Sunday, November 1, 2009

Friday 10/30/09 Market Update

The market pushed lower again Friday taking a big loss. Even though the market is again oversold in the short term, it appears that primary wave [2] already topped. The lower the market price goes, the less probable it is that a correction is unfolding. I expect a sideways correction to complete tomorrow before some further limited downside. A rally should then follow.

An idea of the larger picture is shown in the daily bar chart above. It is a triple zigzag with nice some Fibonacci relationships between the waves. It's certainly not a textbook pattern, but it seems to be a reasonable count if it is not somewhat satisfying.

A few attempts at bearish counts on the Dow Jones Industrial Average are shown in the 5 minute bar chart above. The downward waves seem best charted as a leading diagonal but it is not a satisfying one. But even more, it seems to imply significant downside ahead in the short term which is not that likely considering the oversold condition of the market on that scale. The count on the bottom may be more likely but the wave [2] top and wave (ii) shown are a bit strange. There are probably other counts. For now, it is best to keep an eye on the S&P 500 index.

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