Monday, September 13, 2010

Monday 9/13/10 Market Update

The gap higher today had good breadth and blew through the 1114 target. It also resembles a "3rd of 3rd" wave higher". For these reasons, there is a new count proposed above. It is very similar to the last, but features a running triangle wave [x]. Resistance near the 1130 area should stop the advance.

(c) of [x] counts better as an impulse than a zigzag; consider the alternation of (c)'s and iii of (iii)'s waves and the subdivision of iii of (c) above. iii is also longer than i. These are all typical features of an impulse wave.

There was a strong reversal following the truncated wave (c) which makes sense. Also note the strong reversal following running flat wave W of (XX) in the above daily chart.

Finally, note that the rally since 8/31 is far more characteristic of a zigzag than an impulse. When considering proportionality of waves, a zigzag in the current position is most proportional to flat wave [x]. In addition, a double zigzag since early July makes little sense in the larger context, especially given the very clear looking wave [w] flat (clear on the smaller charts, see this blog's archive).

Given the options, a completing wave [y] looks like a high probability. The [x] wave triangle idea is now an alternate. If wave 2 is nearly complete, its width makes sense as marked above.

A closer view of wave (c) of [y] is above. Stocks should grind higher for a few more days (perhaps the remainder of this week) before a sharp decline begins. Following [3], it appears that there will be two more attempts higher before wave 3 begins. 1115 should hold price action tomorrow but this is not a requirement.

I will be on vacation this Thursday through the following week. 9/26 will be the next regular update following the Wednesday 9/15/10 update.

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