Sunday, July 5, 2009

Friday 7/3/09 Market Update

The S&P 500 index had a large sell-off but again on light volume. This is indicative of a market pullback, not the beginning of a new bear market. As was mentioned in earlier posts, the market is not giving a clear signal for the near future.

My primary count is the same as the previous post stated; an expanding flat, perhaps the "a" wave of a larger correction, that should be completing very soon. Dan shows a chart here. There are 5 waves of the flat's "c" wave (the 5th of which appears to be under development), with the impulses having different personalities. The 1st is hard to read but with a gentle downward slope. The 3rd is very sharp with a big gap down. The 5th already has a clear impulsive nature unlike the 1st but appears to have limited downside Monday.

The flat's "a" wave does look a bit short (or the "c" wave a bit long) but the alternative would be a triple zigzag from 888.86 to 931.92 which is a rare pattern. If this is the real pattern then the double zigzag WXY pattern or a new bear market since 956.23 would be back in play.

If the market continues to sell-off considerably then this is not a flat. If the market goes a bit lower then bounces back considerably, then this was likely a flat that may be part of a triangle (or there is no flat, no 5-wave "c" wave, just a rare expanding triangle). Of course the market may have a "b" wave of Y bounce if this is a WXY double zigzag, or a wave "2" of 3 if this is a new bear market. In any case the market should rise above 900 at the very least on a bounce.

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