Monday, July 6, 2009

Monday 6/22/09-Monday 7/6/09 5m Chart

There are various counts for X however a triple zigzag appears to be most likely on the S&P 500. The reason is due to the layouts of the 3s and 5s. [w] looks to be a clear 3 so it cannot be the first leg of a zigzag and it is not the first leg of a flat (not a sufficiently low 'b' wave following it). Generally it does not matter what X was, it should be clear that the market is in Y now.

Y appears to be a a zigzag with [a] wave completed, not a flat or triangle. The sell-off over the past few days looks too large to be a flat's 'c' wave. It does look like a 5-wave arrangement as discussed yesterday giving reason for a bounce then another 5-wave sell-off possibly completing a head and shoulders pattern. Regardless of the target the WXY pattern looks very much like a double zigzag completing, this is a correction of the market in a larger upward trend.

Triple zigzags are rare.

Impulsing down with a "3rd of a 3rd" coming up. This would be a new bear market, not a correction. If Y and [c] are very strong then it becomes more likely. But remember that W does not look impulsive.

Creative alternatives for the X wave.

X is not over.

[a] is not a 5-wave structure but a zigzag. Then W may be over or is part of a double 3.

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