Wednesday, January 13, 2010

Wednesday 1/13/10 Market Update

A 1 minute chart is above. There was a rally today but it was not unexpected. Yesterday's gap down on the S&P 500 was filled near the end of trading today. The Dow Jones Industrial Average made another new wave [2] high but it was not confirmed by the S&P 500.

Another alternate count (or guess) is shown in the above 15 minute chart. Because there is no wedging or [i]-[iv] overlap, there is an off chance that it is unfolding. It is merely an attempt to justify another brief rally beyond the current peak without extending waves [iii] of [v] any further as previous counts would suggest. The intent is justified because the S&P 500 nearly exceed the previous highs it set several days ago.

Even though there was a substantial retracement today, clearly the S&P 500 primary count is the best looking of the options because wedging and [i]-[iv] overlap is present. It also works well with the Dow Jones Industrial Average.

A 10 minute chart of the Dow Jones Industrial Average is pictured above. Based on this chart, it looks as if a top may be in place.

With closer inspection, there was an overlapping wedging pattern on the Dow Jones Industrial Average today. This bearish sign is shown in the 1 minute chart above. This is illustrated in the 1 minute chart above and may have been the ending diagonal (c) of [v] of C wave. Notice that the most simple description of the rally since yesterday is a zigzag and one with an ending diagonal (c) wave. If a single zigzag did not unfold, a double zigzag did. Because of this and the larger picture of the Dow Jones Industrial Average, a top appears to have completed.

The violation of the lower trend lines formed today on the S&P 500 and Dow Jones Industrial Average and the Dow Jones Industrial wedging pattern since yesterday's lows suggest prices will move lower tomorrow. The extent of this decline and the wave pattern that unfolds should help us determine the position of the market with more confidence. We are looking for a break of the trend lines that were in place since 12/18 to confirm that primary wave [3] is underway.

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