Monday, February 7, 2011

Monday 2/7/11 Market Update

There is no change to the count since yesterday's update. Today's gap and rally is almost undoubtedly a "3rd of a 3rd" rally. The only question is of what degree is this "3rd of a 3rd" wave?

Due to the loss of momentum of the larger rally since 1/28, a completing wave (v) of [v] is a good count. On the other hand, wave (iv) is well out of proportion with (ii) indicating that the core of [v] may have been today. Given that [i] and [v] will be equal at 1336 which is not far off (and [i] and [v] will be well proportioned in time), an extending wave (v) of [v] is the count. There should be a quick snap lower after (v) completes if the count is correct (extending 5th waves are typically followed by sharp reversals; consider wave i of (v) in the first chart above for instance).

Nothing has changed in the longer term. As a note, 1333 should act as resistance since it is 2 times the March 2009 low of 666.79.

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