Elliott Alternation Exposé ~ The Risk Averse Alert

Wednesday, November 23, 2011

Elliott Alternation Exposé

It's getting time to consider the possibility that, the Elliott corrective wave forming following August's throttling is further along in its development than has been assumed up to now. Rather than a bounce of any consequence occurring prior to retest of October lows, this retest appears in progress (putting the market's ultimate undoing squarely on the horizon)...


Up to now my assumption has been that, still forming might be wave b of (b) of (2) of C, this since early-November. A bump higher was projected to complete wave b of (b). However this does not appear forthcoming. So, let's go with the prospect that, wave b of (b) completed last week and wave c of (b) has been unfolding since.

The corrective wave forming since August's completion of wave (1) of C thus far has amply satisfied the Elliott Wave Principle's "alternation guideline." On the same account do probable gyrations ahead, as formation of wave (2) of C completes, gain substantiation.

As you can see, wave a of (a) of (2) of C took the form of a 3-3-5 "flat," unfolding from August 22nd to September 20th. Alternating, wave b of (a) of (2) of C took the form of a 5-3-5 "zig-zag" into October 4th bottom. Wave c of (a), of course, was the monster 5-wave advance off that bottom into October 27th peak.

So, wave (a) of (2) from August 22nd to October 27th has taken the form of a 3-3-5 "flat." Thus, wave (b) of (2) can be projected to unfold in the form of a 5-3-5 "zig-zag." This appears well along in developing.

Another element of "alternation" is seen via formation of wave a of (a), as well as wave (a) itself, and this offers basis for projecting where waves (b) and (c) of (2) might meet their respective ends. This is graphically displayed via colored lines drawn above.

As you can see, the component waves of the 3-3-5 flat forming wave a of (a) of (2) contracted, whereas the component waves of the 3-3-5 flat forming wave (a) of (2) expanded. Thus, "alternation" displayed in this fashion projects that, wave (b) of (2) likely will end above the low set during formation of wave (a) of (2), assuming the 3-3-5 flat forming wave (2) continues such "alternation" as has developed already. By the same token wave (c) of (2) should end shy of late-October's peak of wave (a) of (2).

The Elliott Wave Principle's alternation guideline is just that: a guideline (albeit one whose permutations in so-called "corrective waves" — i.e. counter-trend reactions — typically are diverse and pervasive, thereby advising one's awareness of the phenomenon). The above projection based on this guideline has been in play for several weeks now. My thinking today simply is that, wave (b) of (2) appears further along in developing than assumed to now.

Speaking of "in play," here's trade war at light speed in an imploding global casino, much as is to be reasonably expected these days...

An orchestrated revolt against German sovereign debt among bankers whose position is anything but stable only suggests it is late in the game of make believe where lenders of last resort are hailed as credible backstops supporting a mountain of debt whose existence rather tragically demonstrates a thorough vanquishing of "due diligence:" a failing whose full disclosure awaits a modern day Pecora Commission following on pending collapse of the present day's fantasy...

Fast Money
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