Elliott In Ready To Blow Mode ~ The Risk Averse Alert

Thursday, August 08, 2013

Elliott In Ready To Blow Mode

All things considered in a market this week clearly losing air and, prior to today, lacking breath strong enough to beat back the leak, there's plenty of reason to suspect a sizable giveback might imminently develop...

To that prospective NASDAQ Elliott wave count detailed here a couple weeks ago and labeled above in black, a doubly negative momentum divergence (see bottom panel) occurred at NASDAQ's peak on Monday (8/5). This prospective wave count's validity and likelihood is further confirmed as a result. All the more does its technical substantiation await wave 4 falling to the range of the 4th wave of one lesser degree (i.e. wave iv of 3).

Truth is, too, we could make a sound technical case altering the above Elliott wave view and instead labeling the end of wave 3 at NASDAQ's May peak, then wave 4 at June's bottom and wave 5 of (c) at Monday's intra-day peak. This alternate view is labeled above in red.

Bolstering this possibility is the Elliott wave count applied to the NYSE Composite index below, one previously detailed here on a couple occasions...

Until the NYSE Composite exceeds its May intra-day peak, we will continue recognizing the validity of the above Elliott wave count. Five waves up from the index's June 2012 bottom mark wave (c) ending the Composite index's advance off its March 2009 bottom.

We wisely should consider this prospect now in conjunction with possibility NASDAQ's Composite index just topped on Monday to complete wave (c) of its corrective wave up from March '09 bottom. We must conclude, then, something nasty could develop, and stat. If nothing else, an imminent test of respective [still rising] index 200-day moving averages is reasonable anticipation here. Still, raised is probability bomb bay doors are open, as prospective, mutual index completion of an Elliott a-b-c, counter-trend rally off March '09 bottom assuredly suggests.

Obviously, this perspective deserves close watching. Its relevance very well could persist even were these two composite indexes--NYSE and NASDAQ--yet to reach their respective wave (c) peaks and so, mutually complete the Confetti bounce off March '09 bottom. A grind still higher into September would present only a minor tweak. Nor is this very possibility slight by any means.

Nevertheless, we have seen a pickup in volatility since anticipating the very likelihood in June. Right now, or some several weeks forward, we should expect volatility's increase, confirming we are in the right neighborhood per Elliott. If the above view, as is, were to prove out, volatility's increase in fact should not be many more hours delayed.

Word on the Street
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