Friday, April 2, 2010

Thursday 4/1/10 Market Update

Prices reached new recovery highs Thursday, suggesting wave (v) of [iii] higher or a prolonged wave (iv) sideways correction is underway. Any wave (iv) double sideways correction still underway is difficult to label while maintaining wave proportionality. A completed triangle charts well, is the most simple of the options, and is favorable within the context of the larger count. As a result, a breakout higher following this correction is the primary count. See the chart above for a detailed wave count.

If wave (v) is underway, expect a strong day Monday that begins with a gap higher. This should complete wave iii of (v).

Please note that the waves unfolding over the previous days have not been clear. In addition corrections are unpredictable. For these reasons, there is no obvious count at this stage. A sideways consolidation taking place over the past two weeks is fairly clear however.

A completed wave (iv) triangle works well within the larger count. This can be seen in the chart above; wave (ii) and (iv) alternate (wave (ii) was sharp, wave (iv) was sideways) and the impulsive rally since 2/12 and 2/5 still looks incomplete.

Some targets for (v) are shown above. 1st and 5th waves tend to be equal in price terms, however a 4th wave triangle can also be used for revealing a 5th wave target. The widest part of the triangle (in this case wave b of (iv)) is extended from the the end of the triangle to arrive at the target. Prices can move significantly beyond this level, so this is just one possible level. In the case of wave [iii], wave (v) equals 61.8% of (i) at a nearly identical level as the triangle target. So a good target for wave (v) and hence wave [iii] is ~1195.

The wave (iv) triangle apex is a time target for a possible turning point in stock prices, possibly the completion of [iii]. Even if [iii] does not complete at this apex, compared to (iv), wave (v) should take a fraction of the time to complete. If wave iii of (v) is really underway, half of (v) is already complete.

The larger view shown above remains unchanged.

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