Stock Market Update - Technical Picture

Here is the updated Elliot Wave analysis. Funny thing, for all the stock market gyrations, the market progresses at a pretty slow pace. I believe it was Benjamin Graham who said: "In the short term the stock market is a voting device, in the long term it is a weighing mechanism."

Elliott Wave Long Term:

Elliott Wave Intermediate Term:

Elliott Wave Short Term - Wave 4

So, short term, we are in a counter-trend move, meaning that the primary trend, Long Term (Beginning 03/10/2000) and Intermediate Term (Beginning 10/31/2007), is down.

The Intermediate Leg down is not yet completed. This leg should subdivide into a 5 wave pattern down. The Nasdaq Comp appears to have completed legs 1, 2, and 3 of this 5 wave pattern down, and is in the midst of wave 4, which is counter-trend in nature. Counter-trend, in this circumstance, means that the direction of the wave can be either up, or sideways overall. Wave 4s often (not always) move sideways, and these sideways formations are labeled triangles.

If Wave 4 is a triangle, it will subdivide into an A-B-C-D-E formation, with each leg taking on an a-b-c subdivision.

My short term interpretation is that we should begin to see a sharp decline this coming week in the Nasdaq, as the c-leg of an a-b-c subdivision of Wave B within Wave 4. This decline should move below the January 23, 2009 low at 1,434.08, but should definitely hold above the 11/21/2009 low at 1295.48. Looking at the charts from a non-Elliott perspective, my guess is that the Dec 01, 2008 low at 1398.07 should provide support to complete wave B.

There is a great deal of information that I have included on the charts, detailing each wave in terms of points, percentages, number of trading days. I may not explicitly mention this detail in my comments, but I will refer to it on a regular basis, and it will be a foundation for future analysis.