A look at YM last week and the week ahead

This past week, the emini-Dow didn’t disappoint our expectations of the wave structure.

Early Monday it put in a new low from the previous week to end wave (i) and we got our wave (ii) bounce which appears  ended near the end of the day on Tuesday. It now looks like wave (iii) is in progress with a new low beneath the fireline on Opex Friday.

If you take a look at the above chart you should notice how well David Starr’s two new indicators, FibGrid and DynaRange perform so well in tandem. I call them the “Dynamic Duo”.  If you don’t have them yet you are missing a couple of the most powerful studies available to use with the Elliott Wave method.

Looking ahead for the week, I expect that early on we will complete a wave ii correction. With the pullback on Friday afternoon, it appears we may have completed a 5 wave move back to the “Fireline” from where I would expect a 3 wave correction perhaps to the area I have marked near the Fib “Moguls”,  and then a 5 wave move back above the “Fireline” to complete a Zig-Zag wave ii, near the 38% retracement area of  wave i.

The 38% retracement would be a minimum wave 2 retracement. Quite often we will see a much deeper wave 2 retracement like we had for the wave [2] correction above which came within 1 tick of  the wave (ii) high.

Also if you will look at the moving averages on the chart, it looks highly probable that a David Elliott MAP pattern is setting up (one of my favorite studies).  The first resistance is right at the 20 SMA, ready for a pull back, then  notice the position of the 50 SMA,  it is headed down. A pullback from the 20 should draw the 50 lower into the target area just ripe for an “Ice Hole Failure”  on a bounce back up.

(If you aren’t familiar with the MAP, then you definitely need to go to David’s site at  http://wallstreetteachers.com/ and get your copy of the MAP cd.)

However, a shallow wave ii may indicate the overall bearish mood in the market right now and with increasing volatility it may not have the energy to get much higher.  We will be monitoring this closely.

If you haven’t registered yet for David Elliotts e-mini room, now may be the opportune time to enroll as you listen to David with his trading calls and education to assist you in trading this fast moving market. Occassionaly, you will also have the opportunity to listen to David Starr, Kirk Johnson, myself and other guests as we share our insights. You can sign up for the e-mini also at WallStreetTeachers.

Good luck in the week ahead and good trading.