Sunday, May 9, 2010

Friday 5/7/10 Market Update

The count at this point remains uncertain, but in my estimation there are two options: primary wave [2] completed 4/26/10 or wave B of (Z) of [2] bottomed 5/6/10. The latter option, with B identified as a double, remains my preferred count (but not by a large margin) due to reasons of wave proportionality. A chart of this count can be seen above.

It is possible an impulse down since the 4/26 high has completed or is winding down, however this does not chart well for a few reasons. First, an extending 5th wave lower identified by the 5/6 crash makes sense, but the corrections preceding it are questionable. Consider the correction from 5/4 to 5/5; 4th waves usually break out of acceleration channels and second waves normally retrace far more of the preceding 1st wave, yet neither one of these can be satisfied above.

Second, the larger count required to satisfy a wave [2] top looks very peculiar. This count has been labeled as an alternate in the daily chart below and was previously suggested here. A zigzag since 2/5/10 would also be bizarre.

The reasons suggested above make a completed wave [2] undesirable but not impossible. The exact intention of this market is not clear and there is no obvious count at this time.

A more detailed view of recent market action can be seen in the 1 minute chart above. A more recent view is in a 1 minute chart below.

An extended 5th wave works well as labeled.

The E-mini is a remarkable 20 points higher at the moment. The triangle idea suggested in Friday's intraday update will not make sense if the current levels can be maintained through Monday's open.

A few charts of previous crashes can be seen below. All charts are daily charts on a linear scale. Although interesting, I do not believe the crashes or especially rebounds alone can be used to determine the future outcomes.

Although similar looking, last week's crash is not nearly as severe. Far more of the preceding correction was retraced in 1930's crash.

The rebound following this famous crash did not look impulsive at first.

A brief but strong reversal followed the dip in the summer of 2007.

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