Tuesday, June 16, 2009

An Elliott Wave In The JJC

As discussed in the earlier post today, the JJC is being used as a leading indicator for the stock market by many market technicians. If that relationship is accurate, then there are several conclusions that can be drawn from the above chart:

1) The JJC has completed an almost ideal 5 wave impulse wave with a 2nd wave flat and a 4th wave triangle.
2) Now that 5 waves are complete a correction in the JJC is underway which is coinciding with the correction in the stock market. There is a negative MACD divergence which is often seen with 5th waves supporting the wave count.
3) The JJC bottomed in December. The rise in the JJC in March supported the view that the stock market was bottoming.
4) The JJC bottomed 10 weeks ahead of the stock market. If the same relationship holds with the current top, then we can expect a top, a higher top I believe, in the stock market around August 25 when the JJC should be making a lower high in wave B of its ABC correction.
5) We might expect that the current stock market correction will end when wave A of the correction in the JJC is complete.
6) The JJC should correct to the zone between 24.59 and 26.20 which is the area of the 4th wave of lesser degree, a typical target for correction of impulse waves. When the correction reaches this area and reverses later this year, we can anticipate that a bottom in the stock market will seen a few weeks later. This bottom should be the end of the correction that will ensue once the market tops in August.
7) The JJC supports the view that the bear market rally will continue into 2010 as previously proposed on this blog as at least one more impulse wave should follow the correction of the above impulse wave.

In my view, this is exciting information for traders as we can expect many excellent trading opportunities over the next year as this bear market rally continues.

1 comment:

dave said...

VIX may have broken daily downtrend line, BUT it's still below 50S & 50E.