Tuesday, August 2, 2011

Tuesday 8/2/11 Market Update

The market suffered a heavy loss today. The count since yesterday has changed slightly to allow for an extended 5th wave since Monday's high.

There is now noticeable lack of symmetry to an impulse that began 7/22 which brings about some question to the count. But the market is now not "oversold" but "very oversold" using a variety of metrics. In addition, breadth on 2/27 of 0.09 is still by far the most extreme of the entire down move; today's breadth was 0.27. The next highest after 7/27 is 0.50 on 7/29. The VIX is also negatively diverging since 7/29.

The expectation is for an impulse wave since 7/22 to complete soon. The best count suggests wave [v] of this move began Monday 8/1 with (iv) likely beginning soon. Panic selling will change this view, but the market does not look poised for this in my opinion.

The unemployment number is coming out Friday 8:30am EST which could prove to be an important turning point. Perhaps the market will continue modestly lower into Thursday before a rally begins.

The market is still in a good range for a sideways correction since February. The wave action during that time is still bullish.

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