Here We Go, Bud ... Almost ~ The Risk Averse Alert

Monday, September 27, 2010

Here We Go, Bud ... Almost

Sir Elliott Wave comes armored with fine technical substantiation...


For those paying attention that's a brand new wave count labeling five waves down from April top ... and three waves up correcting this decline. The third wave (i.e. wave c) of this corrective wave is seen presently forming.

A third wave's typical "dynamic" character is confirmed by both RSI (top panel) and MACD (bottom panel). Yet that both these measures approach levels at which a reversal appears likely — this for several technical reasons — one can more assuredly suppose this month's advance is completing the better part of but a corrective wave.

Volume, too, is seen confirming this a corrective wave ... first, by its absence during this month's advance relative to that accompanying August's decline (look closely) ... and second, by its persistent contraction since late-June bottom.

One well-established trend since March '09 bottom has been momentum's levitation (and this at ever-declining peaks). The last instance of this led into April top. There is no reason why we should not expect the same here, too. Thus, wave 4 of c is seen presently forming ... leaving wave 5 of c upcoming ... and then at last the very real threat of collapse.

As you can see, then, the market's levitation might continue into early October. Today's trading — holding Friday's CME-driven gains — confirms this. Likewise, today's final hour — its decisive bout of profit-taking — indicates both a powerful dose of long interest leaving, and just how thin is the bid underlying the market's advance this month.

Top might not be here, but it surely is very near. Yet another day passes and still, every technical measure continues supporting probability the market is proceeding toward a precipice from which a strong turn lower could ensue.

(Elliott Wave International Founder, Robert Prechter, today on CNBC)

Fast Money
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