| Technical Analysis charts of PPH DOW SPX |
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| Thursday, February 9, 2006 |
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Morning / Noon Update
Elliott Wave
I just want to go over some points on Elliott Wave analysis in order to clear up any prior miscommunication. Elliott Wave, in my opinion, is only good for one thing. It is good for determining the speed of the movement of a stock. It also defines the difference between a corrective and an impulsive move. A corrective move will have whipsaw and an impulsive move is fast. Speed also clarifies the difference between a trending and non trending market or equity. The only way that you can ever determine price target is by the pattern that an index, stock or currency is in. You want to play the equities or indexes that will break in the trend of the overall market or sector, be it either up or down because it is the path of least resistance. Wave count will help you in deterring the timing of reaching that price target. For example, it is always good to enter something in a wave 3 move up. A wave 3 move up is always the fastest and most parabolic wave of the 5 wave move up.
Wave count =speed/ timing
Trend = direction
Pattern= distance to price target
The Dow Jones Industrial Average (INDU)
Dow futures have currently broken above the downtrend line of the diamond pattern that I pointed out last night. In bullish waters, you follow futures and in bearish markets, you follow the cash index. The cash index will lag in bullish markets and will front run in bearish markets. Therefore we are bullish.
The Pharmaceutical Holders ETF (PPH)
The PPH is a good example of a stock in a wave 3 of 5. The PPH has completed its wave 1 and 2 and is now beginning its wave 3 move upwards. As stated earlier this is the most parabolic wave. (please refer to the chart) The pharma stocks are just starting to look attractive now. It appears that there is rotation out of commodity stocks into pharma stocks.
SP500
$INDU
PPH
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