Technical Weakness Challenges Santa Claus Rally Hope ~ The Risk Averse Alert

Thursday, December 05, 2013

Technical Weakness Challenges Santa Claus Rally Hope

Although not a new development, uncertainty over the market's near-term prospect persists while the big picture slowly but surely clarifies. Still remaining relatively obscured in its structure yet to develop, however, a proposed Elliott "rising wedge" forming off October 2011 bottom—this completing the market's counter-trend rally since March 2009—might not be quite as advanced in its formation as we have been supposing. Consider technical evidence suggesting the middle wave (i.e. wave b) of the rising wedge's 3rd wave continues forming off the market's mid-May peak...

"Exhaustion" an Elliott rising wedge gives form to likewise should be in evidence through technical states displayed coincident with its development. We saw this via the NYSE's new 52-week high-low differential. Might we anticipate something of the same display via the 10-day moving average of the NYSE's advance-decline differential above? Here we might suppose an Elliott rising wedge's "exhaustion" would be objectively displayed were this measure to sink to its lowest level since October 2011 as wave b of 3 of (c) continues its formation.

Such a prospect, then, finds the market at near-term risk of sinking toward the lower end of its trading range of the past six months. Indeed, the above measure rather suggests the market is likely to be imminently confronted with weakness. Still, we can only wonder whether the greater bulk of it might be delayed until the New Year.

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