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validity of Mr. Elliot?

Gsbank_thumb Brokerage Account

Posted by NASDAQsavages on June 04, 2012 (08:57PM)

I saw Jim Cramer today talking about lower lows than 2k11. I thought - interesting. Very interesting. So i checked the chart and tried to form a thesis of how low it go. I was surprised by what i found. I am by nature a very short term trader. Day trades, some time ill hold something for a week. But what i saw on a weekly chart of the SPY was something I've only read about. The Elliot Wave Theory in action. Starting from the 09 lows to the 12 highs. This is a technical study that is better used on longer term trends. So I'm not completely sure what to make of this, nor am i familiar with it. For those unfamiliar with Eliot's theory go read about it. But a general summary is The Elliot Wave Theory goes; 1, 2, 3, 4, 5 - A, B, C. Is this a major set up of huge plunge lower? SPX 1000?

5 stages of a major uptrend
3 stages of a major downtrend

the turquoise line in the the 50% retracement and my best guess as a bottom.

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Posted by Janosik on June 06, 2012 (01:23AM)

Curious if it will form a textbook A, B, C wave to complete this nice pattern, or if it will start a downward 5 wave cycle.  I'm not sure if all the Euro and domestic news can be considered normal and typical, so the market psychology may get a case of psychosis (ruining the nice Elliott waves).  Bump this post with another chart 3 months from now.  

I wouldn't call a 25% drop a huge plunge.  I could be in the minority with that sentiment, though. 

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