Sunday, December 12, 2010

Friday 12/10/10 Market Update

It is good to be back from my trip. Regular updates will resume at this time.

In Thursday's short update, the favored count was "wave [v] underway". The market rallied again Friday supporting this view.

Regardless of the overbought condition of the market, the wave pattern to the upside looks incomplete in the very short term; consider a possible wave [iv] triangle above with impulse wave [v] following.

Following what was likely wave B, the market has been on a mission to reach new recovery highs to complete what should be an impulse since 11/30.Even if the larger view is not correct, a correction should be coming this week following this impulse. The pullback will probably begin tomorrow or Tuesday at the latest.

Note how the Elliott channel of C is barely containing price action. Momentum is waning and there is difficulty maintaining the trend.

In relation to wave A of (Z), C will be 38.2% of A at ~1245. Other targets for C are available here, but they are much higher and do not work well with the short term impulsive structure since 11/30.

The market structure (and alternate count) on a daily chart can be viewed here. Notice the alternation between the intermediate degree zigzags in the linked chart; one impulse shows clear subdivisions, the other does not. In other words the impulses of the zigzags do not resemble each other which is typical.

So far wave (Z) works well as a zigzag with alternating legs. This alternation and the inability to count the July 2009 - January 2010 rally as an impulse or 3rd wave are the main reasons why the more rare triple zigzag count has been chosen to describe the rally since March 2009.

blog comments powered by Disqus