Sunday, January 17, 2010

Friday 1/15/10 Market Update

The market appears to have topped Thursday 1/14/10. This would be the completion of primary wave [2] that began March 2009.

As the above 1 minute chart of the S&P 500 shows, an impulse wave down appears to have unfolded Friday. The correction following should be a second wave zigzag family correction that should complete Tuesday (there is no trading on the cash exchanges Monday because of the Martin Luther King, Jr. holiday).

Notice the broken trend line and wave crossing in the above 15 minute chart of the S&P 500. These are certainly not bullish signs.

There is slight wedging in the C wave ending diagonal. Even though waves [i] and [iv] never crossed, this should not be a problem. Figure 1-18 in "Elliott wave principle: key to market behavior", shows what may be an ending diagonal with no wave 1-4 overlap. In addition, the legs of C show zigzag characteristics (with [iii] clearly a zigzag) with the Dow Jones Industrial Average clearly an ending diagonal pattern as the below 10 minute chart shows.

Wave [iv] was fully retraced here as well. The lower trend line was also broken.

Other trend lines remain intact however. The above chart is a daily view of the S&P 500. Its lower trend line was reached Friday.

The Dow Jones Industrial Average is in a similar position as the above chart shows.

It should not be long until these lines are broken. The market is overbought, a bearish rising wedge appears to have completed, and an Elliott Wave triple zigzag since March 2009 appears to have unfolded. The breaking of this line is a bearish indicator and should be the beginning of primary wave [3] down.

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