Sunday, December 19, 2010

Friday 12/17/10 Market Update

In Thursday's update, it was stated that there should be an upside continuation of Thursday's action. There was an impulsive upside thrust again Friday that confirmed this view. The rally since Thursday now resembles a zigzag which was also expected.

For reasons of proportionality between waves [ii] and [iv], zigzag wave (i) of ending diagonal wave [v] should be complete, as opposed to a flat or some other sideways correction underway since Wednesday. This is the primary count, but prices can continue higher in an incomplete wave (i) double zigzag. The zigzag shown above is surprisingly clear, so something somewhat unexpected should have a higher probability of occurring. A wave [v] ending diagonal is still likely however, in fact it is more likely than it was Thursday given the price action Friday.

A completing ending diagonal wave [v] of C should drag on for at least most of this week and may not complete for several weeks. A wide move with limited upside potential like this will work very well with the larger view; C will be better proportioned to A without reaching levels well beyond the 61.8% 1228.74 retracement level.

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