Monday, January 3, 2011

Monday 1/3/11 Market Update

Nothing has changed since Friday's update. Wave (v) of [v] should be nearly complete which should conclude the larger rally since March 2009.

As expected, the action higher today was likely a "3rd of 3rd" wave, the core of an impulse that began Friday after (iv). There should be upside follow-through tomorrow but the expectation is a top Tuesday or Wednesday.

The rally since late November is amazingly extended, but again, the trend is still higher. Given the waning momentum of the rally however, at least a correction should be coming soon. The reason is that the market seems far too overbought to support higher prices for an extended period and the market is lacking the typical structure seen before an extended move higher. The market is generally decelerating which is bearish especially on this scale. In other words, the strong action today is likely part of a blow-off, not the middle of a larger "3rd of 3rd" wave.

For those interested, a larger view of the count can be seen here.

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