Mystery Solved? ~ The Risk Averse Alert

Tuesday, July 26, 2011

Mystery Solved?

The mystery surrounding the McClellan Oscillator's moonshot off June 16th bottom is solved...

NYSE McClellan

During formation of wave 1 of (c) last July the McClellan Oscillator reached its highest reading of any since. Unfortunately, this peak has dropped off the 1-year chart above, but it came in just slightly higher than that reached last month when wave i of 5 of (c) was near completion.

So, applying the Elliott Wave Principle's "like from like" quality to the McClellan Oscillator the evidence indicates wave 5 of (c) is well under way. Likewise, much as occurred all the way up from late-June 2010 bottom, expect the McClellan Oscillator to fade every step of the way higher as wave 5 of (c) develops.

By the looks of it, too, this final leg of the market's counter-trend rally off March '09 bottom appears slated to take the form of a "rising wedge," whose five component waves each subdivide in threes (although not indicated above, these are labeled a-b-c). We plainly see this three-wave subdivision in formation of wave i of 5 of (c).

Now, whether wave iii of 5 of (c) presently is unfolding should be confirmed sometime over the next several days. Having been inclined to suppose that, the market was likely to extend its advance from last week, presently developing this week, then, is thought wave b of iii. Wave c of iii [higher] should develop promptly ... unless, of course, wave ii of 5 of (c) did not complete at last Monday's low and, instead, still is forming.

I rather suspect time is running short for debt farmers whose tools in Washington are taking a beating with their debt ceiling swindle venturing another huge wad of taxpayer capital to fill the banking system's void. One can just imagine what vile reactions from constituents these folks are enduring. Nothing like an informed citizenry with access to a broader knowledge base inspiring the national will to turn up the heat on whores of "the market" in Congress...

Fast Money
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