Monday, August 1, 2011

Monday 8/1/11 Market Update

An alternate count similar to the one presented in yesterday's update became the primary count when the market's strong open did not hold. In other words, wave (iv) of [iii] appears to have been a running flat with wave [v] completing today.

An impulse since 7/22 should now be complete. The May-June decline still looks like 5 waves down considering the wave action at the June lows, so a Feb-June flat is a good count. Following this, a June-July upward flat appears the be the best count also due to the action near the June lows and the 6/23-7/7 clear 5 waves higher. A clear 3 wave pullback followed during 7/7-7/18 with a possible 5 wave rally ensuing as an alternate count. A 5 wave collapse works well as the 'c' wave of a July flat or 'a' wave of a July alternate count zigzag since 7/22 still incomplete.

As warned last week, the large retracement of the last multi-week impulse higher makes it unlikely that a second wave lower has unfolded since July.

The market has been trading sideways since February, about half of a year. The count suggests a base is now complete with future recovery highs likely. Pessimism has been clear and strong the past week which supports the count and the view that there will be a continued bull market since March 2009.

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