Thursday, November 5, 2009

Thursday 11/5/09 Market Update

The market had a large gain today with the Dow Jones Industrial Average closing above 10000. But volume was lower today, it has been waning the past 4 days since the bounce began. A 1 minute chart of the S&P 500 and Dow Jones Industrial Averages are shown above. The S&P is the first. The entire pattern does not really look impulsive, especially on the Dow considering the overlap mentioned yesterday. A big rally tomorrow changes this view, but it does not seem likely.

Tomorrow at 8:30 am EST is the unemployment rate report. The sentiment following this report may be negative leading the markets lower. If not the market should continue upwards, giving strong doubts about the primary wave [2] top. The Dow Jones Industrial Average is at nearly at a 78.6% retracement of wave [i], only about 100 points from the current level.

An ending diagonal may have formed today that should be the last wave within [ii] setting the stage for a decline. If this is incorrect, it is probably a leading diagonal. Some of its waves do look a bit too impulsive (it is a 3-3-3-3-3 pattern) but the wave preceding it was very strong for what would need to be another first wave. That wave is best suited as a 3rd wave or an 'a' wave. The former just does not seem right on the Dow.

It is FreeWeek at Elliott Wave International. Be sure to view their short term updates, Elliott Wave Theorist, and Elliott Wave Financial Forecast publications until November 11th.

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