Quick Count of the Australian All Ords Index

Jan 11, 2009: 12:19 PM CST

How might the Australian All Ords Index gives us clues as to the possible resolution of the S&P 500 Index?  It might do so by having a relatively clearer Elliott Wave pattern to view.  Let’s take a quick look at the Index and a possible Wave Interpretation.

$AORD Australian All Ords Index (weekly):

We’ll start the count at the October 2007 highs which was the same time the S&P 500 Index peaked.

In both the S&P 500 and the All Ords Index, Wave 1 was rather orderly, which broke down to a five-wave fractal in both indexes.

Wave 2 was also quick, forming an “ABC” Zig-Zag style pattern into the May 2008 highs.

Wave 3 is where things get a little “tricky.”  We see a steady fractal wave 1 down with a month-long fractal wave 2 correction.  Now, once the market began to fall in September, we had intense swings to the downside and a classic wave “iii of 3” which tends to leap off the chart (and create new momentum lows as this did in October).

Fractal wave iv of 3 was quick and fractal v took us to new lows on a positive momentum divergence, completing the hideous Fractal Wave 3.

If this count is correct, then we’re in perhaps the latter stages of a fractal wave 4 correction and should be heading to new lows – or at a minimum a test of the November lows – as the Wave 5 plays out to the downside which would officially complete the “circled” large-scale Wave 3 and send us into a meaningful Corrective Rally soon.

Perhaps the pattern will be similar on the S&P 500 – in that we still have one more down-leg to go before rallying sharply into a large Wave 4 which could take us to S&P value 1,000 or 1,100… but we’re not there just yet.

The S&P 500 Index’s wave count recently has been tremendously difficult to count because of a complex correction and possible Elliott Triangle taking place.  Perhaps we can translate the relatively ‘simplicity’ of the Australian All Ords Index into a possible clue of what might be in store for the S&P 500.

And as a disclaimer, remember that Elliott Wave interpretation is only one of many analytical tools we can use to try to assess the next probable direction of the market.

Corey Rosenbloom
Afraid to Trade.com

13 Comments

13 Responses to “Quick Count of the Australian All Ords Index”

  1. Anonymous Says:

    Hi Corey, Great analysis. of the snp using the aus dollar. I’m still tryign to grasp my hands around the hands on the count. It there a link on your site on EW theory? And would you mind maybe giving us a EW 101 theory Post. Thanks.

  2. Anonymous Says:

    Corey,

    You wrote “S&P 500 – in that we still have one more down-leg to go before rallying sharply into a large Wave 4”.

    Could you please illustrate by count, the larger Wave 4? Thanks.

  3. Corey Rosenbloom Says:

    Anon,

    I haven’t formally put down any lessons in Elliott but I probably need to do so – at least an introduction piece or series like you mentioned. I’ll do so – thank you for the inspiration!

  4. Corey Rosenbloom Says:

    Anon,

    I drew the possible ‘leg down’ on the chart above (fractal 5 if it comes which might test but not exceed the Nov. lows) but we do have a big (circled) wave 4 yet to come if this count is correct – most Elliotticians are saying this.

    I’ll try to update my S&P Elliott but Wave 4 could take us to 1,000 or perhaps as high as 1,100.

  5. dacian Says:

    Corey, in your last update for SPX in terms of EW, you were having 2 scenarios.

    1. We are in wave 4-up (which is now ending); EW retracements for wave 4-up are from 24% to 62% I guess, so in terms of price this is still valid. In this case, is there a way one can calculate the targets for 5.1, 5.2, 5.3, 5.4 from now, given that wave 5.1 has not start/end yet. I know in practice we can calculate a prices target for the end of wave 5 as wave4_end_price – 0.62* ( (0) – (3) ), with (0) as the start for wave1 and (3) being the price of wave3 end.

    2. We are is wave 3, and you specified a target of 699 for wave3. How did you calculate that?

    thx

  6. Anonymous Says:

    Hi Corey, nice approach.

    Do you think there is any probability that we are on an A-B-C correction to the 2003-2007 bull market and then after the next leg (3-5 or C-5) we could return to a bull market?

    Avi

  7. Corey Rosenbloom Says:

    Dacian,

    1. When 4 is officially complete – it could be already under one count – then we would expect 5 to be roughly equal to wave 1 in terms of size beginning with the peak of wave 4. As to the individual waves, we can have clues using Fibonacci but there’s no way – that I know of – to know exactly the measurements of each wave and which one may extend, etc. I find Elliott is easier to ‘forecast’ wave by wave rather than large waves at a time. I’d recommend trying to forecast the end of Wave 5 rather than trying to figure up exactly how we get there.

    2. I’ll need to revisit that projection now that we have more data but I assumed an ‘equal swing’ of 5 to 1 (in other words, again with 3 being extended – and it was – we’d expect fractal 5 to equal roughly fractal 1). At the peak of fractal 4, take the measure of fractal 1 downward.

  8. Corey Rosenbloom Says:

    Anon,

    I really don’t think that’s possible, first because we’ve already broken the 2002/2003 lows in the S&P and that’s not typical of a corrective wave.

    If we assume a big ABC structure, then A had 3 waves (2000-2003) B had 3 waves (2003-2007) and now C is expected to have 5 waves (the way corrections work). That would make us in an expanded flat and we could expect the C wave to go even lower than it is now, given that perhaps 3 waves are complete now.

    After we finish the C wave, we don’t necessarily have to return to a bull – we could start an impulse wave down. I don’t think that will happen, and in fact, many counts have 2000 as large scale wave IV (4) which means this ABC now is just a correction and that big wave V (5) is yet to come after this C completes. Wave V would take years to unfold and take us beyond the 2007 peak.

  9. dacian Says:

    “After we finish the C wave, we don’t necessarily have to return to a bull – we could start an impulse wave down.”

    Could you detail on that? I guess the bear market in 1930 behaved this way, don’t you think? I mean how you would interpret a new impulse down after the 5-wave completes? And how many waves that impulse might have? I was looking for this and there is only one place where I found it (a french blog) which states in 2009/2010 we might have 9 waves down actually. Is that an extension of wave-5 down? And is it something magic about 9 subwaves for an extended 5-wave down? thx

  10. Corey Rosenbloom Says:

    I’ll reprint what I posted to your previous comment on Monday’s post:

    I’m just saying that it’s not guaranteed after finishing a C wave that the next elliott impulse will be up – it means we have a fresh start in the wave count cycle.

    I have no idea about magic 9 waves, but each Elliott Impulse can contain one (but not all) wave that ‘extends’ and it’s possible this final fifth wave down could extend, but I’d argue we’ve already gotten that extension in the 3rd wave so the 5th should by no means extend.

    Don’t get too far ahead of yourself in trying to categorize every wave in the future. My advice is to take it one wave, one swing at a time and seek profit/manage risk within that one wave rather than try to figure out exact targets for the next cycle. To me, it’s just far easier that way.

    And as to the second point, it’s good to keep primary and at least 1 alternate count, but also know exactly at what point you abandon one of those view in favor of something more concrete. I wouldn’t ignore anything just yet.

  11. Anonymous Says:

    Corey, really appreciate you views on the market. I have learned so much.

    Thanks again

  12. cobran20 Says:

    Can you please post an update on the All Ords? Thanks

  13. cobran20 Says:

    Can you please post an update on the All Ords? Thanks