Technically, no, if we swung back down to test the November lows from here, it would satisfy the requirement for a truncated Wave 5 so W5 doesn’t have to go beneath the recent lows but obviously it would ‘look’ better (form) if it did.

If the Financials get stronger, then we should expect a sustained counter-rally that may lead to something else, but we’ll have plenty of time to figure out if it’s the real thing or just another retracement swing up.

You’re on the right page. It’s important to have two or three possible Elliott Counts (alternates) to be better prepared and not get caught flat-footed.

I’m still debating whether we’re in the Major 3 or have finished it.

I’ll try to count and put up a weekend review that updates us to the two main possibilities.

That’s a good idea – those are major variables that can affect global markets.

I agree, and I didn’t catch on to the structure until just before noon but was able to switch my tactics from retracement mode to trend mode, in which the strategy become buying EMA pullbacks.

If price reversed, then it reversed and the stop was trailed beneath the 50. But if it didn’t, then you wind up with a big win.

You have to anticipate structure as best you can and then trade accordingly. If you’re wrong, or if price reverses, your stop will take care of you.

Good point! Combining the larger structure into play would have made for a nicer move. I was looking for a possible down-move (off yesterday’s doji) early on so the initial rally caught me by surprise and then I had to shift my view mid-day. Could have participated in more of the trend day if so.

Good call!

No, I’m not watching your trades

I’ll try to update the larger scale Elliott count this weekend.

Feel free to email me again to keep in touch – there’s really no easy answer other than taking smaller positions until you feel comfortable and then raise the size as you develop coping tactics.

Just wondering if it reached these levels does it invalidate a Fractual 5 wave capitulation?

The Banks and Oil seem to be making this rally have greater breadth, but still too high on a adjusted Shiller PE basis.

First, we are rallying off the bottom of a wave 3 down that went from the wave 2 peak at 1440 to the recent low of 667. This rally would therefore be wave 4.

Or second, we are rallying off the bottom of a wave 5 completed impulse that started at 1576 in the fall of 2007. This rally would therefore be the start of a corrective wave.

If its option 1, then the 38%-50%-62% Fib retracement levels are 961-1054-1147. If option 2, the levels are 1012-1122-1230.

Either way, it looks like the potential for a rally to 1000 is more likely than most people would seem to expect.

There is always the possibility I am completely wrong. This is the first time I have ever tried to calculate Fib retracements. Please correct me/call me out/tell me what I’ve missed!

http://www.forexfreedownload.com