Today the market continued trading sideways. It broke out of the shallow downward channel and is now in a shallow upward channel. The larger rally has now retraced almost exactly 50% of the decline since the 956.23 top.
The correction today did get us near a 38.2% retracement of the previous impulse. A possibility of two impulse waves can be seen up off of that low today (the first chart). This may be a zigzag or part of some other impulsive structure. Assuming the waves were two impulses, this chart is marked as if we will have more upside because this works best with that count so far. If it is only a zigzag then another count will be needed and it is sure to be a strange one; the zigzag would be part of a double zigzag but it seems very small compared to what the first would need to be. In any case the count on the first chart does not look right nor does a zigzag at the location.
Using the first chart, the market could rally from here completing the (c) of the [y] wave of the double zigzag. The 927 or 930 target discussed yesterday would then still hold. Even if there is no double zigzag, it could be completing an upward impulse of some kind. This is still an off chance because [w] looks very much like two thrusts with a wide arrangement of zigzag waves in between.
Kenny just posted a chart showing an ending diagonal scenario, I agree with this idea completely; it is a 5 and would be the (c) wave of [y]; wave X is then completed. I have posted another chart showing this. The chart solves many problems and looks better on the very small scale, consider wave (5) of [1] on the first chart near the close. Also we have not seen this pattern in some time, that supports its existence. This is my primary count.
With this count the market will sell-off Monday and may gap down. Note also that the triangle apex I mentioned yesterday and earlier (http://natesmarketanalysis.blogspot.com/2009/06/monday-61509-15m-chart.html) lines up almost perfectly with the high around the close. If W really has begun this reinforces the idea that that really was a triangle.
Problems:
Zigzag looking pattern but at the end of a rally.
Alternatives:
Triple zigzag completed but this is a rare pattern. Also the (a) of [y] wave would need to be a zigzag and it looks like a clear impulse.
Zigzag at the close was the second zigzag in a double zigzag.
A 5 wave impulse completing soon, currently in the 5th wave of it. A 1st wave completed Wednesday and we are now in the "3rd of a 3rd" wave of a larger impulse. Any other creative impulsive structure off of 888.86.
In wave 2 of a larger decline. Seems very unlikely at this point considering the zigzag looking structure of W.
Degrees may be off.
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