Friday, August 5, 2011

Friday 8/5/11 Market Update

The count remains unchanged since yesterday's update with the market action moving right in line with expectations. The market rebounded strongly after completing what should be an impulse since Wednesday's high. The low today should mark the termination of the impulse that began 7/22.

As explained yesterday, the extended wave [v] labeling describes market action well. Following this should be an impressive bounce with at least one huge up day. It will not surprise me if the S&P 500 gains 40 or 50 points Monday.

The expectation is for a new multi-month rally to new recovery highs with the waves clearly bullish. The sideways structure since February, the structure of small waves in mid-June to mid-July, and the impulse since 7/22 with its fear- or panic-driven extended 5th (most ending diagonals or extended 5ths signal a change in trend) are the bullish waves of note. On the other hand, this is just a probability and the view will become more bearish if the coming bounce shows weakness.

Have a nice weekend.

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