Upside Target on a Major Turning Point ~ The Risk Averse Alert

Monday, June 20, 2011

Upside Target on a Major Turning Point

Assuming the market's final lift higher off late-June 2010 bottom has begun (as I am), channeling guidelines as put forward in the Elliott Wave Principle provide a view toward the upside target wave 5 of (c) might likely reach...


The channel's upper end has two parallels: one to the peak of wave 1 of (c), the other to the peak of wave 3 of (c). Were the lower parallel (i.e. to wave 1) to mark the end of wave 5 of (c), it seems wave 5 might likely unfold about as rapidly as did wave 1, and closely approximate its length.

At this early moment in supposed formation of wave 5 of (c) at the top of my list is the possibility that, a major turn in the market might be but some days away, as the just mentioned scenario suggests. The first point of curiosity on the way, then, will be the 50-day moving average, as was noted last week.

SPX 1-hr

RSI's constructive configuration noted Friday became only the more so today. Last Thursday's bottom appears all the more solid as a consequence.

The ultimate end of what I have labeled in marking the ongoing correction of last week's lift off bottom is supposing enough underlying technical weakness across the broad market for this correction to persist another day or two. Last week's NASDAQ 100 performance, in fact, is seen raising this possibility...

NDX 5-min

Quite simply, the RSI extreme reached at last Thursday's bottom raises prospect that, NDX bottom might not yet be in. Minimally, a retest of Thursday's low accompanied by RSI divergence could develop over the next couple days, keeping a lid on seeming prospects for a decided move higher at present.

Yet by several technical measures there is a growing case for supposing the market is about to trace its final advance, at last, in counter-trend rally off late-June 2010 bottom (and March '09 bottom before that), and soon reach a major turning point from which collapse could rapidly develop.

Fast Money
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