12_27_12_Elliot Wave Update with Alternative Harmonic Wave Count

Market movement today dipped below yesterdays target by about 40 points and then began the expected, and dramatic, upwards correction this afternoon. Based on both the traditional wave count and my experimental use of the harmonic wave method (harmonic count may be seen as green alpha-numerics on the charts) I am expected the DJIA to continue this afternoons rally up into the neighborhood of13,212 -13,228. This range corresponds with both a 161.8% extension of corrective wave ([a] black) and a 61.8% retracement of wave 1 (black and green). As this correction will be a second wave in this sequence it has the ability to move up towards the starting point of wave 1 (green and black) , though should not move beyond that point. Thus, invalidation for any continued correction in this count would come at 13,365. Wave two should finish its correction by this coming monday, as it would at that point reach 161.8% the length of wave 1.

From the Harmonic perspective, intermediate (not shown in chart) wave 1 (green) completion should bear a Fibonacci relationship to wave C1 (green) as this is also wave A (green) of an A-B-C bear market pattern in the intermediate fractal structure.

After the market correction to around 13,220 completes, a very strong bear market will ensue. I am roughly expecting regular single day drops in the 70 to possibly 200 point per day range during that time.

-W

Elliot Wave_DJI Update_12_26_12

NOTE: For the descriptions below the (large green a) will stand in for "wave one" and the (large green b) for "wave two". The reason for this is that I am temporarily experimenting with the concept of "Harmonic Elliot Waves" by integrating it slowly into the more traditional method I am use to.

As shown in Figure (1-1) below , the DJIA has fallen in a five wave sequence with its expected terminus and resistance point between the 50% and 61.8% extension of waves i - iii, and 161.8% extension of wave i.

 

 

Figure (1-1)

As shown in Figure (1-2) below, I am anticipating a fairly mild but rapidly occurring three wave correction to at least 13,154.46 in the DJIA. Because this will be wave two ( green b) , wave one (green a) having completed in and around 13,070, it is possible that wave two may extend up to the 50% or even 61.8% retracement level of wave one. However, I think strong negative pressure in the larger wave sequence will keep pressure on the DJIA price level from rising beyond at most 61.8% of wave one. Though the timing is likely not very accurate, the below chart provides my general outlook through wave two, and a more vague but bearish directional outlook beyond that point.

(Figure 1-2)

Best,

-W

Updated Elliot Wave Chart_DJIA Mini Futures