S&P 500 Market Update_7_29_12

First and foremost, I was really excited by the fact that I was able to call this past weeks turn-around before it occurred. Granted I had it coming after the completion of what I thought would be one last triangle, but the important part is that it was done objectively and correctly predicted the complete opposite of what my original and incorrect assessment provided.

That being said, I have a new chart for this coming week. Regardless of what happens in the next week or two I am still predicting a very strong down turn in the markets. I believe that the current wave movement is the final sub-minor movement required for the completion of wave-2 which, of course, proceeds the falling waterfall effect of wave-3. I decided to chart the S&P 500 today instead of the DJIA, as I think it is more widely traded and resultantly displays a more accurate representation of the herding behavior which creates these patterns.

I am holding $1415.87 as my upper resistance. The alternate and absolute top resistance is $14.21.85. If the market breaches both of those levels for a significant period of time, more than two or three days, I will have to consider re-evaluating my count.

Until that happens however, my posted count for this week is listed below. Incidentally, the DJIA will likely follow a similar pattern over the next few days.

I have also added a 25 day moving average to the 50 and 200 day in the hopes of spotting some interesting crossover points.



- W

IMPORTANT CHANGE TO DJIA WAVE ASSESSMENT_7_26_2012

I am making a somewhat significant change to my wave count. I was counting the present triangle as though it were the "c" wave of the current wave-2 correction. Due to the law of alternation, I no longer think this right right. Because waves will alternate between simple and complex patterns, I am inclined now to reconsider my wave count and re-label it as a double three, with the bottom of the first downward moving wave as "1". This seven wave structure will terminate upon its seventh wave and wave "c" (blue) should follow numbers  1-7 and B (blue) upward into the area I have cordoned off with the noted price levels. The grey box is my target area and represents a close approximation of the next most likely upward Fibonacci relationship.

The red numbers, letters and trend line represent my old count, which I am comfortable at this time doing away with. This current sideways movement is not indicative of a "c" wave and is, at least in my mind, more likely a flat "b" which, according to Elliot's rules, is likely. An expansive upward "c" wave will follow. 

Furthermore, it is likely that the duration of an upwards "c" wave would be swift and last for approximately six days in total. 

Best,

W

Explanation to 7_23_12 update

In the alternative, the triangular wave structure we see now may be wave b (black). If that is the case, the end of this triangle will be the impetus for a upward 5-wave sequence which would likely retrace towards the top of wave 1.

I don't think that this is the case, but based on the wave structure, I can't make out any diffinitive "b" wave where the triangle is assumed to be a "c" wave ( the third wave in the corrective three wave pattern).

The reason I think that this triangle will be a terminal wave 2 (black) is because of what I am assuming to be the strong downward pressure of an upcoming three wave.

My original assessment of this correction was that the dip on 6/11/12 was the corrective "b" wave and that 1.618 the height of "a" would mark the top of "c". To a large extent that prediction has proven true. While the triangle pattern currently in question has continued for a while in terms of time, the upper resistance level in terms of its price points haven't really changed. This encourages my belief that the current triangle is in fact a "c" wave.

All told I am sticking with my current prediction, though I am assigning it less confidence than usual. When the market is elusive in terms of movement, I prefer to wait until a definitive indicator of future movement develops.


-W

DJIA Update 7_23_12

I have added to my analysis a linear regression line (moving downward and to the right in red) as well as the trends in the 50 and 200 day moving averages. I think these provide a reasonable means of gauging the wave count and help provide a rough channel.

Because the current sideways pattern is a triangular patter, I think that wave 2 (black) will complete upon the upward formation of the 7th wave of the sideways triangle. It is likely that this correction will not last past the beginning of August and my macro-assessment is for a major upcoming bear market. 

If the market drops below the trend lines I have outlined in any significant way, it is likely that the downward pressure will prevail before early August and we would quickly move into wave 3 (black). However, my official prediction is that this market will finish out its sideways movement before coming down in August.

-W

Twitter Announcement

Please feel free to follow me on twitter @WarrenRaiti to get thoughts on the wave count, socionomic developments and quick updates should a large movement in the market occur. 

DJIA Update for 7_22_12

While my expectation for Friday's market was met in terms of its direction, I am still looking for more downward movement in the DJIA. It should bounce off of the expected resistance point as labeled in the chart. 

Furthermore, I am becoming more and more convinced that we are looking not at a "C" but at a "B" wave, meaning that more upward movement would have to occur before the market would take its next dive. 

Nevertheless, I am sticking to the prediction that the market will continue to trend in between the red dotted lines and likely complete wave 2 (black) at the end of this month or the beginning of August. 

I remain bear in the long term, but will not discount another brief push up before that occurs. "C" waves are usually very strong and resultantly, I am skeptical about it having already formed, given the sideways market movement.

More to come, but I think the best thing to do now is just to watch carefully to see what happens over the course of the next two weeks.

Best,

W

Formal DJIA Update_7_19_12

Just to formalize / extrapolate on my impetuous post earlier, I have included a new chart which I believe more accurately reflects the current wave count. I think that the last few weeks of market action has demonstrated a "flat top-bottom rising" pattern, comprised of 3-wave subsets. As is noted in the graph, I believe that today's market growth was filling out the last leg of that process. I have labled what I think is the fifth and final wave of this pattern with E (black). Waves 1-4 are labled A-D (black) and you will notice that 1.618 times the length of wave [a of E] is pretty close to equivalent to both the current market price level and my proposed levels of resistance.

Again I am predicting another major downward shift in the market after the completion of this corrective 5-wave pattern.

All the best,

-W

DJIA update_7_19_12

If the market pushes any more above its high for today, I will have to re-evaluate my count.

DJIA Mini Update 7_18_12

Boundary line update from yesterday.

DJIA Update_7_16_12

Based on this weeks movement so far, the market appears to have started a new bear market third wave. However, last weeks trading, today and likely into early Wednesday are part of a triangle type pattern that will terminate upon the completion of its 5-wave structure at the point labeled "e" (red) in the top chart. After this wave form has completed, I am anticipating strong negative downward movement in the market which will flesh out the 3-wave of the larger trends, as noted in both the second to bottom and bottom chart. 

In terms of timing, the rest of the summer is going to look very bearish. As noted before we are entering a powerful downward cycle. The two bottom charts both demonstrate the market weakness as the price level has been meeting upward resistance in 3-wave pattern and exploring new territory with 5-wave structures on the down side. 

-W

Update to DJIA Assessment from 7_8_12

Given today's market movement, I am having a little bit of trouble coming up with a definite daily wave count and thus prediction for tomorrow. As a result, I will wait until the pattern fully unveils itself to continue the count. However, my general expectations for the rest of the week are as follows"

1. If the downward pressure we have seen in the last few days moves beyond $12,647.89, the completion of minor wave 2 (black) has occurred and the beginning of wave 3 (black) is underway. This means that the market will again take a hard tumble over the course of the week

2. If the market goes up tomorrow, its resistance will likely be in the neighborhood of $12,818, and will then tumble.

Either way, and even if the DJIA can push past the $12,818 mark, the minor and primary degree waves all indicate that there is a major crash approaching, likely in the next few weeks, if not earlier. 




Best,

-W

Personal DJIA Update for 7_9_12

The corrective wave labeled as 2 (black) is coming to an end this week. It is highly likely that the market will top out tomorrow or the day after. The corrective pattern, as noted before is that of a 3-5-5 correction (3 waves up, 5 waves down and 5 waves back up, forming minor waves a, b and c [orange], respectively). As a result the remaining pattern which has yet to unfold completely, is that of C (Orange), which requires one more set of five sub-minor waves for completion.

My target area in terms of price for the completion of this wave ranges is wide at the moment, and falls between $12,885 and $12985. Though this range is somewhat large, about a hundred points, the important takeaway point is that this will likely be a major market top. I am inclined to think that it will travel to the upper resistance point, since that is in Fibonacci relationship to the length of wave A (orange).

-W

Update to DJIA Prediction for_7_4_12

After I posted my chart yesterday and viewed it today, I realized that I was not giving due weight to the breadth of bull market corrective waves. Because such corrections tend to last 1.618% times the length of bear markets and because of the extension in wave iii (black), I think it is instead likely that iv (black has not finished forming yet. THIS CONTRADICTS MY CHART FROM YESTERDAY. What this means is that a motive wave upward is still on the way and that the DWCF (Dow Jones U.S. Total Stock Market Index), AND the DJIA will push up to right around $14390.20 and $12,973, respectively. Once the market reaches this point it will have completed wave 2 (black) and wave 3 (black, not shown) will begin.

We are currently in the beginning stages of the bear market I have been keeping my eyes open for these past many months. So far the wave count supports my assertion that this is the case.

Because this entire experiment is based on the theory that transparency and openness is the key to progress, I am leaving the faulty chart from yesterday online. If not as an example to learn from, then a show of good faith. I look forward to doing another Socionomic assessment, perhaps this weekend. 

And now for the charts.

Best,

-W

Update to the DJIA Prediction_7_4_12

Below you will find my daily chart for the period beginning on May 2nd of this year. The corrective pattern which has been in place since June 1st should be coming to an end this week. I think it is unlikely that the DJIA will push up too much further in this correction as it seems to have filled out a 3-3-5 corrective pattern. I mistakenly thought that this had occurred earlier, but it turns out that the A wave of this correction was a 5-3-5 pattern which, because of its amplitude, and proximity to 1.618% the length of the bear market fall, I mistook for a completed correction. The difference in price however, between the top of wave A and what I believe to be the top of wave C ( both marked in dark red on the chart) is not incredibly significant. This leads me to believe that the upcoming push downward, likely to begin with the remainder of this week, will be quite strong.

I have also separated and labeled the minor motive wave and its correction in the hopes of making the chart a bit clearer for those who are not already familiar with counting the waves.

All the best,

-W