ES Hour chart analysis

• ES hour chart near support and resistance lines.
• Price sustaining above the cloud will lead to an upper breakout.
• Breaking below 100 Hour SMA and cloud should give a correction towards 1428 and 1421.

ES Chart update

 

• ES Hour chart has violated the hourly up trend line and 100 Hour SMA.
• Falling below the hourly cloud will extend correction for bears.