Variation on a 4th Wave ~ The Risk Averse Alert

Thursday, October 18, 2012

Variation on a 4th Wave

I misspoke yesterday and have corrected the error. The Elliott Wave Principle's "alternation guideline" suggests that, during formation of wave a of 4 the NYSE Composite's wave 3 peak in fact likely will be exceeded (yesterday I wrongly indicated this would not be the case).

Back in March the NYSE Composite's wave 1 peak never was exceeded during formation of wave a of 2. The "alternation guideline" advises one expect the opposite more or less in every related aspect of wave formation. So, that's why the NYSE Composite's wave a of 4 might be expected to behave in opposition to wave a of 2. Likewise wave 4 versus wave 2 in their entirety should alternate. That's why wave 4's worst more likely might come sooner rather than later, as contrarily occurred during formation of wave 2.


Above presents a new variation to the Elliott wave count since September peak. All it does is extend out some days the market's levitation before succumbing to a bout of selling erasing much of the market's gains since early June. It is during this upcoming period we might expect the NYSE Composite Index to slightly exceed its September peak. Of course, this is just one possible path forward in formation of wave 4 of (c).

No need to change last night's conclusion. The several technical measures recently cited as supporting a negative near-term outlook remain no less foreboding and, as such, should serve to effectively cap any further market advance into what is thought significant overhead resistance.

Word on the Street
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