Monday, July 20, 2009

Monday 7/20/09 Market Update

The market had lower volume today compared to the previous three days before it. The market did move up today but is showing weakness on a variety of levels. If I were to guess a wave count, right now all the wave counts on a small scale are guesses, I would say the market is completing an ending diagonal [v] wave.

This appears to be true for several reasons. First, the market is near 956.23 resistance with wedging and with overlapping waves. Also given the overlap with no clear clear triangles for days now, the market does not appear to be correcting; the pullbacks have been brief and limited and do not work well as parts of larger corrections. Finally there has been an explosion in the market giving clear overbought conditions. Take a look at the RSI for instance; on all charts from 1 hour to 1 minute, there is some sort of obvious divergence into today's close.

The market appears to be topping here with a noticeable pullback imminent. But as mentioned in earlier posts, this pullback should set the stage for an advance breaking 956.23 confidentially to the upside. The size of the pullback will be interesting and will help us determine the nature of the next advance.

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