Friday, June 19, 2009

Thursday 6/18/09-Friday 6/19/09 1m Chart


The action near the close yesterday appears to have been a flat. Following this was another zigzag looking pattern topping at 926.92 with truncation that preceded a market sell-off in the early afternoon. The triple zigzag pattern is rare but is the best looking count.

A rebound followed but does not look impulsive; there is a clear zigzag at the end of the pattern (marked by the [X] wave) with something else leading the bounce that was crossed by the (B) of the zigzag. Following this there was a sell-off that nearly crossed into (A) of [Y]. The near crossing and its width gives doubt to it being the 4th wave of a larger impulse still being developed. It is more likely the beginning of iii however it is difficult to make out any of its waves but it may contain a leading diagonal. If we are sitting with an uncompleted 3rd wave as it appears, we could gap down on Monday powering through resistance.

The market action has now exceeded a 38.2% retracement of the entire move down from the top (956.23) and has retraced almost all of the 4th wave of that impulse. In other words we are sitting at a nice position for a large market sell-off and this supports the finer count shown here.

The impulse bounced off of the lowest trendline formed during this correction. A channel line is forming in the opposite direction as shown.

Problems:
The i wave was retraced heavily, greater than 61.8%.

i contains clear impulsive waves but some waves are not clear, particularly [1] and [4].

Triple zigzags are almost never seen.

Alternatives:
Kenny's idea of this being a double zigzag, not a triple zigzag, may have been correct since we had another zigzag pattern today. Dan's (b) wave idea posted today (http://2.bp.blogspot.com/_TwUS3GyHKsQ/Sjv9h0yx6KI/AAAAAAAAA6o/OTRY9XBinmc/s1600-h/5.png) may also be accurate to give us a double zigzag.

There may be alternatives to the wave count off of 2 or B that I am not seeing. There may be a way to call it a zigzag then setting us up for an alternative triple zigzag if Kenny's count yesterday is correct. But this is difficult, particularity finding a long enough 3rd wave of 1 of A of the zigzag.

The top was really the absolute one with 5 waves coming down along the trendline shown. However the 2nd wave would be a very large retracement and the finer counts do not support this well.

It is not of major concern but the degree of my labellings after 2 or B may not be correct, it may be too low by one degree. 2 or B may be of wrong degree as well, we will not know until the market gives us more information.



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