Saturday, April 30, 2011

Friday 4/29/11 Market Update

For reasons explained below the labels have been increased in degree by two levels, but the count has not changed since yesterday's update.

The market continues to draw out impulse waves higher since the 4/18 swing low. If the core of intermediate impulse wave (3) was Tuesday 4/26, the market should still continue higher as the impulse winds down. This is a good count, but considering the sub-wave labellings that are required for it, the still winding up wave (3) is preferred. An extending 5th wave within (3) or 1 of (3) is unlikely.

The count presented here may seem hard to fathom, but this is exactly the type of action seen since Autumn 2010. Grinding action higher makes sense in a market where the VIX is sitting near the low 15 level.

In addition, the moment the markets closed at 4:00pm EST on Friday, the futures immediately made a quick spike higher to reach and then close (at 4:15pm EST) several points above Friday's previous high. This type of action is an indication that the rally is incomplete and a possible gap higher is brewing for Monday's open. A gap higher that is not filled but generates new momentum in the market should be the core of (3) at this stage.

The wave structure since March 2009 has not changed. The long term view can be view in this this post.

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