Sunday, May 22, 2011

Friday 5/20/11 Market Update

At this moment, the futures are suggesting a gap lower Monday for action under last week's low tomorrow. Given this, the retracement percentage, and the width of the pullback since the last recovery high, a wave 2 of (3) correction underway is an alternate count.

(2) may be a running flat. There is very choppy action and some wedging since the last recovery high; it is hard to deny the corrective nature of this move. A wave C of (2) ending diagonal in this position makes sense. Perhaps [v] is underway, but it is not clear. Passing below 1306 means [v] is not underway and some other ending diagonal count may be in play.

There is still good reason to expect higher prices given the zigzag-looking advance to new highs since mid-March. The count since March 2009 can be seen here.

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