Tuesday, August 18, 2009

Friday 8/14/09-Tuesday 8/18/09 1m Chart

Volume was very light today but the market did rebound from the lows established yesterday. There were clear impulsive upward waves today giving reason to believe the market completed corrective wave B. Today's waves may be part of a zigzag correction however, wave (iv) of [c] of B or [x] (implying a second zigzag to complete a double zigzag B wave) would be most likely. If a decline does come, the correction can be differentiated by market breadth and wave size of the following waves.

The bullish (primary) count is shown on the above chart. Below is an alternate count that has been updated since yesterday. The bearish alternate count will essentially not be valid if the market shows any sort of strength with prices into the mid 990s tomorrow. Over 38.2% of yesterday's 3rd wave has already been retraced. Obviously overlapping the above (i) wave will invalidate the count.

But keep in mind that today's bounce may be part of wave [x] of a double zigzag B wave (labels would need to be modified but the structure remains the same). If an impulse up following the one shown is weaker than the former, it may be wave (c) of [x]. The more I look at it, the more I favor the double zigzag scenario.

Even though the count is not clear, note the sideways action yesterday should have completed some sort of 4th wave. The move up today is probably not a part of that wave because the entire pattern would be very wide for what it is. This idea is reflected in each count shown. If this is incorrect, wave (iv) is probably an unfolding expanding flat.

The sideways action yesterday is not clear but the fine count is really not important at this stage.

Wave (v) of [c] looks small.

The 38.2% retracement of A is in the 960s. However, what looks to be wave (ii) of extended [v] of A has been reached.

wave [c] of B was larger and sharper than [a] of B.

A double zigzag is unfolding to replace the single zigzag as shown. That or the single zigzag structure is correct but it will be trailed by a second zigzag.

This is primary wave [3]. Then [c] would be relabeled as a 3rd wave and [a] as a 1st wave. But where was B? If this is the case, there will probably be a huge "3rd of a 3rd" gap down soon.

As mentioned above, (iv) is an unfolding expanding flat with wave c nearing completion.

Other creative counts I am not seeing.

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