One Among Finite Elliott Wave Possibilities ~ The Risk Averse Alert

Thursday, May 05, 2011

One Among Finite Elliott Wave Possibilities

Taking a closer look at the Elliott wave count possibility mentioned yesterday, five waves up from late-June 2010 bottom are labelled as follows...


Formation of wave 4 of (c) is seen currently in progress — unfolding as a contracting triangle, yet still with an upward bias, thus alternating from wave 2.

Remaining to be seen is whether during formation of wave e of 4 momentum (bottom panel) will fall below its low registered during formation of wave 2 (late-August), as is typical. It appears that, were this to occur, then the lower boundary of wave 4's contracting triangle could be violated. According to the Elliott Wave Principle, this is not unusual.

Likewise, if the lower boundary of wave 4's contracting triangle were violated, then there is a heightened possibility that, wave 5 might fail to rise above the peak reached during formation of wave d of 4 (May 2nd) — producing a so-called "fifth wave failure." Indeed, it was along these lines that, the peak reached in early-April was suspected a possible fifth wave failure (which possibility was mentioned only in brief passing a few weeks ago). Again, according to the Elliott Wave Principle, fifth wave failures are not unusual.

As ever, any given Elliott wave count under consideration is but one among finite possibilities, each of which largely are substantiated by underlying technical conditions. All things considered, continuation of the market's prolonged levitation projected via the above Elliott wave count is as technically well-substantiated as are other alternate wave counts presented here recently, detailing wave (c) (of an a-b-c corrective wave up from March '09 bottom). All are harmonious with a technically-based perspective strongly suggesting that, the counter-trend rally off March '09 low — one giant bull trap — is in fact nearing its end amidst much positive talk not backed by nearly as much money...

Fast Money
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