Thursday, November 12, 2009

Thursday 11/12/09 Market Update

Two charts of the S&P are shown above, the top is a 1 minute bar chart and the lower is a 5 minute bar chart. The market moved lower today but again on light volume. The expanding ending diagonal count discussed the past few days seems the most likely given the movement in stocks today. It is possible the past two days have been a zigzag 4th wave of an impulse, but it seems too large for what it is. Obviously if there is a strong rally tomorrow breaking resistance levels, [2] probably did not top. Otherwise expect lower prices with [3] underway.

If an expanding ending diagonal really did unfold, prices should break down fairly rapidly the next few weeks in a "dramatic reversal". Volume should also pick up. I will support a wave [2] top as long as prices generally continue lower with determination.

Tomorrow I expect a correction for at least the morning hours but with prices only reaching the low 1090s. This would be wave iv. Of course there is a chance prices breakdown further before a correction. In any case, crossing below the 1080s is a bearish sign.

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