So, off the table for now (yet still remaining a credible possibility, albeit diminished, however) is prospect five waves up from mid-November 2012 bottom are in the midst of unfolding, with the 4th wave of these currently forming. Rather, three waves up are seen forming into the market's February 19th peak. These have developed in the framework of the following Elliott wave view...
Same old, same old, "double zig-zag" forming off March '09 bottom (whose labeling is a-b-c-x-a-b-c). The second "zig-zag" (i.e. the second a-b-c) has been forming off early-October 2011 bottom. Its "c" wave is seen presently unfolding, having begun off early-June 2012 bottom and taking the form of a "diagonal triangle" (aka a "rising wedge").
Again, if we consider the market's underlying technical state as evidenced by the NYSE advance-decline differential, we see confirmation of the above Elliott wave view. We see this measure's best readings during formation of wave c of 3 of (c), as would be expected. We also see a whole lot of pathetic over the entire duration wave (c) has been forming. Late-August to mid-September 2012: let's objectively call it a barf bag advance. January 3rd to February 19th, 2013: a heavy duty Hefty trash bag lift. All told, though, quite fitting an Elliott wave form—a "rising wedge"—indicating trend exhaustion.
Yesterday was but icing on a baking powder light cake.
Now, too, does the burst in the NYSE new 52-week high-low differential since mid-September "make sense." This further substantiates the above Elliott wave count. Specifically, this measure confirms a "c" wave is in the midst of forming. A "c" wave is an Elliott third wave, and these are typically accompanied by an undercurrent one could objectively call "dynamic." The NYSE new 52-week high-low differential since mid-September has displayed this very "dynamic" underlying quality about the market's advance.
Likewise this measure's fade as wave 3 of (c) reached its peak but further reveals the market's underlying exhaustion, as well. Substantiated too, then, is the likelihood a "rising wedge" is the Elliott wave form developing since early-June 2012.
Now, there really is nothing saying wave 4 of (c) might find delayed the worst yet to come, such as yesterday's setback revealed is likely in store. In fact there's nothing discounting the possibility that, during formation of wave 4 of (c) the February 19th peak of wave 3 of (c) will not be exceeded (how ever slightly this might be). As wave 2 of (c) is seen a "complex" corrective wave form (being either a "double zig-zag" or a "double three"), the Elliott Wave Principle's "alternation guideline" suggests wave 4 of (c) likely will be a "simple" corrective wave form. This means a simple a-b-c is likely to mark the component waves of wave 4 of (c).
An "irregular flat" is one possible, simple a-b-c corrective wave whose component waves subdivide in a 3-3-5 fashion, and whose "b" wave exceeds the peak from which its "a" wave began (i.e. the February 19th peak of wave 3 of (c)). I'm raising the possibility this specific Elliott corrective wave form could mark wave 4 of (c) largely because at no time during formation of wave 2 of (c) was the peak of wave 1 of (c) exceeded. The Elliott Wave Principle's "alternation guideline" suggests developments during formation of wave 4 of (c) are in every conceivable way likely to be different than developments during formation of wave 2 of (c). There's nothing set in stone about this "alternation guideline" driven possibility, though. It's just something to look out for. As desperate weak hands (many of whom are hopelessly bankrupt to boot) have amply shown, anything's possible, and this no matter how ugly the undercurrent. So, it seems reasonable to expect near-term support to develop, now that major indexes are in the vicinity of their respective 50-day moving averages. Then we might look forward to a subsequent bounce, this possibly lifting major indexes nominally above their respective February 19th peaks. After that we could expect the worst yet to come, such as yesterday's thumping otherwise objectively projects, as many observers today likewise were claiming. With these we can agree. Yet first might come a fitting dose of frustration seemingly defying this negative outlook on which we presently find considerable agreement among active market participants.
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