One Question Answered ~ The Risk Averse Alert

Wednesday, October 17, 2012

One Question Answered

Last Friday I questioned whether the middle wave of an a-b-c corrective wave down from September peak might extend in time unfolding before the floor gives way and a significant return of the market's advance from early June rather quickly (or maybe just persistently) comes to pass. It's clear at least in some quarters today we got the answer. The middle wave of an a-b-c corrective wave down from September peak is in the midst of unfolding. There's probably a little bit more upside remaining, too, before a decided turn south gets under way.

You get the picture via the Elliott wave count applied to the NYSE Composite Index above. Overhead resistance should prove formidable, if it is tested at all. The Elliott Wave Principle's "alternation guideline" in relation to wave a of 2 suggests the NYSE Composite in forming wave a of 4 probably will exceed its September peak, how ever slight this might be on account of overhead resistance.

My outlook here is bolstered by a McClellan Oscillator, first, on all counts supporting my current wave count bias and, second, tiring while the market's levitation since early-June approaches an anticipated, near-term end. The NYSE Summation Index further displays a nugget of gold likewise substantiating my less than ebullient outlook, this immediately speaking, as well as looking out some months from now.

Here's where I think we are: exactly the reverse of one week ago in a trend about to turn the other way.

Those several other technical measures recently cited as supporting my outlook remain no less foreboding.

Fast Money
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