Sunday, April 11, 2010

Friday 4/9/10 Market Update

The count remains unchanged since Thursday's update. As detailed in the chart above, sideways corrective wave [iv] of A of (Z) of [2] appears to be underway.

Following the impulse higher that began the morning of Thursday 4/8, a shallow, sideways correction ensued. This may be triangle wave b of upward zigzag wave (b) of [iv], the most simple way to describe the consolidation. A correction this shallow is not likely a 2nd wave; not even 38.2% of the previous wave was retraced. A 4th wave correction within the impulse since 4/8 is a better possibility, however it is quite out of proportion with the second waves that helped initiate the rally.

A zigzag correction to new recovery highs implies a larger correction or ending diagonal is underway. Because impulse wave (v) of [iii] from 3/31 to Tuesday 4/6 appears to be complete and the ensuing correction was much smaller than expected for wave [iv], a sideways correction is the most likely unfolding pattern. As a result, the brief correction Tuesday 4/6-Thursday 4/8 was likely wave (a) of [iv], where [iv] is an unfolding flat or triangle. A wave [iv] double is also possible, however the 4/6-4/8 slide charts best as a double zigzag.

Some targets for wave (b) of [iv] can be seen in the chart above. c is 78.6% of a at ~1203 and equal to a at ~1207. 1200 may be reached following a gap higher Monday, but prices should begin to slide following the new recovery high, perhaps in a similar manner that was seen 3/25. If further consolidation follows the high, the corrective nature of the advance since 4/8 should not change; a double zigzag or slightly different single zigzag are possibilities. [iv]'s pattern (flat, triangle, or double) can be determined only after this slide begins. For wave (c) of an unfolding flat or triangle, good targets are the low 1170s/upper 1160s or low 1180s, respectively.

A 30 minute chart is presented above. The intermediate view remains unchanged since Thursday's update. Note the obvious divergence on the RSI and MACD indicators to name a few. The extreme overbought condition of this market prevails.

Note that the lower a-c line of (iv) (the lower gray channel line above) may provide support for (c) of [iv], particularity if it is an unfolding triangle.

The larger view illustrated above has not changed. This alternate is still a possibility but remains unlikely.

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