Tuesday, July 16, 2013

BSE Sensex Elliott Wave Count Long Term

“Everyone kept saying ‘a top is not in place yet.’ They persistently pointed to the ‘normally reached’ levels of this or that statistic that were not yet there to reinforce their desire to remain bullish. . . . Apart from statistical measures of increasing blindness, this unwillingness to acknowledge what they themselves were already feeling revealed a comfortableness, a confidence, a conviction that whatever was happening – short-term survivable dips – would continue . . . until ‘the top,’ like a strip tease artiste of our youth would with decorum appear on stage, bow, and then, accompanied by applause from all the bulls eager to cash in on their excitement, would begin to twirl its statistical tassels in front of everyone.
“I’ve gotten so old I can’t remember the names of those ladies at the Old Howard, but I can remember that all you got was a flash of this or that, before they waltzed off. Stock market tops are like that. You know it’s there somewhere if you squint hard enough, but you never quite see it, so you keep waiting for more. And then, in the end, as the curtain comes down on the bull market you realize that the one rule about tops is not that they provide this or that signal, but that they come before anyone is ready.”
. . . Justin Mamis (re-quoted by Jeff Saut of Raymond James)

 
This is a follow up to the post on January 22nd, where i concluded that the top was in and any movement specifically over the November 2010 highs (21079), would invalidate the count. What followed was a 2000pt decline approx. This however turned out to be a 3 wave move (now counted as a 4th wave), followed by an up move (now a 5th wave) which basically recounted the Red C wave.
Green Wave II was therefore completed on May 20th (20,443). This Larger count will still be invalidated if the Sensex gets over the November 2010 highs (21,079).




Confidence in the Long term count comes from the short term action where a clear 5 wave decline from May 20th - June 24th is followed by a 3 wave corrective move which ended July 15th. Todays 250 pt gap down does well to push the market along the path of least resistance..
 

Both counts are likely to be invalidated if we make new highs above 20,062.83 (July 15th highs.)
The conclusions remain the same from the last post as long as the market does not invalidate the count.
i) Big downside: Green I & II are complete and  III, IV, V are pending with downside targets close to 11,000 or below.
ii) Lesser downside: A 5-3-5 correction of the 2009-2010 rally is still in progress which probably will take us down to 14,000   

 Posted on July 16th, @ 2:10 IST with the Sensex @ 19820-30