Saturday, January 26, 2013

Friday 1/25/13 Market Update

There is some change to the short term count since the last update, but a top should be near if the longer-term primary count is correct.

1/17 appears to be the point of recognition wave of C.  Supporting this is the fact that the subwaves of C seem to work best as described above.

1500 was achieved this week, the original target for C.  There is a very mature rising wedge pattern with the primary Elliott wave count still being a strong one and better than the alternate counts above.  A longer term count is available here.

In my opinion sentiment has been more positive now than it has been for the entire rally since March 2009.  The only question seems to be centered around how high the market will go, not whether or not the market will pull back.  There seems to be nothing in sight that could shake the market and this is being used as evidence to support a continued rally.

When there is no popular fundamental evidence to support a decline in the market, and the consensus is that a sell-off is not possible, that is the time to be fearful.  The conditions now seems to suggest a sell-off is imminent with the wave count suggesting the sell-off to be a strong and deep one.  The highest probability at this time is 1150-1200 in the S&P 500 by September 2013, about a 20-25% drop.

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