Blog Posts on Elliott Wave Lives On: Oct 28-Oct. 31, 2014

George Schaeffer says:
October 28, 2014 at 6:47 pm:

The R2K ($RUT) was up 2.86% today compared to a rise of 1.19% in the $SPX. $RUT:$SPX (relative Strength of $RUT vs. $SPX) is showing signs of a nascent uptrend:

http://stockcharts.com/freecharts/gallery.html?s=%24RUT%3A%24SPX

The A-D line recorded a plurality of +2098 with the DJIA up 188 and the SPX up 23 1/2. The McClellan Oscillator rose to +80 and it’s derivative, the Summation Index, has climbed from a low of -635 to today’s -220. Today’s breadth performance was strong enough in relation to the rise in the large-cap price indexes to be considered part of what PN Haurlan and Dave Holt of the former Trade Levels service called a “kickoff impulse”. And I think “impulse” (as in “impulsive”), rather than corrective is the right way to describe the market action since the 1821 SPX low.

IAWT says:
October 30, 2014 at 4:05 pm:

"This not acting like a corrective wave at all in my opinion. It hasn’t from the start. It looks like a sub dividing kick off rally wave. Once again….oct 2011 deja vu. Down into Turkey day then rockets back on into February."

George Schaeffer says:
October 30, 2014 at 6:05 pm:

I agree with IWAT and have posted that the rally since Oct. 15 has looked like a motive wave more than a corrective wave because of the strong "kickoff impulse" characteristics it has displayed. This description is founded on the broad and deep market participation that has characterized it. With the McClellan Summation Index having risen to -90 from -635, we see objective evidence of a persistently strong A-D line. The chart pattern of the relative strength of  R2K vs. SPX still looks like the early stages of an uptrend. It needs to surpass it's preceding high of .5858 to confirm that it's recent rally is more than just a corrective uptick.Again here is the chart of $RUT:$SPX:

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX

The evidence in support of this rally being a corrective wave is Tony's OEW work and the V-shaped pattern the rally has traced out. Impulse upwaves tend to have a broader bottoming pattern and corrective upwaves are more likely to be V-shaped. The market was strong but somewhat mixed today with the DJ Transports down 84 while the DJ Industrials were up 221.
If the rally were to continue showing this kind of incomplete participation by market segments, I would consider that to be support for the corrective B wave thesis.
However the DJTA had posted a new high on Tuesday while the DJIA had lagged considerably. The strength of the Industrials this week, and especially today, combined with the weakness of the Transports over the last 2 days will create a better opportunity for a joint closing by both the DJIA and DJTA at new highs. This would represent a Dow Theory bull market confirmation and would also be bullish for the intermediate term trend, coming as it might only 2 -3  weeks after the low point of a sharp correction.

I should add that my agreement with IWAT does not include this part of his post:

"Once again….oct 2011 deja vu. Down into Turkey day then rockets back on into February."

I don't expect a decline into Thanksgiving from today's close. After making new highs, we might expect a kind of consolidation before the rally resumes. The day before Turkey Day is often a good up-day.

George Schaeffer says:
October 31, 2014 at 3:14 am

The correction down to the 1821 low did not look nearly deep or long enough to me to be a P4, but it did look to be about the right magnitude for an M4. I believe that the surpassing of the SPX 2019 high will occur by Fri., Nov 7.  If that occurs with good A-D line strength and wide price index participation, that will be strong enough proof for me that we have completed M4 of P3 and are now in M5 of P3. Tony's OEW group will probably figure out a wave pattern that describes recent price action in those terms.

Technical Points for the $SPX on Oct. 20, 2014

The $SPX is coming up from below against 2 vital resistance points: it's 200-day SMA and the 1905 low of Aug 7. For those few on this site who may not know this:  Once a low point which has been downside support is broken, it becomes resistance when the price of the item moves back up towards it from below. So if the $SPX can rise above these former low points, it will have made an excellent technical accomplishment. The 200 day SMA was not a previous low point per se, but it did provide technical support for the $SPX for a long time period. So the principle described above works the same way for it as for the 1905 former low.
Additionally,  Richard Russell's PTI stopped going down right at it's 89 day MA on the day when Major Wave A  of Primary Wave 4 probably made it's low. Russell's Dow Theory Letters has used the 89 day MA as the dividing line between bull and bear markets for decades, and it seldom if ever has given a wrong signal. It seems to be an exception to the principle of indicators losing their validity after too much exposure.

Link to $SPX chart on Stockcharts.com:  http://stockcharts.com/freecharts/gallery.html?s=%24SPX

                                                                                                   

Mystery Indicator & Monday Oct 13 2014 A-D Action

The Mystery indicator is starting to move down for all the Price Indexes, but not yet in proportion to the degree of the price declines. I am at the point of concluding that it is of no use in predicting intermediate-term corrections (do not mean intermediate Elliott waves). Maybe it is accurate in predicting or tracking the primary (long term) direction of the various price indexes, or maybe it's numerous detractors are correct in believing it is a just plain useless indicator. I am therefore discontinuing my commentary on it until the bull market is over; then I will try to see how well it matched market price action over the course of the entire bull market.
The small-cap R2K was down only .38% today and the A-D line posted a -1116 on a day when the $SPX recorded a -31.39 and the DJIA a -223.  On a day like today, the R2K could easily have put in a  -2.5%  day and the A-D line could easily have displayed -2000+ declines over advances. Inasmuch as the latter two indexes had previously been the market leaders, maybe this is a sign of Major Wave A decelerating, and hopefully  approaching conclusion.
The RS of the R2K vs SPX made another potential bottom and incipient turnaround today, but we shall have to see if it becomes an uptrend. Here is the link to the chart:

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX