Wednesday, July 22, 2009

Wednesday 7/8/09-Wednesday 7/22/09 5m Chart

The market made another new high today near 960 but was unable to hold onto those gains for the remainder of the day. Waves continue to be choppy and are overlapping as mentioned yesterday. This gives great doubts about a continued rally even though the wave count remains unclear. The chart is another guess of the price action.

A wedge pattern appears to be taking shape which may or may not be complete. Wedging, even if it does not align with an ending diagonal count, unusually means lower prices in technical analysis (see this page for more information). An ending diagonal [v] wave may be forming as shown but its structure is a guess. For an alternative ending diagonal, consider the marked w of (iii) wave as the top of (iii) of [v] with y the top of (v) of [v].

Regardless of the structure notice the subwaves of the marked pattern do not look impulsive, they look like zigzag waves. A triangle also has zigzag waves but that idea is no longer valid as the market has been pushing upward making new highs. Kenny posts an alternative here but it, like all counts, has its own issues (consider the strange [iv] wave flat).

There is continued technical divergence and lack of breadth. Also the upward channel drawn yesterday was broken this afternoon. A pullback to at least the 930s or so remains imminent. In fact given the wave formation I would expect the market to top tomorrow if it has not done so already. This would be a completion of what appears to be wave A with wave B ahead. See my earlier post for a better idea of what I believe is ahead.

Some waves just do not look right.

The above ending diagonal mentioned.

A larger pattern is forming that contains some or all of the triangle waves as of late. These options are all just guesses at this point.

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