Sunday, January 9, 2011

Friday 1/7/11 Market Update

The market moved under 1262 Friday in an impulsive manner. This increases the chances that a top has been seen as suggested was possible in Thursday's Update. This seems most likely but is not a high probability.

The sharp bounce that followed may have been a second wave. It must be nearly complete for the count to remain valid. If there is a pullback in the morning hours then a surge above Thursday's closing levels, there is a good chance the count is incorrect.

If the count is incorrect, look for wave [iv] to be completing. This idea seems a bit questionable however given that [iv] cannot be a flat (the downward action since Thursday cannot be an impulse given the wave crossing). To make use of a zigzag from Thursday-Friday implies [iv] will be wider than one would expect given the size of [ii]. This seems to be the best alternative however, even with proportionality considered.

If an impulse has completed since late November, the rally since March 2009 may be over. The rally, no matter the scale, is running out of momentum to the upside.

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