Thursday, May 31, 2012

USD/JPY ~ Update ~ 31 May 2012

The USD/JPY is still trading inside its channel so the medium-term trend is still down:

As said last week, the support at 78.25ish looks very strong so we could see a bounce here. I'd like to see a channel breakout though before turning bullish.

S&P 500 ~ Intraday Update 5 ~ 31 May 2012

And up we go!!!

I hope you're long : )

S&P 500 ~ Intraday Update 4 ~ 31 May 2012

Huge hammer in the 30min:

The decline is probably over for today. The low was 1299, so only about 2 handles above my target.

S&P 500 ~ Intraday Update 3 ~ 31 May 2012

The sell-off continues and we're already near the support at 1292-97 where I expect a bounce. The wave count supports this scenario because the motive wave down from 1335 looks almost completed.

S&P 500 ~ Intraday Update 2 ~ 31 May 2012

1311 broken:

1295ish seems to be the target.

(Edit: 1304ish as the end of wave v would form a very nice impulse from 1335 though. So if we form some reversal here (e.g. a hammer) then we should get a move up into week's end.)

S&P 500 ~ Intraday Update ~ 31 May 2012

Support and resistance levels for today:

Wednesday, May 30, 2012

S&P 500 ~ EOD Update ~ 30 May 2012

No EOD rally today (as you probably noticed... : )), the Dow stopped right at 12460 (

The move from the lows looks very corrective (probably a fourth wave) so at the moment it looks like we'll decline to 1295ish once again:

The ADP employment change and the GDP are released tomorrow before the open so we could get another huge gap (up or down).

Dow Jones ~ Intraday Update 2 ~ 30 May 2012

12420ish is still holding and it looks like the Dow is trying to rally:

If we manage to get above 12460ish we could get a nice EOD rally, similar to last Wednesday.

By the way, the low on May 23rd was at 12:28, today's low at 12:27...

Dow Jones ~ Intraday Update ~ 30 May 2012

The Dow Jones opened lower today and is now hovering around the support at 12420ish. A break of this level should lead to a decline to last week's low. If we get some kind of a reversal in this area though then the targets are 12520-30ish and 12580 (gap close).

EUR/USD ~ Update ~ 30 May 2012

After 1.26 was breached last week the EUR/USD continued its decline and is now at the support area at 1.2400-50ish:

As you can see in above chart the current decline from 1.49 would form a nice shoulder of a huge inverse H&S.

Obviously this is all speculation so let's have a look at the medium-term trend. The medium-term trend is still down, ever since 1.30 has been broken. If we get a convincing break of 1.26ish though then I'd turn bullish again (target 1.3).

Tuesday, May 29, 2012

S&P 500 ~ Intraday Update ~ 29 May 2012

The SPX broke the resistance at 1328 at the open and then rallied to 1335, right below my resistance area at 1335.5-1337. We then sold off and are now trading just above the support at 1324.

Gold ~ Update ~ 29 May 2012

Gold hit the support at 1550ish a second time last week:

Once again the support held and I'm still waiting for a break of 1620ish to turn medium-term bullish.

S&P 500 ~ Support & Resistance ~ 29 May 2012

FTSE ~ Update ~ 29 May 2012

A reader asked me whether I could count the FTSE. I tried to do so this morning and many overlapping waves made it actually very difficult to find a nice count.

Below is a bullish possibility which is similar to my bullish SPX count. If we don't decline below last week's low and rally from here then we might see a very bullish second half of 2012.

If the lows don't hold and the FTSE drops further and even below 4800ish things could get bad very quickly:

ES ~ Globex Update ~ 29 May 2012

The ES is up pretty nicely at the moment and is trading at the resistance at 1328 right now. If 1328 is breached a rally to the huge resistance at 1340-45 is likely:

As you can see in the chart the rally from 1287 looks like a wedge. So despite the 40 handle rally I wouldn't get too bullish yet. I'm still waiting for a break of 1340 (to 45).

Friday, May 25, 2012

USD/JPY ~ Update ~ 25 May 2012

The USD/JPY is still inside its channel. As you can see in the chart (lower channel lines) the decline has slowed down though :

We're approaching the strong support at 78.25 where I think we'll get a bounce. Before turning medium-term bullish I'd like to see a channel breakout though.

Thursday, May 24, 2012

S&P 500 ~ Elliott Wave Count ~ 25 May 2012

I couldn't follow the market today so you can imagine that I was very pleased when I came home to see that the markets hardly moved today.

Above count is still very speculative. What we need is a rally above this week's high at 1328 and then a rally above the 1340ish area. If we get that then the count looks pretty good.

A reader pointed out that we could be in a wave (iv) triangle. If you look at the chart above you can clearly see a potential triangle since Monday. So it's definitely something we have to consider, especially if the market declines tomorrow.

Wednesday, May 23, 2012

Dow Jones ~ Elliott Wave Count ~ 23 May 2012

I think I've posted enough SPX counts today so for once I post the EW count for the dow (but it's basically the same for the SPX):

This count is still very speculative. As you can see in the chart we have to break the 12750 area to get confirmation.

S&P 500 ~ EOD Update ~ 23 May 2012

Wow! What a day!

The SPX opened lower today and declined to 1297 by 12:30 pm where it completed five waves down from 1328. From there the market rallied into the close and finished the day at 1319.

S&P 500 ~ Intraday Update 2 ~ 23 May 2012

As mentioned two and a half hours ago in this post it looked like we got five waves down from yesterday's high.

We've now already rallied about 1 % since then and I think we'll know soon which count is underway (see chart).

EUR/USD ~ Update ~ 23 May 2012

We did get a rally at 1.26 but it was actually not as strong as I thought it would be. We're now below 1.26 and if we don't get a massive end of day rally we'll close below this important support:

S&P 500 ~ Intraday Update ~ 23 May 2012

Even though we haven't declined below last week's low yet the bearish count, I posted before the open, looks very good now:

It looks like we're about to complete five waves down from yesterday's high. These five waves could either be the complete wave (v) (as shown in the chart) or only wave i of (v). So depending on how the next rally looks like it's either the first or the second count.

AUD/USD ~ Update ~ 23 May 2012

S&P 500 ~ Pre-Market Warm-Up ~ 23 May 2012

It's still too early to tell whether 1292 was a medium-term low.

Below you can see two possible counts.

If the SPX rallies above yesterday's high the bullish count is most likely underway. As said earlier though I'd like to see a rally above 1340 before turning bullish.

If the SPX declines below last week's low then above count is underway and a fifth wave down (probably to 1260-70) should follow.

Tuesday, May 22, 2012

S&P 500 ~ EOD Update ~ 22 May 2012

About forty minutes before the markets closed the SPX broke below 1320, quickly sold off to the support at 1312ish, and then rallied into the close to finish the day virtually unchanged.

S&P 500/ES ~ Intraday Update ~ 22 May 2012

The ES breached the resistance at 1321 shortly after the SPX opened and then rallied to 1326.5 (SPX 1328.5). We're now back at the breakout level which should be support now.

I was actually about to add a resistance line at last Tuesday's low at 1328.4 in my pre-market chart. I decided not to add it. Today's high is 1328.5 so I probably should have added it... : )

If the low at ~1320 holds I think we could see a rally back to today's high. Else we'll probably drop back to yesterday's close.

S&P 500 ~ Support & Resistance ~ 22 May 2012

EUR/USD ~ 22 May 2012

We're already back above 1.28. As said late last week, possible targets are 1.29 and 1.30ish:

ES ~ Globex Update ~ 22 May 2012

This morning the ES is slightly higher. We're now already approaching my second target at 1321 (SPX 1323). I mentioned yesterday that this level is a pretty strong resistance for the ES. In the chart below you can see why:

If 1321 is breached chances increase that ES 1287.25 was an important low. The next target after 1321 is the 1340-45 area.

Monday, May 21, 2012

S&P 500 ~ EOD Update 2 ~ 21 May 2012

I mentioned in this post that most medium-term lows were followed by a strong rally. Today's rally was quite strong so 1292 could be a medium-term low.

One up day is not enough though. As you can see in the chart below the strong rallies lasted several days. So, to confirm 1292 being a medium-term low, we need a continuation of today's move for the rest of this and probably next week.

S&P 500 ~ EOD Update ~ 21 May 2012

After the channel was breached the SPX quickly rallied to the resistance at 1312ish. About an hour before the close this level was finally breached and the rally continued. The SPX closed at 1316, up more than 20 handles.

I'll have more charts later.

S&P 500 ~ Intraday Update ~ 21 May 2012

Great start into the new week:

The channel was breached shortly after the open. The SPX then rallied and hit my first target at 1312 about an hour ago. If 1312 is breached the next targets are 1323 and 1335-40.

S&P 500 ~ Pre-Market Warm-Up ~ 21 May 2012

The SPX is still inside a declining channel and as long as it stays inside it the short-term trend is down.

We hit the support at 1293 on Friday so we could see a rally here. Possible targets if the channel is breached are 1312 (high on Friday) and the 1330-40 area.

USD/JPY ~ Update ~ 21 May 2012

We're still inside the channel thus the medium-term trend is still down.

Sunday, May 20, 2012

Silver ~ Update ~ 20 May 2012

The situation for silver is very similar to the one for gold. Silver continued its sell-off until mid last week when it almost hit the support at 26 $. It then rallied for the rest of the week and it looks like this low isn't only a short-term but a medium-term low.

The next targets are 30 and 31.3ish. The medium-term trend is bullish again if we get above these levels.

Friday, May 18, 2012

EUR/USD ~ Update ~ 18 May 2012

Target hit:

I think we could see a rally here. 1.29 and 1.30 are possible targets.

Gold ~ Update ~ 18 May 2012

We got the expected rally in gold:

The support around 1550 held again and I think 1620ish is next. It's too early to tell if it's a medium-term low but if we can break the resistance at 1620-30 and the declining trendline then gold looks very bullish.

Thursday, May 17, 2012

SPX ~ EOD Update ~ 17 May 2012

The SPX declined another 20 handles today and is now already near the 1300 level.

I've been bearish since 1385 has been broken earlier this month. As we are at a crucial point here I'm now neutral and wait for the next move.

If we get a reversal wave 4 is probably completed and I'll go long...

... and if we decline even more I'll be on the look-out for a new short entry.

EW Tutorial

I just posted an Elliott wave tutorial for beginners. If you've been following my blog but just didn't understand why I put some random numbers on my charts then the tutorial is for you. ; )

Any feedback is welcome (improvement suggestions, etc.)

Elliott Wave Tutorial ~ The Basics

This tutorial is for everybody who is a complete beginner in Elliott Waves and likes my charts but doesn’t (but wants to) understand them.

Do you remember your first driving lesson?

There were so many new things: You had to change gears, you had to remember which pedal is which, and you even had to watch the traffic. You slowly improved the more you practiced. It wouldn’t have helped you if your driving instructor had told you how to drive in theory. You needed practice.

It’s the same with Elliott Waves. There are like hundreds of rules and even more guidelines. I could write down all of them in this tutorial and you could learn all by heart. However, I think you wouldn’t really learn anything and it would get boring very fast. That’s why I only included the most important rules and guidelines and added many charts and exercises at the end of chapters 2 and 3 so that you can practice what you’ve just learned.

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Chapter 1 ~ The Basics

In the 1930’s R. N. Elliott discovered that the stock market moves in certain patterns. He isolated and described these different patterns and called the theory “the Wave Principle”.

Progress unfolds in five waves
He noticed that the market’s progression unfolds in waves. More precisely, progress ultimately takes the form of five waves. Three of them, waves 1, 3, and 5, ensure the direction of the movement. They are separated by waves 2 and 4 which point to the other direction.

Chart 1.1 - Five-Wave-Pattern

Two modes: motive and corrective
There are two modes of waves: motive and corrective. Motive waves point to the direction of the bigger trend and are five-wave patterns. Corrective waves are countertrend and consist of three waves.

While the components (subwaves) of motive waves are numbered, the subwaves of correctives are lettered.

A cycle consists of eight waves
A complete cycle consists of one motive and one corrective pattern. This results in eight waves in total.

Chart 1.2 - Cycle

Once one cycle is completed another will follow which is then followed by another five-wave pattern. This creates a five-wave structure of one degree larger than in chart 1.2. This five-wave pattern is then followed by a three-wave correction of the same degree. The result is a cycle of one larger degree:

Chart 1.3 - Cycle of one larger degree

This is the most important chart in this tutorial so it’s crucial that you understand it. Chart 1.3 is actually just a bigger copy of chart 1.2.

Each subwave of [1] (= circle 1) ((1), (2), (3), (4), (5)) consists of five waves (1, 2, 3, 4, 5) which themselves consist of five waves and so on... Imagine you could zoom in endlessly and always get the same picture.

Chart 1.4 - Chart 1.3 zoomed in = Chart 1.2

Additionally, if you have a look at wave (A) in chart 1.3. you can see that it consists of five waves and points downward and not upward as we’ve always seen it so far. What may look wrong at the first glance is actually correct:

Motive waves don’t always point upward and corrective waves downward. The absolute direction doesn’t define the mode, the relative direction does. Motive waves trend in the same direction as the wave of one larger degree and corrective waves trend in the opposite direction.
In above example wave [2] is the wave of one larger degree (relative to wave (A)) and points downward. Hence wave (A) is motive and consists of five waves because it points downward as well.

Chart 1.5 - Cycle of one larger degree relative to Chart 1.3

As you've probably already noticed, I used different ways to label a wave one. Once I used a simple 1, another time I added brackets, square brackets, and in the last chart I even used Roman numerals. This isn't by chance.

So that Elliott wave practitioners understand each other they agreed on the following notation:

Chart 1.6 - Notation (Circles are often replaced by square brackets for practical reasons)

I suggest you to use this notation as well. If you tell a friend that the Dow Jones completed wave 3 of 5 of B of 3 he most likely doesn't know what you're talking about. If you tell him that the Dow Jones completed Minor 3 of Intermediate (5) of Primary [B] of Cycle III though, then he probably still doesn't know what you're talking about but most likely because he doesn't know Elliott waves.

For reasons of simplification I won't use above notation in this tutorial so you can skip it until the end of the tutorial. To distinguish between the waves of different degrees I'm going to use different font sizes.

Key notes
  • Motives consist of 5 waves and point towards the direction of the wave of one larger degree
  • Correctives consist of 3 waves and trend in the opposite direction of the wave of one larger degree
  • The structure always repeats itself (Zoom in/out, chart 1.4)

In the next chapter you’ll learn the variations of motive waves.

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