Thursday, April 14, 2011

Non-Trivial 17 Points; Elliott Wave Projection

[For all images, click to enlarge.] Please study the principles of the table below for a minute.

The present market structure reflects the principle stated in box 4 of the table above. Contrary to my expectations, yesterday's support line was broken, transforming--or, better said, revealing--the structure from an a-b-c correction to a 5-wave sub-structure of wave-a. The teal boxes in the chart below, encompassing waves i and v, are nearly identical in size and time, 17 points. Wave iii, as is typical, was the longest.

The significance of this structure is that the market correction has yet to complete its b and c waves. Below is one projection for the b and c targets, based on a .618 and 1.618 Fibonacci retracement and extension, respectively.

To get a big picture view of this wave structure, I present the chart below. There is a point in time at which the possible price projection bifurcates.

Finally, this picture fits in with a fractal comparison of the 2007 stock market top and the present period. A defining characteristic of this patter was the sharp V shaped bottom, indicating a lack of a sturdy basing period.