Another strong day in the equity markets has caused our Elliott work to step off track. The move up from Monday’s PRP low has now created a situation where the trend in the PRP’s (higher lows and higher highs) continues; and the end of our wave is deferred. The “I was wrong” point (stop loss if you will) of 832.98 has been breached and the immediate bear case proven wrong.
I will now wait for the next PRP high to form (to which should be no later than Monday) to see whether the RSI (top pane) can confirm the new high in price. Please note that we are still in a general area of resistance.
Even though the rally from March 6 is more powerful than I would have thought I will stick to my March 24 thoughts that had the view of “ … we get a new low (below 666) before a potentially large multi-month rally can unfold in equities. Today’s chart shows that a large Expanded Flat pattern may be unfolding from the November 2008 low. Under this scenario the cash S&P500 can’t move above 877.86. If it does it will imply that the low of the year is in and that the market has started a large fourth wave rally that will last into early 2010.”
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