Folks, here's the Objective Elliott Wave weekend update from Tony Caldaro, from his the Elliott Wave Lives On site (always included in the other sites of interest at the right side of the page here). I see that on the one hand, the SPX completed the minimum retracement amount (and time) for his Primary Wave B. And personally, I still find it interesting that the Nasdaq which made its low in November 2008 - a Fibonacci 8 (or 8.5) months ago (rather than the Fibonacci 5 months of the SPX) retraced more like the 50% level to its 2007 high. Also that the SPX attained Tony's minimum wave C of B amount; but, Tony's leaning to the idea that Primary B up didn't finish yet because of the subwaves not looking right yet. (I've got my own alternative idea about the move from the early July low being a 5th wave thrust that fits my flat idea - but, let's leave this to be about Tony.)
So we're fortunate to have Tony's update - here it is:
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the ELLIOTT WAVE lives on
Market analysis using proprietary Objective Elliott Wave techniques
August 08
weekend update
REVIEW
Economic reports for the week continued to display some stabilization and improvement. Construction spending and pending home sales improved along with ISM manufacturing. The Payrolls report displayed a decrease in job loss, as did the ADP index and weekly Initial claims, and unemployment slipped to 9.4%. On the downside Personal income and Consumer credit declined, along with Factory orders and ISM services. The market rallied on monday with the positive ISM report, then went sideways until friday and rallied with the Payrolls report. For the week the SPX/DOW were +2.25% and the NDX/NAZ were +1.05%. Asian markets were mixed losing 1.60%, Europe gained 2.55%, and the Commodity equity markets gained 2.25%. Bonds were -2.0%, Crude +2.1%, Gold +0.2% and most currencies dropped against the USD (+0.9%). The uptrend made a new high on friday at SPX 1018, and the index has now gained 53% from the March 09 low.
LONG TERM: bear market
We continue to maintain the view that the recent five month surge in the US equity market is the Primary B wave of an ongoing bear market. It has been quite a rally, and many have turned bullish. This is exactly what we projected a few days after the March 06 low at SPX 667. March 14, 2009 weekend update:
"With the stock market now into its eighteenth month of the bear market we have the potential for the first completed wave pattern of Primary degree. We have been expecting this bear market to unfold in three Primary waves: ABC. Primary wave A would complete the first low, followed by a strong Primary wave B, and then a retest or lower lows in Primary wave C to end the bear market. Primary wave A has subdivided into three Major waves: Mar 08 (SPX 1257), May 08 (SPX 1440) and potentially Mar 09 (SPX 667). Major waves A and C have subdivided into five Intermediate waves. Major wave B was a simple counter-trend rally. The five Intermediate waves within Major wave C are defined as: July 08 (1200), Aug 08 (1313), Nov 08 (741), Jan 09 (944) and currently Mar 09 (667). Should the Mar 6th low at SPX 667 hold, and OEW then confirms a new uptrend, we can expect a Primary wave B rally to follow lasting several months. Historically, using similar bear markets (1929-32, 1937-42, 1973-74) as a guide, a Primary wave B rally can retrace as much as 50% of the entire bear market in about five months. The bear market decline thus far has been from Oct 07 (SPX 1576) to Mar 09 (SPX 667): 909 points. A 50% retracement would drive the SPX to 1122. Our Primary wave B target, all along, has been between the OEW pivots at SPX 1107 and 1179. Even after a 58% decline in the SPX, the waves and the pivots are still in alignment. After such a massive decline, a 50% retracement rally sounds quite extraordinary. But it is really only a rally back to the September 08 levels."
As Primary wave B unfolded we modified our upside target to between a 50% rally (SPX 1001) and a 50% retracement (SPX 1122) due to additional historical analysis. At the June SPX 956 high we did warn that risk was increasing even though that uptrend fell short of our overall expectations. The market then declined to SPX 869, held, and then started this recent uptrend. From the SPX 667 Primary wave A low we have counted this extended rally as an ABC Primary wave B. Major wave A ended at SPX 956, Major B at SPX 869 and Major C still underway. Upon completion of Primary B, Primary C should follow.
MEDIUM TERM: uptrend
Since Primary wave B has taken the form of three Major waves, wave C should have some fibonacci relationship to wave A. Major A rallied from SPX 667 to 956 (289 points). Therefore counting from the Major wave B SPX 869 low we had made the following projections: at SPX 1014 C = 0.50A, and at SPX 1047 C = 0.62A. This week Major wave C SPX hit 1018 reaching the minimum 50% relationship to Major wave A. Major wave A took the form of a zigzag and we are expecting the same for Major wave C. Thus far it appears that that we are still in Intermediate wave A, or the first leg of the abc zigzag. From the July SPX 869 low to fridays high at 1018 the pullbacks have only been between 13 and 16 points. During Major wave A the pullbacks, that separated the waves, were around 50 points. Until we observe a significant pullback, to complete Intermediate waves A and B, we feel this market will continue to work its way higher.
SHORT TERM
Support for the SPX remains at 990 and then 961, with resistance at 1018 and then 1041. Short term momentum was nearing extreme overbought levels when the SPX hit 1018 on friday and then turned lower into the close. Since the pullbacks during this rally have been numerous and minor it has been a bit difficult in determining the shorter term count. Currently we're counting wave 1 SPX 888, wave 2 SPX 873, wave 3 SPX 982, wave 4 SPX 969 and wave 5 underway. Waves 2 and 4 alternate between a zigzag and a flat. After this five wave rally concludes we should get a significant pullback and then another five wave rally to complete Major wave C and Primary wave B.
FOREIGN MARKETS
The Asian markets were quite mixed this week and displayed a net 1.6% loss. Of the five we follow only Australia and Japan were higher.
The European markets gained 2.55% with the FTSE displaying a bit more strength than the DAX.
The Commodity equity markets gained 2.55% on the week with Brazil leading Canada.
All the foreign indices remain in uptrends.
COMMODITIES
Bonds lost 2.0% on the week and confirmed another downtrend. 10YR rates are rising again.
Crude gained 2.1% on the week and is uptrending. There should be a significant selloff in Crude when the Primary wave C in equities gets underway. But we may not see the February lows again.
Gold had a choppy week gaining 0.2%. Gold and Silver remain in uptrends.
The USD (+0.9%) recovered midweek from a new downtrend low and the other three currencies we follow declined against the USD: Euro (-0.5%), Yen (-2.9%) and Cad (-0.3%). The USD and Yen are in downtrends, Eur and Cad uptrends.
NEXT WEEK
Tuesday kicks off the week with Productivity, Unit labor costs, Wholesale inventories and the start of the FED's FOMC meeting. Wednesday the twin deficits, trade and budget, along with the FOMC statement. Thursday weekly Jobless claims, Import price index, Retail sales and Inventories. Then on friday CPI, Industrial production and the UofM Consumer sentiment reading. No speeches or testimonies scheduled for the FED. Best to your week!
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987
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