Wednesday, January 12, 2011

Closing In On At Least A Short Term High

Trying nail down the final subdivisions of the current rally is certainly a difficult undertaking and fraught with dangers.  Yet,  again the potential is here for a top.  The rally from the 12/31 low appears as a series of overlapping 3 wave movements in a narrowing channel that is most likely an ending diagonal at subminuette degree which is also completing a larger ending diagonal from the November low of minuette degree.  The Qs must remain below 57.39 in order for the count to remain valid.  An overshoot of the upper channel line would be expected prior to a top which should be coming in a few hours.

This morning the futures are positive, supposedly on good news out of Spain, but the reaction is tepid at best, consistent with 5th wave action.


Two well known advisory services are calling for tops as of yesterday evening.  First, Robert Prechter of Elliott Wave International has called for an across the board top in stocks and commodities.  In his latest Elliott Wave Theorist he shows completed counts for stocks and commodities including the Qs, but cautions that a few more "pops" may occur at small degrees of trend.  The comments in last night's post aside, one thing I can say about Robert Prechter is that the Elliott Wave Theorist usually does not usually get involved in the short term counts except when he believes an important turn is near, and he has rarely been wrong about these calls, so I take them seriously.  Even in 2007 when he called for a top in June or July, he argued that traders should remain short into the October high and he proved to be right.

Gann Global Financial is calling for an across the board top in commodities based on their understanding of Gann's 60 year commodity cycle.  They have been quite prescient with commodity calls since 2008 when they caught the top in oil.

The weight of the evidence seems to be that a top of significance is near at hand.  We may not all agree on what will follow this top, but as the market pattern unfolds over time, we will get clarification:  is this Primary wave 3 down,  Primary or Intermediate wave B down, or just a second wave at minor or minute degree in Primary or Intermediate wave C up?  It is too early to tell.

2 comments:

Anonymous said...

Craig,

Found your blog recently. Thanks for taking the time to share your analysis. I too expect the top is very near but i'll admit the impulsive wave structure from the 2009 lows and the july 2010 lows does look quite bullish for the long term. I'm expecting 1000 on the spx but waiting to see how the first leg down unfolds to get a better idea.

jeff

Trader Craig said...

Jeff,

I agree with you. I don't know if you have had time to read some of my earlier posts, but I am expecting the rally to continue well into 2012 and maybe 2013 after the impending correction ends.

Craig