Monday, August 8, 2011

Monday 8/8/11 Market Update

The market extended to the downside today drawing out another impulse wave lower. This action is in line with the bearish larger picture discussed in Friday's update, but the impulse that began 7/22 now appears to be incomplete.

The rationale behind labeling an impulse complete was largely due to the very oversold condition of the market and a good extended count to support the panic trading. In fact, it still seems hard to believe the market will continue the plunge lower before a relief rally, but it is fairly clear that the impulse wave count is once again incomplete.

Please note that there are still many possible counts to describe an impulse since 7/22 with just two options above. The first favors a high degree of symmetry and the second "or" count takes into account the very oversold condition of the market while breaking a few guidelines. If the strong waves lower last week are used as extended 5ths, the termination of the impulse can be expected sooner.

The trend is clearly presently in the downward direction. A complete zigzag since March 2009 is now almost certainly complete, but a variety of options are now present.

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