Sunday, November 4, 2012

Friday 11/2/12 Market Update

The wave count has not changed since the last update.  There is still upward wedging, but on virtually all scales the waves look bullish.  A double zigzag from June to September is possible but there is a lack of proportionality between the two actionary waves within it.

The waves following the last recovery high look clearly corrective.  This is due to the vast upside retracement of all downward waves the the 3-wave characteristics of all downward waves.  A possible alternate top is a truncated one in mid-October, but a truncation missing a new high by this distance is not typical.  In addition, the wave down following works better as a zigzag as shown.  An upward flat correction may be complete, but this pattern lacks proportionality between its subwaves.  This flat can be a second wave, but it is more shallow than is typical for a second wave.  The best alternate count is perhaps truncation followed by a double zigzag down still incomplete.  This double zigzag down would be a second wave withing a large impulsive structure still winding up.

There is a wedging pattern lower that seems to work best as an ending diagonal.  Following the low of this pattern last week is either an impulse or two impulses higher before a sell-off.  Both an impulse or zigzag family pattern higher since the low can terminate an upward correction, but considering the longer term action, the primary count remains unchanged.  Also keep in mind that ending diagonals often come at significant or noticeable tops or bottoms, so if one did unfold it may be setting the stage for a larger rally than has already been seen.

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