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G4 Weekly Market Wrap, The Early Christmas Edition

  • Written by Syndicated Publisher 39 Comments39 Comments Comments
    December 23, 2010

    In spite of discussions about potential inversions taking place in the XJO in my previous Market Wrap it would appear that my original call of a top for the XJO in late December /early January remains the valid call. It is always difficult to time a top exactly especially when you have a ‘creeping’ type of top forming in the index. Hence the latest price action invalidates my comments about a significant low forming in the same time period.

    The following MTD (medium term Delta) chart for the XJO shows that MTD point (1) previously formed 11 calendar days after the vertical orange line (see first red arrow) and the MTD low point 2 (see first blue arrow) formed about 5.5 weeks later.

    Now these MTD dates do slip and slide somewhat so it is not possible to accurately indicate when the next MTD point (1) will occur. If MTD point (1) occurred 11 days after the orange line then it would mean a top around the 1st January. Please note that these Delta dates are not accurate but only give a guide as to the approximate time period during which a top or bottom will occur. It is entirely possible that the current MTD point (1) has already occurred. This will depend on whether a new high is produced in the coming week or two. Slippages of 3~5 weeks are common with these MTD points which is why it is difficult to be accurate in predicting tops and bottoms.

    Giving ourselves some leeway we could say that if it hasn’t formed already then it should do so in the next week or two. Based on past cycles we would expect that the following MTD point 2 would form 4 ~ 6 weeks after point (1) formed. This would suggest an MTD low in late January /early February.

    AMERICAN MARKET

    My primary count for the S&P500 remains the one shown in the chart below. I do have some concerns about Minute wave Circle i already being over 73% of the range of Minor wave 1. This gives me the impression that it should in fact be Minor wave 5 rather than Minute wave Circle i based on the proportionality of these two waves.

    The main reasons for not believing that it is a Minor wave 5 is that my Delta work still indicates than another rally is due in the new year before Intermediate wave (C) and Primary wave Circle B complete and that the earliest likely top for the 4 year cycle would be February. So whilst it is entirely possible that we could in fact be forming Minor wave 5 at this time, for the time being I am discounting this option.

    The other count where I was suggesting that we may still be forming Minor wave 4 is becoming less likely the further up the current price action moves. In Expanded Flat patterns it is usual for the b wave to extend beyond the origin of the a wave but the further up this rally moves, the less likely that this pattern being a Flat becomes.

    The following Astro Chart shows us that the price action has now reached the North T Node level. We can see that the next level up is another Saturn planetary line.

    Summary

    Both the Australian and US indices continue to climb and it’s difficult to call exactly when the ‘creeping’ tops will be put in place. They will happen in their own good time. There is no doubt that many of the daily indicators are in overbought territory but these can be in this condition for ages so it is a matter of being patient.

    I would like to take this opportunity to wish you all a safe, healthy and happy Christmas and may 2011 bring you all of the things that dreams are made of.

    Join us daily at our Elliott Wave Watching thread and see what the EW enthusiasts are saying about the US and Australian markets. Simply click on the link below:

    http://forum.incrediblecharts.com/messages/427230/2591748.html

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