BSE Sensex Elliott Wave Count H&S

On August 5th i wrote about the head and shoulder pattern in the BSE Sensex. This pattern broke down soon after and a measured move from the breakdown would be 13000 ish . A natural progression of this pattern is also a test of the neckline after a breakdown from underneath. A textbook definition of this chart pattern can be found here. I waited for that test all of September but the closest it came was approx 17,250 on the 8th and 21st of September. The Friday close of 17,804 tested and closed perfectly on the neckline. In my post on October 9th the 2nd option which was short term bullish also talks about the head and shoulder neckline retest with a final target of 17800.
The chart below shows that this has been achieved.

Elliott Wave Count.
As per the 2nd option on the October 9th post, we revert to the September 11th Count. The move from the 15th of July to the 26th August is a red (1) and as expected the Red (2) has expanded and finally completed on the 28th October with the neckline retest discussed above. Red (1) and Red (2) currently seem like the first 2 waves of a 5 wave pattern, to the downside.  


This time i think there are no two options, just one.
DOWN
I think in the next 2-3 weeks we will be back at or below 15750.

S&P500 Musings

Below is a comparison of the spy in 2008 and now. The topping pattern came in the form of 3 peaks in 2008. The third peak shaped like a scissor blade followed by a decline, a slightly lower decline and then a 16 pt rally. The current top is similarly shaped with the latter half of the pattern seemingly more volatile. Totally surprising? Maybe not! Although the currently rally has come at an extraordinary pace (2.5 months vs 1 month), in form it looks just like the 2008 rally.

Fibonacci Observations.
The March rally in 2008 was barely a 61.8% retracement of the decline of that time. But if compared to the decline from the 2011 May highs (29.75pts) it is very close to 61.8% (18.39 as on 24th October) versus the 2008 retracement (16.15pts).
Of course, with the EFSF gimmicks the Oct 24th high is long gone, but we can now look to the 76.4% retracement level @130.16 which is not too far above, and should be tough resistance.

S&P500, Emerging Markets and a Famous Global Bond Fund

I started writing this blog to keep track of my own opinions and look back later at the madness that was. This post may serve just that purpose, as i attempt to reconcile the Elliott Wave count on the S&P500 ($SPY, $SPX) with that of an Emerging Market ETF ($EEM) and a famous Global Bond Fund that take pride in their fundamental bond selection process, currency allocations and other hedging strategies.
$SPY VS $EEM
From the 1st of Sep to the 4th of Oct the $EEM seems to have completed 5 waves down with seemingly perfect form and the $SPY over the same period has completed 5 waves but with a ton of rule breaking overlaps or 2 great counts for the $SPY are provided by Joe the ElliottTrader on Youtube.
Now introduce the bond fund with a very mild marked 5th wave or alternate counts in brackets, that shows that there is a possibility of a 5th wave that is yet to come.The only way i see a reconciliation between the three charts is for
1. The Bond fund to have a 5th wave down, as determined by the alternate count.
2. $EEM to have an extended 5th wave of which we have completed a 1st wave down on the 4th and a 2nd wave up today or on friday.
3. $SPY chop counted with a FLAT-W-X-FLAT, followed by a 5th wave of which we have completed a 1st wave down on the 4th and a 2nd wave up today as shown in the chart below. In this count all a=c with the exception of the a-b-c in the X-Y where c= a*76.4%

This would all go well with Robert Prechters "All the same Market " thesis, for an actual 5th wave lower, which i think could start today.

Any one of the below would invalidate the count.
1. $EEM gets above 38.24
2. $SPY gets above 119.56

BSE Sensex Elliott Wave Count Long Term

Well, its about time for another post!!
My last post on September had 2 Scenarios. The Market went with option 2 on the first move down to 16400 and managed to hold above 16200. My target for the A-B-C was 17600 which would have been a test of the neckline of the head and shoulder pattern. The market was was weaker than i had assumed. Since i had expected the A-B-C to break through the 11th Feb low, i had counted the low on the 26th of august as a sub-division Red(1). But since the ABC did not break the 11th Feb low (17295.62) i can now count the 26th Aug Low as a Green(3). This means the count changes and the september 21st high is a Green(4), instead of a Red(2).
The new count is below and the old count from the last post is here. I will not attempt to label the short term subdivision right now but will do that in later short term posts, as the market starts moving.


Starting with the higher probability of the 2 Scenarios:
1. We shall start a decline immediately.
My target for this decline is the a measured move from the mini head and shoulders pattern (white box, 11th Feb 2011 - 4th Aug 2011) is (14,450-14,750).

2. If we go over 16750, the Green(4) is most likely not complete and will extend further into the 11th Feb (17299.25 territory) and a final target of 17800 may be reached. In short we would revert to the 11th September count with a slightly raised target due to a slanting head and shoulder neckline.