Thursday, December 3, 2009

Thursday 12/3/09 Market Update

There was a significant increase in volume today to a level not seen since early November on the S&P 500 and late October on the Dow Jones Industrial Average. The S&P did break above yesterday's highs but interestingly this was not confirmed on the Dow Jones Industrial Average. A late afternoon sell-off followed that was quite sharp.

Above is a 1 minute chart of the S&P 500. The wave count has been changed slightly with some alternates shown. A satisfying 5 wave impulse since the 11/27/09 low can be seen. This may have been wave [i] of C of (Z) of [2], wave C of (Z) of [2], or wave (c) of [b] or [x] (or [d] if B is a rare expanding triangle) of B of (Z) of [2]. But if [2] topped, C of (Z) would be far smaller than A which is not a very satisfying pattern. The next best option is a corrective B wave still in progress whose [b] or [x] wave just completed. B is getting a bit complex though so I have some doubts about this.

After considering all the options, I believe wave [i] has completed and wave [ii] of C of (Z) of [2] is underway. If prices continue sharply lower and 1091 is broken, this idea will be suspect. But assuming the idea is correct I would expect a bounce to ensue tomorrow after the current wave completes if it has not done so already. A single or double zigzag should bottom at that time.

On another note, Elliott Wave International has extended their free offer of the Fibonacci eBook until December 7th. Enjoy and have a nice weekend! The next post will be on Sunday.

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