Wednesday, September 16, 2009

Monday 9/14/09-Wednesday 9/16/09 1m Chart

The market continued to rally today but given the lacking market breadth, technical weakness, and an enormous bullish percentage, this will soon be coming to an end. The Dow Transports actually closed lower today, not even close to confirming the 108 point gain seen in the Dow 30. Ironically, the continuing rally is actually confirming the larger count, that B of (Y) was a running flat and C of (Y) is completing now.

Wave [v] of C 0f (Y) of [2] still appears to be underway. It is obviously extending telling us the population is hopeful. The labellings above are one way of viewing the rally and this is probably the most bearish scenario; the "3rd of a 3rd" wave may have occurred later then what is shown and the occurrence of wave [iv] is not certain. Luckily a channel has formed so we have another tool to help identify a change in trend, or at least a correction.

Looking at the decline that occurred after the 1930 correction, a very similar structure as this one seen since March 2009, there was a 15% drop in prices over the course of 12 days before a bounce ensued. So if the market tops at 1070 tomorrow, prices would reach 910 by early October. The point is the market never gives you a perfect entry point, but big moves down are coming soon. They will "save" the few remaining bears that remain in this market.

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