Wednesday, November 20, 2013

Wednesday 11/20/13 Market Update

There is a change to the wave count since the last update.  The primary wave count states that a significant top was reached Monday.  The next best option is a pullback underway that will find support no lower than the November low.

The reason for the change in view is due to the size of the correction unfolding since the last all-time high.  In addition to this, today price encroached on the core of [c] of Y above which is something a 4th wave usually does not do.  There is also no sideways/sharp alternation between [b] and the correction underway.

A sideways correction following the October high is possible, but this would be unusual as the 'b' or 'x' wave reached far above the high of the 'a' or 'w' wave, respectively.  A better option is an ending diagonal underway since the November low.  But then there is a proportionality problem between the September-October and October-November corrections as expressed in previous wave updates.

The primary wave count has no major issues and waves look well-proportioned to one another.  This is the reason why it is the best choice, even though ending diagonals are not common patterns.  If the wave count is correct, the November rally of three waves might have created a major top that will not be exceed for years to come.

There are two impulse waves lower, the last of which might be complete.  Reaching 1796 might give a flat pattern higher in a bearish larger picture, but it would improve the chances of new all-time highs significantly.  In other words, lower lows and lower highs will work best with the primary wave count.

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