Wednesday, September 8, 2010

Wednesday 9/8/10 Market Update

Stocks moved higher today nearly exceeding last week's high. Because prices are not falling quickly from the 61.8-78.6% retracement area of the last sell-off, the wave [x] of 2 triangle count discussed here the past few days is not the primary count. This relabeling should not be a surprise after today's action, even today's open.

As the impulsive labellings become less likely, the triangle labellings become more likely. As time passes wave (d) is showing greater proportionality to the previous triangle whereas a second wave higher is becoming more out of proportion to its 1st wave counterpart.

There have been a number of broken guidelines since the 8/31 rally which helps identify the rally as a correction. The unpredictability of corrections is what makes their waves so hard to identify. The structure of the rally has been relabeled using yesterday's alternate--it was mentioned in yesterday's update that this count would be used if the rally continued.

In the coming days prices should reach the low to mid 1110s to complete wave (d). Before that move occurs, it looks like a corrective b wave must complete. So far b looks like a sideways correction but its structure is not clear. A sudden drop into the 1080s is possible, but it should be the foundation for wave c of (d).

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