Stock Market Highlight #15
Elliott Wave concepts presented in "The $upertrader's
Reference Manual" used to anticipate resumption of surge down.
(COMMENT #s 590)
UPDATED 19980820
COMMENT 1998-590
1. The chart at the bottom of the page shows hourly prices for the Dow Jones Industrial
Average since the mid-July all-time high.
2. The chart continues the outlook last reviewed in COMMENT # 579 of 980811.
3. As you may recall, that COMMENT was released just a few hours before point
"5" shown at the bottom of the chart.
4. This point marked the end of the initial surge down.
5. It would appear that the market has since followed the most probable scenario which is
one of correction.
6. This scenario marks the 980811 low as an Elliot Wave "I" wave down.
7. It suggests that we are now in the process of moving higher and completing a corrective
"II" wave.
8. NOTE THAT IT IS POSSIBLE THAT THE "C of II" AND, THUS, THE ENTIRETY OF THE
"II" WAVE IS ALREADY COMPLETE.
9. If so, the "I" wave required 116 trading hours down and the "II"
wave correction 38 trading hours up.
10. 116 / 38 = 3.053 (close to 3.000).
11. Under this scenario, an Elliott Wave expectation (see pages 290-2 of "The
$upertrader's Reference Manual") is that the "II" wave should have
corrected back to the approximate price level of "4" wave of previous degree,
which it has done.
12. Hence, it is very possible that "Wave III" (down) began yesterday morning.
13. The higher probability scenario, however, is that price will at least attain both the
price and time levels shown in the chart.
14. At this point, the horizontal level marks the 50 percent price retracement level.
15. The vertical line marks the 50 per percent time retracement level.
16. The "I" wave down required 116 hours (2 X FIBONACCI # 55 = 110).
17. 58 hours from the "I" wave low thus marks the 50 percent time retracement
and is shown by the vertical line in the chart (FIBONACCI # = 55).
18. The vertical line is 34 hours from the "B" point low (FIBONACCI # = 34).
19. This expectation is supported by a 16 minute intraday chart which suggests that the
"C of II" wave is presently in the process of completing the "iv"th
wave (down) of an expected "i-ii-iii-iv-v" fractal breakdown which is expected
to complete the "C
of II" wave to the upside.
20. Under this interpretation, the 8560 level in the DJIA should hold as intraday support.
21. A move equal in price to that of the "iii of C" wave would then project up
to the 50 percent price retracement level (the horizontal line shown in the chart).
22. The "C" wave would be approximately 1.618 X the "A" wave in price.
23. In time, the 34 trading hours of the "C" wave compared to the 24 hours of
the "A" and "B" wave = 34 / 24 = 1.417 (SQ RT 2 = 1.414).
24. Hence, the favored scenario is a little more down later in the day and then some
movement upwards to the target shown in the chart.
25. Further, let's not forget that a new high in the DJIA UNCONFIRMED by the other
averages (see pages 171-184 of "The 1998 $upertrader's Reference Manual") is not
an unexpected event.
26. Given the expectation of COMMENT # 579, what was the most telling event suggesting the
correction we are now experiencing?
27. It was the price DIVERGENCE formed at the point marked with the "B" in the
chart which is when the SPU made a new low which was not CONFIRMED by a new low in the
DJIA (see pages 171-184 of "The 1998 $upertrader's Reference Manual").
28. Did you catch it?
What Highlight do you want to go to next?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Stock Market Trading Highlights Main Page