Gee, Think.

I’m going to guess that the Qs will head down again today. Now this is
a guess because I haven’t had much time to look at the charts again. I
would call it a prediction if I could be a little more specific. I’m
calling it a guess so that if I’m wrong I can shrug it off.
Now, if my calculations on my wave analysis of the Qs over the last 45
days are right, and further if wave 1 is related by equality to wave 3,
then wave 5 has not yet reached it’s target of approximately 37.00.
This target would relate wave five to waves one and three by 1.618
approximately.
Yesterday was a small interruption to what I think is the downward trend
of a bear market 5th wave extension. The action on tuesday was not of
enough amplitude to make me think that the fifth wave was over yet. If
we were entering the A, B, C, correction phase yesterday’s upswing would
have to continue much higher today. Yesterday’s uptick was probably a
correction from a smaller degree wave in wave 5.
I’l have to check the 5 and 8 day moving averages to be sure that I
think the downtrend will continue today.

I’d like to add that after completing the fifth wave, there should be a retracement up to approximately the start of wave 4 as a minimum target. This could occur in a relatively straight line, but will likely have at least three distinct waves, A, B, and C. The end of wave C should be somewhere in the price territory of wave 4.

Elliot Wave Analysis Qs July 16th, originally uploaded by Gare and Kitty.

This is my first attempt at the application of the Elliot Wave method of analysis. Regrettably I have not had much time to work on this image and its details, but nonetheless I am going to post it. At the least, it will be instructive to me. I should be able to look back at this and see where I went wrong. Now that I’ve got that out of the way, here goes:

I have diagrammed the progression of a motive bear wave. I see it as possibly having completed its fifth wave, and thus approaching the A phase correction. I wish that I had the time to be more precise. Having more time I would measure the lengths of these waves. Measuring their lengths in both price and time movements would serve to verify my wave count and also aid in ratio analysis for the purpose of predicting the length of the next price move.

Nonetheless, wave 1 and wave 3 appear to be of approximate equal length in price movement. This means that wave 5 should be related to waves 1 and 3 by some fibonacci ratio, perhaps 1.618. Based on this I would expect the fifth wave now in progress to continue to approximately 35.00. This would approach the 1.618 relation with waves 1 and 3.

Wave 2 appears to be a falling expanding triangle combined with a flat. This would make it a double three. Further, wave four could be a flat. This would coincide with the guideline of alternation between corrective waves.

There are some parts of this wave count that do trouble me. First, the second wave hardly retraces into the area of wave 1. That, and the fact that I just threw this sketch together in about 15 mins!

We will see how my analysis work out. I can’t know either way for certain, but that’s the sport of it!

Volatility in the Qs is approaching a significant fibonacci level, 19.34 to 19.45. On my chart from May 11^th 2006 to July 7^th 2006 I see three fibonacci retracements converging at this level.

The first retracement range is starts at 15.07 on 05/12/2006 and ends at 26.40 on 06/08/2006.
The second retracement range starts at 21.48 on 05/22/2006 and ends at 18.07 on 05/23/2006.
The third retracement range starts at 22.14 on 05/34/3006 and ends at 16.53 on 05/26/2006.

The first range has a 38.2% line at 19.41.
The second range has a 38.2% line at 19.40.
The third range has a 50.0% line at 19.33.

These ranges seem to be significant in that they create a line that is overlapped three times. Now the QQV is currently at 18.73. This leaves it more than 55 cents away from the area of resistance. The chart seems to show that there is a strong likelihood of the Qs volatility index (QQV) bouncing off this level. The QQV appears to be in a downtrend since the high at 26.51 June 8^th. Since volatility is inversely related to the underlying stock price,based on volatility alone I think this indicates that the Qs are in for a rise over the next week.

Click for the chart:

 

This the the photo of a page in the book to go along with the last
post.

Continuing my reading of “Elliot Wave Principle” by Frost and Prechter I have come across this page. It demonstartes a few of the myraid examples where the golden ratio, 1.618, is apparent in nature. The premise of the wave theory is summed up as “the stock market obeys thegolden ratio just as every natural growing form does.” From seahorses, to huricanes, to pinecones, to our DNA. There are example of all sizes that exhibit frequent 1.618 proportions.
This is truly an amazing phenomenon that I think many people would enjoy thinking about. It’s astounding that there is something so basic that unites so many vaired forms of our world.