Elliott Wave Analysis Daily & Weekly XJO Updates Disclaimer

To read these updates in the correct order, please read from the bottom to the top.       

31/01/07

I was quick to dismiss a small red wave ii developing, after yesterdays strong rally to new highs, but I forgot that an expanded flat (a-b-c) correction will exceed the previous wave high, before its final wave c decline.

If today's decline continues tomorrow, and falls below Monday's low, I'll start to think the red wave ii is the correct count.

30/01/07

Referring back to the post on 22/01/07: "beware of extensions in this final wave".

With another all time high, and today's strong price action, it looks as though the move up from the blue wave 4 low is extending (that is, one of the 5 waves is breaking down into 5 waves).

If this is so, we should see 1, 2, 3, 4, (1, 2, 3, 4, 5) = 9 waves.

This however, would still allow for red waves i, ii, iii, iv and v to form into a larger pattern, as indicated on recent charts.

Link to Daily chart: charts/XJO_20070130.JPG

29/01/07

Prices declined as expected today, which is in line with both scenarios that have been discussed.

I think we will see further weakness, with a reversal later this week if prices are going to resume the uptrend.

Remember, prices would have to fall below the blue wave 4 low to rule out higher prices altogether.

Link to Daily chart: charts/XJO_20070129.JPG

28/01/07

Here's a better look at the two different wave counts that are being discussed here...

Either blue wave 5 will break down into 5 waves (small red waves i, ii, iii, iv and v) or the blue and large red wave 5 have completed.

A smaller red wave ii will not decline past blue wave 4 and the 'most likely' area for it to decline to is around 5640-5700 (the area of the 4th wave of 1 lower degree).

This weeks price action will hopefully provide the answer.

Link to Daily chart: charts/XJO_20070128.JPG

25/01/07

A new high today, but weaker into the close.

Note that Monday will be 3 weeks up from the blue wave 4 low and as we've seen 5 waves up on the daily chart, this is another reason to 'look for a change in trend'.

As mentioned before, the next multi-day correction will tell us if this blue wave 5 is over or is breaking down into 5 waves and therefore has some weeks/months to go.

Enjoy the long weekend!

Link to Daily chart: charts/XJO_20070125.JPG

24/01/07

Looking at the last few days intra-day action, one pattern to keep in mind is an 'Ending Diagonal'.

Ending Diagonals occur at the end of a trend and consist of 5 waves within converging trend lines. If this pattern is forming, we may get another push higher tomorrow.

Link to Daily chart: charts/XJO_20070124.JPG

23/01/07

Not much to add today.

There shouldn't be too much left of this current wave before we see some sort of retracement.

Link to Daily chart: charts/XJO_20070123.JPG

22/01/07

With a new high for the index today,  I can now see 5 small waves up on the daily chart for this (blue) wave 5.

After these 5 waves we should see a correction (beware of extensions in this final wave though) but as mentioned last week, we will have to let the price action tell us if this final (red) wave 5 breaks down into 5 waves or is about to complete.

The next multi-day correction and where it stops will be very telling.

Link to Daily chart: charts/XJO_20070122.JPG

19/01/07

If the current thinking is correct, next week should push to a new high.

The only question is, will (blue) wave 5 breakdown into 5 sub-waves, or will this be it?

Link to Daily chart: charts/XJO_20070119.JPG

18/01/07

With the last couple of days price action on the chart, I've been rethinking the wave count.

Not that it drastically alters, again, but it puts the blue wave 4 as completed and very, very simple compared to blue wave 2 (rule of alternation).

This thinking, reflected on today's chart, puts us in the final blue wave 5, of red wave 5.

How this plays out remains to be seen, but it may indicate that we're closer to a major top than previously thought.

Link to Daily chart: charts/XJO_20070118.JPG

16/01/07

Today prices jumped higher in early trade, only to close marginally lower by the end of the session.

I'd say that the price action on an intraday chart still looks more corrective - I can't see any nice 5-3 wave combinations on the way up.

Although we had a new intraday high today, this price action does fit with an irregular correction (see Rules), which indicates that prices should move lower from here.

Link to Daily chart: charts/XJO_20070116.JPG

15/01/07

With today's stronger prices, the 'surprise' mentioned last week is starting to appear.

Also, regarding last weeks discussion on time cycles, today was 7 days up from the wave 'a' low - so will this be the 7 day correction?

Link to Daily chart: charts/XJO_20070115.JPG

12/01/07

Further gains today, as expected. This should set us up nicely for wave c down next week.

The only surprise will be if this turns into an expanded flat, where wave b makes a new high before wave c gets underway.

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Link to Daily chart: charts/XJO_20070112.JPG

11/01/07

Today's price action confirms that we are still completing the wave b rally, itself a 3 wave pattern, and I would expect yesterdays high to be taken out before it's complete.

As this hasn't happened today, within 7 days (give or take 1 day) of the high, the 7 day cycle hasn't come into play here. These cycles should still be noted for the expected decline - or rather a likely date for it to end, along the other techniques discussed.

Link to Daily chart: charts/XJO_20070111.JPG

10/01/07

Looking at a intraday chart (not posted), I still think we may be in the wave b rally as today's price action and decline still looks corrective.

The next few days will clear this up.

After wave b has finished, I'm expecting 5 waves down to complete this a-b-c correction.

Link to Daily chart: charts/XJO_20070110.JPG

09/01/07

The expected rally started in earnest today.

As discussed in previous months, 'typical' time frames for corrective moves to last are 6-7 days, 13-14 days, 20-21 days etc. With this being a fairly large correction, I would say the latter timeframes are more likely.

Here's a chart showing these timeframes and how often they occur i.e. very often. The red labels indicate possible future time frames 'to look for a change in trend'.

Link to Daily chart: charts\XJO_20070109_time.JPG

Note: The previous chart had a blue 3 near the 12th Dec price tick, which shouldn't have been there, that has been removed.

08/01/07

More of the same today.

I'd expect a rally at some point, possibly wave b of an a-b-c correction to complete wave 4.

Link to Daily chart: charts/XJO_20070108.JPG

05/01/07

With further weakness today, it's getting more likely that the alternate count is coming into play.

If this is correct, we may see a 3 wave bounce before a further decline to the area of the 4th wave of one lower degree - so around the 5320-5500 level.

With wave 2 being very complex in structure, one would hope the 4th wave to be a simple a-b-c (the rule of alternation).

Here's the revised chart with the other labels removed for clarity:

Link to Daily chart: charts/XJO_20070105.JPG

04/01/07

The dip today was as expected. Now looking for some support and prices to move higher.

I don't think the top is in, but lets let the prices action decide!

Link to Daily chart: charts/XJO_20070104.JPG

03/01/07

Today's update below. This trend is still essentially up and slowly working its way higher.

Link to Daily chart: charts/XJO_20070103.JPG

02/01/07

One of the things with Elliott Wave is the alternate wave counts and in keeping with this, here's an alternative count for the XJO below.

This can be frustrating but, as in this case, either count calls for a decline very soon. The extent of this decline and its nature should tell us which count is correct.

Link to Daily chart: charts/XJO_20070102.JPG

Disclaimer: This is for educational purposes only and is not trading advice. These are personal views of the author. The reader should always seek professional advice to suit their personal circumstances.