Tuesday, October 19, 2010

Tuesday 10/19/10 Market Update

There was a large sell-off today that began with a gap lower. This sell-off should be a complete zigzag wave that likely completed wave [ii] of C of (Z). There was a near 50% retracement of [i], but lower prices are still possible if [ii] is a double zigzag with complete wave (w).

If the count is wrong, a zigzag lower setting the stage for a larger advance is still the best count. If there was not a zigzag down, look for a continued sell-off with "3rd of 3rd" wave coming tomorrow or Thursday.

The above trend line was broken to the downside, but this was an expected activity mentioned in yesterday's update. The advance should continue tomorrow.

If the count is correct, wave [iii] should not make new recovery highs if an ending diagonal is unfolding as described; wave [iii] should not be longer than wave [i]. The market seems to be on course for making a double top.

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