Wednesday, August 3, 2011

Wednesday 8/3/11 Market Update

The count remains unchanged since yesterday's update. The market took a dive lower to complete what should be wave (iii) of [v] of an impulse that began 7/22.

The rebound today was sharp for a 4th wave, but it was following an extended 5th wave down and an extended 5th of 5th wave down. This sharp rebound makes sense. In addition, there is also a wedge pattern higher today which is bearish unless prices quickly continue higher.

Even though wave iv of (iii) was not reached, the 50% retracement level of (iii) of [v] nearly was, so the market should move lower soon if the count is right.

Prices are well oversold at this point and a sideways correction since February is still the preferred view given the wave action over that period. Given that [v] appears to be extended for reasons discussed yesterday, a sharp, soaring rally should begin soon. It is possible that the longer term count will become more bearish during the course of that bounce depending on how far prices move.

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