Monday, May 16, 2011

Monday 5/16/11 Market Update

There was a quick morning sell-off, a bounce, and an overlapping decline. Because wave ii above looks like a fairly clear flat and the surrounding downward waves have a corrective appearance, the count is an ending diagonal that began at Thursday's high. Ending diagonals are not common however, so the count is not a high probability. Moving under 1326 essentially invalidates the count.

Since Friday's update, there are a few changes to the count for simplification, but there is nothing profoundly different. Wave 2 of (3) above is getting quite wide in relation to 1 and a descending triangle pattern can be seen. On the other hand, the market is oversold enough for a bounce to begin.

The best alternate is a sideways correction underway that began in mid-February. It is not likely that a significant high is in.

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