Another Groundhog day in the Tortoise rally.  Gap-up, sell off on volume, prices rise back up on no volume, ramp into the close.  Distribution looks like this, which should be worrying to anyone buying at these price points.

The employment numbers are out tomorrow and the Media has been in a frenzy on how great they are going to be.  Complicating matters is the fact that the market is closed tomorrow, although the bond market will be open for a while. This clearly led to a number of traders wanting to go into the holiday weekend flat – which caused some volatility.

We also got a new high on the SP500 today which is annoying as I then had to update my hourly  counts.  Now on my bear counts we are still in Primary 2 up in both of my highest probability estimates.  The Highest Probability count also still has us in (a) of [Z] again, the next best alternative is that we’ll finish P2 next week, probably on Magic-Manic-Monday.

In the Bull count I still have us in a wave [iv] which is looking increasingly like sideways action, which means the price may not go down much to accomplish its goals.  After the counts I’ll give a quick update on the SP500Feb 5 Support/Resistance line and the Nasdaq Multi year contracting diagonal.

Bear Counts

The Daily

The Highest Probability Hourly

The Best Alternative hourly

The Bull Counts

The Daily

The Hourly

SP500 Feb 5 Support Resistance Line

Last nigh I mentioned that in this particular rally, where the indices cannot go down, there would be continued retests on the trend line.  When I woke up this morning I thought that Think or Swim (TOS) was playing an April Fools Day joke on me.  In the low volume overnight session the SPX was ready to well above the resistance line  and almost at the March 2009 Rally resistance line.  Yet Another Exhaustion gap buying frenzy I wondered, with a barely audible sigh.  Through the day we managed to breach the support line again and then in the last hour went upto do a backtest on it and ended the day just below the trend line.

Here is the trend line from Feb 5

and a close up of the last several days

Nasdaq Contracting Diagonal Update

For those of you who have not seen the Monthly count on this you should first look at the chart below.

Now look at the past few weeks – You can see that the NASDAQ Composite has been idling around the Trend line.

Indicators

And Finally, some indicators on the SP500 so you can look at some bearish divergencies.

So is it time to eat Humble Phi [sic] and tell everyone that Elliot Wave is useless.  I have heard a lot of such talk on many boards and blogs today.  The answer is no.  Elliot Wave is all about Patterns and probabilities – and this market seems to be going for the lowest probability pattern every day and just keeps going up every day – The SPY is now up 14 days in a row.   Can it do this forever? I have to ask.  The market has been incredibly nice to the bulls for the past year – you just buy stocks – the lower quality the better – and you make money.   The market is not renowned for easy money.  I can only imagine the correction – should it ever come – will be a doozy.

Anyways over to the counts.  I’ll start with a close up on the last minor waves and then show the rally as a whole.   As you will see today we had a throwover start - where the market gets so enthusiastic in its final wave that it pushes over a Trend line and then falls back through it.  Now we have not fallen back through it yet – we actually closed very near that, but not quite.   Watching for the market to push back through the trend line and stay below it will be the key to confirming this count.

Long Term update

Short Term Update

From Dec 2009

And P1 to P2

First The SP500 Elliot Wave chart of the Entire Rally

Now a close up of the last waves (It is either over or needs another push up to 1155 – 1160).

Trading chart on the Russell 2000 (Continues to push against the top of the exhaustion Zone)

Trading Chart on the XRT (Continues to push against the top of the exhaustion Zone)

Long Term Dow Industrials

Short Term Dow Industrials (has tried 3 times to get back into the Bear Channel – 4th Time should be the treat)

Long Term SPY

Short Term SPY (imitating Icarus) 

Long Term VIX (Waiting for it to return into the LT Channel

SPX

More on this as I work out if this could be a useful tool.

SPY Arithmetic Scale

Chart 2:  This char is the same, however I have used log scale.  In this chart we have already gone through support and have been retesting the now resistant trend line.

SPY Log Scale

You can see the retesting in more detail when we zoom into the intra-day activity.

SPY Log Scale Recent

Also look at the Fib Lines, from the March low on the S&P Futures.   This should be a make or break week.

SP Futures Arithmetic Scale

SPY Target

Okay, based on my flimsy Tech Analysis, I think the current bounce will end Monday or Tuesday, somewhere between 106.57 and 108.21.  This should be followed by a steep decline to 101.28 (or below).