The market moved lower in the morning hours in a zigzag fashion overlapping the a of (i) wave as seen in the chart above. Because there was no satisfying impulse from the lows on 9/14/09 (waves are very clear on this date), a developing ending diagonal was immediately a possibility. This did appear to play out nicely with a small throw-over near the close. 1056.04 was the last tick. This satisfied my expectation of a high in the mid 1050s as stated yesterday. Expect a weak day tomorrow if the ending diagonal is valid.
Because at least the 1030s should be expected if there was an ending diagonal, the 1039.47 high obtained on 8/28/09 should easily be overlapped. It means the impulse wave since 9/3/09 was probably not a 3rd wave unless it was the 3rd wave of an ending diagonal. But since the impulse beginning 8/17/09 (as seen in yesterday's chart) was slightly shorter than the one beginning 9/3/09, an ending diagonal in the C of (Y) of [2] position is not likely playing out unless wave [i] of C of an ending diagonal has been completed. But this would lead to a very wide C wave in an already highly overbought market. So the running flat B wave that Dan showed yesterday seems most likely even though it is a rare pattern. An ending diagonal C wave is also rare but given the technical conditions of the market on small to large scales and the time requirements to complete such a large pattern (waves [ii] through [v] of C still remain), it is not likely this pattern is unfolding.
In addition, the pattern containing the running flat B wave is the best looking formation among the options presented. For example wave (b) of [i] of an ending diagonal C wave seems too large to be a corrective wave within [i]. Furthermore that wave has already been labeled as 5 waves, a count that suits it best given the big decline right in the middle of if (the "3rd of a 3rd wave").
So an ending diagonal [v] wave probably completed C of (Y) of primary wave [2] today. This is a very significant top if this count is confirmed. There is a chance there is slightly more upside left, perhaps an impulse formed all day today. But generally, there are all the right marking of a market top here.
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