Tuesday, December 21, 2010

Tuesday 12/21/10 Market Update

The market made a new recovery high today, not unexpected, but 1256.51 was broken to the upside invalidating the short term count provided in yesterday's update. After carefully considering an impulse with "3rd of 3rd" wave higher today, the alternate provided in yesterday's update, now seen in the chart above, appears to be the most probable. This view is based on proportionality between the corrective waves surrounding the gap today as well as the proportionality between the motive waves within wave C.

Just as a note, an ending diagonal is composed of corrective waves. Corrective waves are difficult to predict and label, so there is no high probability count at this time.

The rally since late November continues in a market that is quite overbought and having difficulty maintaining momentum. The most simple view of the rally is an impulse as shown above.

An impulse wave C following impulse wave A works well with the larger count. Even if the alternate count found here is correct, an approaching significant top makes sense.

Note: There will be no updates from 12/23 through 12/28; I will be out of town.

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