Wednesday, July 29, 2009

Friday 7/24/09-Wednesday 7/29/09 1m Chart

The market continued its sideways correction again today. Strength was shown at the close with buying volume coming into the market. This helped to confirm the ending diagonal count shown causing a break out of the falling wedge; conviction needs to be shown to validate the pattern which happened as the upper wedge line was broken.

The ending diagonal appears to have been the (c) wave of a flat. It is uncommon for a flat's 'c' wave to form an ending diagonal but it is the best count. A triangle is no longer valid since the marked 'c' wave yesterday was exceeded to the downside. [ii] was a zigzag pattern so a flat still provides a nice correction alternation within the larger A wave.

It appears that wave [iv] has completed with wave [v] underway. The correction is almost undoubtedly of minute degree since it was by far the largest correction in terms of time seen within A; in fact it took far longer than wave [ii] to complete. There is no sign of an impulse down from an orthodox top so the market will move higher. There is an off chance that a leading diagonal has formed but it would be a 3-3-3-3-3 leading diagonal (as opposed to the standard 5-3-5-3-5 leading diagonal) which probably does not even exist. Even if this is a valid pattern, neither the top nor the action preceding the top would look right.

So the 980s should easily be reached with a run approaching 1000. 1000 may not be reached by A and there is no requirement for it to do so. [iv] may provide a nice base for a larger advance, especially with an ending diagonal completing of the larger pattern.

Fibonacci targets are in blue (length of wave [i] extended from (c)) with the 100% mark at 988.25 (not shown) and 161.8% at 1000.13 (not shown). This A wave had a very extended 3rd wave so it is not very useful as a whole, perhaps some of its subwaves are good indicators. In any case, better targets can be found as [v]'s subwaves start to develop.

Still some problems identifying fine counts within A and the correction shown.

The market is still correcting but this would really be a long correction for A's size. Also a falling wedge was just formed making this highly unlikely.

Waves within the flat are up for debate.

Some other correction including the ending diagonal.

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