Elliot wave

[Ares]

It would be nice to see a tutorial about the Elliot Wave theory here in the Technical Analysis Forum.
Expert examples of this theory would be really nice to see.

[AussieTrader]

Have a look here Elliot Wave International:

http://www.elliottwave.com/

[catrader]

http://www.investopedia.com/university/advancedwave/

[Ares]

Thanks AussieTrader and Catrader.

Ares

[cipisek]

I thanks too

[la-onda]

fyi:
08 März
weekend update
REVIEW:
As we suspected in last weekend's update, the rally to SPX 1388 ended the January uptrend when the market broke through 1360. This week all twelve US indices we follow confirmed downtrends, from the popular SPX/DOW to the sector specific XLF/XLY. Also, all five Asian indices and the two European indices we follow are in confirmed downtrends as well. The FED continued to talk up a storm and took some limited action on friday. The economic numbers continued to deteriorate from not so good to bad. The market bounced around early in the week, then on wednesday it headed lower. For the week the SPX/DOW -2.9%, and the NDX/NAZ -2.4%. Bonds and Gold ended flat, but Crude ($106) and the Euro (154) gained.
LONG TERM: bear market
The October 2007 bear market has resumed, after spending the month of February in a narrow trading range. Thus far this bear market has made a trend reversal every month: November 1406, December 1524, January 1270, February 1388, and now in March. Quite unusual! The OEW count remains the same: an ABC ended Major wave A at 1270 in January; Major wave B ended at 1388 in February; and expecting another ABC down for Major wave C now underway. The EW pivots and fibonacci ratios suggest the target for wave A should be SPX 1170, and SPX 1070 for wave C. When that final low is reached, everything should line up for a terrific bullish market rally into 2009. To illustrate this scenario we have updated the bear market forecast chart, which was first posted in early January, with current market data. The chart is posted below, and will be added to the photo section. The blue numbers on the left are the EW pivots that have already occurred, and those that are expected to occur as the bear market continues. Also notice that once Primary wave A ends around 1070 (EW pivot 1061), a strong bullish market should carry the SPX back up to the EW pivot at 1383. That's a 30% rally! Long term investors can also note the relationship between the 89 week moving average (gold line) and the MACD at the bottom of the chart. When the SPX broke below the 89 wma, and the MACD turned negative in late 2000, a bear market commenced. When the SPX broke above that 89 wma and the MACD turned positive in early 2003 a new bull market followed. Now the SPX is again below the 89 wma, and the MACD is in negative territory. Simple charts like this can provide a lot of useful long term information.
MEDIUM TERM: downtrend
A week ago wednesday the SPX topped at 1388, ending the uptrend since January, with a failed C wave. The failure occurred because the C wave of this flat failed to reach the previous A wave at 1396. When C waves fail the following reversal is usually sharp and swift. Which is exactly what transpired, and is still onging. Within the next seven trading days the SPX dropped 106 points (7.6%), and was within 12 points of the low for the bear market. Therefore counting a failed C as the end the flat formation for Major wave B appears correct. Within this same time period, not only did the SPX confirm a downtrend, but every one of the twelve US indices we follow confirmed as well. During the next several weeks we should look for 5 waves down during this downtrend to complete Intermediate wave A. The daily MACD should get quite oversold, and the weekly MACD should continue lower. The following EW pivots should also come into play: 1344, 1327, 1316, 1287, 1261, 1240, 1226 and finally 1168. If the  market keeps following the monthly reversal scheme. Expect an end to Intermediate wave A some time in March. Then an uptrend for Intermediate wave B into April.
SHORT TERM:
Support for the SPX remains at 1287 and then 1261, with resistance at 1316 and then 1327. Short term momentum is oversold and displaying a positive divergence. Friday's low of 1282 held the 1287 EW pivot well and then rallied to 1302 before easing back into the close. After reviewing this decline from 1388 closely, it still appears to be only Minor wave 1 of the five Minor wave decline. If this 1287 pivot does not hold, then a decline to 1270 (the low for the bear market), or to the next pivot at 1261 is likely. After Minor wave 1 does end, the market should then get a good rally, with 1344 the likely limit. Bear markets in downtrends, are very tough to trade on the long side. Rallies should be used as selling opportunites. When this downtrend bottoms, then the risk of long positions diminishes.
FOREIGN MARKETS:
All of the Asian markets are in confirmed downtrends. Japan's NIKK and India's BSE remain the weakest, followed by Australia's ASX, then Hong Kong's HSI, and finally China's SSEC. Certainly feel that China has not ended its bull market and will make new highs before yearend. Also, Hong Kong appears to have the same possibility.
The two European indices we follow: England's FTSE and Germany's DAX are both in bear markets and both in downtrends. The DAX should underperform the FTSE.
COMMODITIES:
Bonds continue to uptrend and long term rates continue to decline. The 1YR dropped to its lowest level thus far: 1.55%. Indicating the FED is now nearly 100 bps behind the curve, as liquidity pressures continue. For now rates should continue to decline. But they appear to be closing in on a major bottom soon.
Crude made all time new highs this week, nearly $106, as its uptrend continues.
Gold also made all time new highs this week, $995, but its uptrend continues to display signs of weakness. Maybe another try at $1,000 before it turns over.
The Euro/USD continue to go their separate ways. The Euro made all time new highs, and the USD continued to sink against nearly all currencies.
NEXT WEEK:
The economic data starts on monday with wholesale inventories; tuesday the trade gap; wednesday the budget deficit; thursday unemployment claims and retails sales; then friday the core CPI. Only two presentations by the FED: on tuesday FED governor Kroszner at 10:00, and FED chairman Bernanke on friday at 1:00. Best to your week and weekend.

http://caldaroew.spaces.live.com/

[la-onda]

Blog quotation...
09 April
wednesday update
SHORT TERM: uptrend starting to weaken, DOW -49
Overnight the Asian markets were mostly lower with only India bucking the trend. Europe came in flat, but closed -0.40%. US index futures bounced around overnight and into the morning, then the market opened mixed at SPX 1368. That was the high for the day. A pullback into the 1364 support pivot followed, as the market hit 1360 at 10:00. Also at 10:00 February wholesale inventories were reported higher than expected +1.1%, and FED governor Kroszner's testimony before the House was released: http://www.federalreserve.gov/newsevents/testimony/kroszner20080409a.htm. The market bounced around the support pivot until 11:00, and by 11:30 it broke through to the downside. This is the first time this level has not held support since April 1st. By 1:00 the SPX hit 1352, bounced a bit, and then made the low for the day at 1350 by 3:00. For the day the SPX/DOW were -0.60%, and the NDX/NAZ were -1.10%. Bonds were up nearly 3/4 points, Crude made new highs up $2.30, Gold rallied $18.50, and the Euro was higher. Support for the SPX notches down to 1344 and then 1327, with resistance at 1364 and then 1383. Short term momentum was oversold at the lows and edged up a bit. The near term indicators are close to being oversold as well. Tomorrow at 8:30, the weekly unemployment claims, along with the February trade deficit. Then at 1:00 FED chairman Bernanke gives a speech in VA, and at 2:00 the March federal budget deficit will be announced. Yesterday we posted that if the 1364 pivot, specifically the 1357 level held, the market could rally to a potential 1416 medium term top. That level did not hold today. The next support pivot is 1344, and this becomes a crucial one for a continuation of the uptrend. Should this pivot also fail to hold, then it is likely we have already seen the high for the uptrend at SPX 1387. If it does hold, then SPX 1416 is still a possibility. Currently, the near term indicators are close to being oversold, and 1344 should provide some support. Then we'll just have to see what the next rally looks like. Best to your trading!
MEDIUM TERM: uptrend
LONG TERM: bear market
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987         

[la-onda]

REVIEW
After a deluge of economic information during the week: FED lowered fed funds to 2%, Q1 GDP +0.6%, payrolls down only 20,000, PCE +3.2% annualized and ISM manufacturing still contracting at 48.6. The entire SPX range for the week occurred within the last two days: SPX 1383 - 1423. Not that much volatility. For the week the SPX/DOW were +1.25%, and the NDX/NAZ were +2.75%. Bonds were flat, Crude lost 1.9%, Gold dropped 3.6% and the Euro lost 1.2%.
LONG TERM: bear market
From the October 2007 top at SPX 1576 we continue to count the bear market as three Intermediate waves down into the January low completing Major wave A. Then an Intermediate wave A rally into the February high, followed by an irregular wave B into the March low, and Intermediate wave C still underway. Upon completion of this uptrend, from the SPX 1257 low, Major wave B should complete and the bear market should resume. The reason we maintain this view, is that in the entire history of the stock market from the year 1932, no bull market of more than three years has been followed by a bear market of anything less than eight months. That short bear market occurred in the 1950's. Since a 5 month bear market has never followed a 5 year bull market, there is no reason to expect it has occurred this time. However, OEW and EW for that matter, are about probabilities. Even though OEW defines the waves quantitatively, it does not label them. It removes the guess work of where a significant wave began and ended. These actual waves then create the structure of the overall bull/bear market. OEW applies to all market indices, commodities, stocks, etc. When an OEW technician knows exactly what the waves are, it removes a lot of the guess work. Then, the technician has to define what these actual waves are projecting for the future of the market by labeling them. The OEW technician applies a simple labeling scheme, based upon my many years of experience of watching the stock market unfold. It is not perfect, because the projected long term trend can change. Markets, as we know, are influenced by external events. Waves do not unfold because they have been etched in stone. They unfold because of changes in market sentiment as it relates to these external market events. Keeping all of this in mind, let's offer an alternative view, which also has historical validity. The Dow Theory has been around longer than the period we referenced (1932-2008). The theory suggests that when economic cycles change the TRANsports lead the change because they transport the goods that manufacuters make and consumers buy, before they show up in the profits of the Industrials. Therefore when the Transports start to breakdown, and the Industrials follow, it's a signal of an economic slowdown and a looming bear market. Conversely, when the Transports breakout, and the Industrials confirm, it's a signal of a pending economic expansion. Recent examples of this indicator start in November 2007. When the DOW made new highs in October 2007, the TRAN failed to confirm. Then in November 2007 the DOW Theory gave a sell signal, and the market sold off. Recently in March of 2008 the DOW made a lower low, but the TRAN failed to confirm. Then on April 18th the DOW Theory gave a buy signal, and the market has rallied. Naturally, this Theory is not perfect. It gave a sell signal near the lows of the 1998 correction, just before the market stormed to new highs in the dotcom explosion. Since I started posting this blog in August 2005, the DOW Theory (DT) and my labeling of OEW both remained bullish until late 2007. Then the DT gave a sell signal in November at SPX 1420, but my work didn't give a sell signal until early January at SPX 1375. Recently the DT gave a buy signal at SPX 1390, and my analysis is still bearish. I point this out because at the October 2007 highs there was a perfect five waves up from the October 2002 low, but I personally chose to ignore it. My error, not OEW. Recently, at the March 2008 lows there is the potential for an an OEW ABC flat formation. Expecting the bear market to last longer than just five months, as mentioned above, I have chose to ignore it. Maybe I'll be wrong again, and my labeling and interpretation of the wave structure will be wrong again. I'm only human, and markets are not etched in stone. The waves are clearly defined by OEW. The potential error in the interpretation of those waves are the error of the OEW technician, not the waves. We will know with the test of time.
MEDIUM TERM: uptrend makes new highs at SPX 1423
When the market started uptrending in March we projected several possible retracement levels. The first was a 38.2% retracement at SPX 1379. The next was a 50% retracement at SPX 1417. And finally the third, a 61.8% retracement at 1454. As the uptrend unfolded it appeared to be corrective, and still does. Every rally has overlapped the previous high, which is not an impulsive pattern. In early April the market ran into significant resistance at SPX 1387 and sold off. That was a potential top at the 38.2% retracement level. However, the selloff didn't breakdown below 1316, which would have signalled more downside. But held at 1324. Both of these levels coincided with the OEW pivots of 1383 and 1327. Holding support the market has now rallied to new uptrend highs with very little downside action. On thursday the SPX closed right at an OEW resistance pivot 1410, which should have offered significant resistance. On friday the market gapped right over it on the positive jobs report, the Microsoft buyout of Yahoo, and the FED expanding loan facilities yet again. With fridays action, the market hit the 50% retracement level at 1417, and traded around it for most of the day. The range for the day was 1406 to 1423, and the market closed at 1414. Our technical indicators are overbought on the hourly charts, and on the daily and weekly charts as well. This is clearly the strongest uptrend since the bear market began: 166 points verses 118, 126 points. On the near term indicators the market is displaying negative divergences. Yet, since the market has managed to continue to climb over the OEW pivots: 1383 and 1410. It may continue a bit higher to the next pivot at 1438, before turning over. For the reasons mentioned above, I'm certainly not convinced that this uptrend is the start of a new bull market. The short term wave structure looks corrective, and the uptrend has not exceeded any levels that would suggest it is more than just a bear market rally. Every uptrend, no matter how high it goes, is followed by a downtrend. During the next downtrend, which could start at any time, we'll have more information to determine exactly what this uptrend means longer term. Personally I prefer to stay with the long term trend. Until this market proves that the long term trend has changed, I remain bearish. There are other markets in long term bull trends: Gold, Crude, Commodities, and possibly even the USD. Corrections in known bull markets are safer to buy into than chasing rallies in potential long term bear markets.
SHORT TERM:
Support for the SPX is now at 1410 and then 1383, with resistance at 1438 and then 1462. Short term momentum is overbought with a negative RSI divergence, and the MACD is displaying a negative divergence as well. The near term indicators are also displaying the same. The beginning of this uptrend was quite choppy, rallies overlapping other rallies. However, from the recent 1324 low in mid-April, the rally has started to trend with minimal pullbacks. If one were bullish, they could say that the market since the mid-April low is starting to impulse higher. They could even count the entire uptrend as a 1-2, 1-2, 1-2-3 ... However, I prefer to count this uptrend as an ABC, or an (abc-x-abc) with the B (x) at the end of March. If the uptrend continues higher and completes the bullish pattern: 1-2, 1-2, 1-2-3-4-5, 4-5, 4-5. Then we will know to buy this market on the next downtrend correction, and the bear market bottom was in at the March low. If the bearish pattern: ABC (abc-x-abc) completes soon, and the market starts to downtrend. Then we know that this uptrend was nothing more than a bear market rally. Until a bullish pattern unfolds I remain bearish long term on the stock market.
COMMODITIES
Bonds ended flat this week after testing the low of the downtrend. Still see Bonds starting a major bear market.
Crude lost 1.9% this week, as monies moved out of commodities into stocks. Still see Crude uptrending in a major bull market.
Gold lost 3.6% as the downtrend continues, but it is trying to find support at the $850 level and is oversold. Still see Gold in a major bull market.
The Euro lost 1.2% this week as it continues its downtrend from the 160+ all time highs. The Euro may have just started a long term bear market.
FOREIGN MARKETS
The Asian markets are, and have been for the most part, in uptrends. Still bearish on most, but China appears to be resuming its bull market.
The European markets are following the US, as both the FTSE and DAX are currently in uptrends.
The Commodity markets Canada and Brazil are both in uptrends, as Brazil blasted to new highs on an investment grade upgrade.
NEXT WEEK
ISM services on monday, pending home sales on wednesday, weekly umemployment claims on thursday and trade deficit on friday. Also on monday FED chairman Bernanke speaks at the Columbia Business school in NYC at 8:30 in the evening. And FED governor Kroszner gives a speech, also about housing, in Ohio at 8:45 wednesday morning. Best to your week!
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987