Wednesday, September 23, 2009

Thursday 9/17/09-Wednesday 9/23/09 1m Chart

Today was exciting, at least after the Fed statement. The market hit a new high of 1080.15 after the statement but as Kenny pointed out, it was a weak rally. Prices then broke down. In 90 minutes, the S&P 500 lost about 20 points.

Although it is difficult to make out wave patterns, it appears that primary wave [2] topped today. One possibility is shown, but the Dow is really not clear. Perhaps an ending diagonal unfolded, but there is no wedging. As discussed yesterday, wave (b) of [iv] may have topped today, but then [iv] would then seem excessively complex.

Today may have been an important turning point in the market; bullish sentiment may have peaked after the Fed statement. Furthermore, this market continues to be in a weak technical position. Also the Dow Transports peaked 9/17/09 and are not even close to confirming the Dow's high set today, 4 days later. I expect the remainder of September to be very weak if the market did top today. Watch for impulsive waves moving down from today's peak.

As a final note, the S&P 500 has gained 413.36 points since [2] began; 666.79 was the bottom on 3/6/09 and 1080.15 was the high today. This is a 61.99% gain, very close to the inverse of the golden ratio, 0.618.

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