Wednesday, July 1, 2009

Tuesday 6/30/09-Wednesday 7/1/09 1m Chart


The market broke above 930 today but again hit resistance and sold down to the low 920s. It closed positive but on light volume (it is a holiday week however). The double zigzag WXY count is no longer likely but the market still appears to be correcting.

The W wave still appears to be a zigzag but appears to be the first leg of a corrective combination; the action since the 888.86 low does not look impulsive on the finer charts, it looks like a double zigzag. So W is still a zigzag and X a double zigzag however Y is some other correction still being completed.

W took about 8 days to complete so Y should take at least another week to complete. It should be a triangle or flat due to the two 3-wave corrections seen the past 2 days. A 5-wave impulse down may complete tomorrow completing an expanding flat. This flat would probably be part of a larger correction such as the 'a' wave of a contracting triangle or the 'a' wave of another flat. The two 3-wave structures may be the 'a' and 'b' legs of a triangle. In any case there is a channel that has formed since the action from 888.86 but it should not be a surprise to see the market break out of it but with limited downside. Beyond this there is much uncertainty about the nature of Y, the market needs to deliver more information.

Problems:
The (c) after the triangle looks small compared to (a) and (b) and was truncated.

Alternatives:
This is a triple zigzag X wave setting up for a Y zigzag or other correction. But it does not look impulsive off the lows yesterday to make the 'a' leg and the 'b' leg looks too wide.

There was no triangle but some other correction.

There was a triangle but it was in the middle of a double zigzag (would only involve a relabel).

There was an impulse off the 888.86 lows then a wave 2 correction followed by the beginning of a 3rd wave. Wave 2 may not be finished. But note that the [w] wave shown here: http://3.bp.blogspot.com/_wpKB2FCKFlc/SkPwAUAYjOI/AAAAAAAABMc/k6f93GZzNY8/s1600-h/20090625.png is probably not an impulse.

Degrees of the 3-wave structures shown may be wrong in comparison to the W wave.



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