Sunday, April 18, 2010

Friday 4/16/10 Market Update

The sharp sell-off Friday crossed many waves. Because of this development, the count has changed following the 3/31 wave (iv) of [iii] triangle breakout; the intermediate view of this is above. It now appears that wave B of (Z) of [2] is underway.

The wave [iv] that results is quite small but does alternate well with wave [ii]. Waves (iv) and (v) of [v] are also abbreviated and surprisingly small. Because of this, various RSI and MACD divergences were not clear or visible using the scale of a 30 minute chart.

A more detailed look at the updated count can be viewed in the 5 minute chart above.

The collapse Friday is likely an impulse wave lower. See the 1 minute chart above. The shallow bounce higher at the session lows looks like a crystal clear zigzag correction. The choppy waves that followed may be a flat correction preceding a final zigzag higher. This would in turn complete a larger corrective wave higher. Also possible is a completed 'a' wave zigzag higher that is part of a larger correction other than a double zigzag, such as a triangle or flat.

In any case, the corrective nature of the rebound implies more downside ahead. Considering this and the size of the sell-off since the Thursday peak, a correction within wave B makes sense.

The degree of the sell-off has been suggested as a minuette degree wave, 2 degrees apart from minor degree wave B. This labeling is speculation that wave B of (Z) will be larger/more complex than a single zigzag lower.

The larger view can be seen above. Waves B of (W) and B of (Y) were both flats (expanding and running, respectively) so it is wise to assume that B of (Z) will not be a flat. A sharp correction (zigzag family pattern) would alternate nicely with the previous sideways B waves. It appears that a zigzag is already half complete, so a half complete wave B wave with almost unnoticeable retracement of A does not make sense. A double zigzag is a far better option and seems to be the the best choice when considering the history of wave [2]. Any correction is possible however and there is no rule defining what B will be.

The primary wave [2] top suggested in the 30 minute chart is a reflection of this alternate count suggested some time ago.

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