Monday, May 23, 2011

Monday 5/23/11 Market Update

The view presented in Friday's update has not changed. Within an area of choppy, corrective looking action since the last recovery high, a zigzag since Thursday's high may be complete as marked above.

The gap to only slight new lows today at this stage of the decline is not an overly bearish move. In fact, this is the action that is often seen at bottoms.

The most natural count for the action this month is an ending diagonal. Because of the length and width of the sell-off and the size of [B] in relation to previous [B] waves since March 2009 (seen here), a running flat following (1) that is complete or nearly complete is the best view. If this is incorrect and the market does not plunge, the view will still be bullish in the shorter term. It is very difficult to visualize impulsive action to the downside. In addition, the market looks oversold.

Regardless of the next month of action, there should still be new recovery highs later this year.

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