One Trick Pony Two Turns From Home ~ The Risk Averse Alert

Wednesday, January 19, 2011

One Trick Pony Two Turns From Home

Checking on the possibility that, a "rising wedge" — a "special" Elliott Wave form appearing exclusively at the conclusion of either "impulse" or "corrective" waves — is unfolding to form wave c of an a-b-c Elliott corrective wave up from March '09 bottom...


Ah yes, the old "levitate the market on flat-lining, momentum trick" — made possible with such increased selling restraint as only has served to buy time ... and more or less the standard follow-on to the "CME-juiced short-squeeze cocktail" whose use has been a tried-and-true means for initiating rallies since March '09 bottom.

The present levitation appears to be extending formation of the initial wave (of three) of the rising wedge's fifth and final wave. No surprise seeing this dynamic yet again coming into play here. This same manner of time-buying levitation has been standard fare over the past two years.

Indeed, it remains possible that, today's setback might not yet begin the fifth wave's corrective, connecting wave. The fifth wave's initial wave (unfolding since early-December) still could have more life ahead (probably lasting a mere day or three longer) ... with limited upside, of course (as ever).

Recall the projection put forward a few weeks ago in discussing this "rising wedge," suggesting that, its fifth wave's connecting wave might maintain an upward bias, while momentum simultaneously fades more decidedly than occurred during formation of wave 3's connecting wave (over the latter half of October). This possibility remains living.

So, with only eight trading days until the end of January wonder turns to whether transition beginning formation of the fifth wave's connecting wave might lead the NYSE Composite to finish negative on the month. Such a modest indication that, 2011 might not be the barn burner most expect would be a fitting development, both in relation to the present, late stage formation of a prospective "rising wedge" off late-June 2010 bottom, as well as to what disaster could very well unfold immediately following this rising wedge's completion — indeed, sometime this year.

Fast Money
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