Wednesday, December 11, 2013

Wednesday 12/11/13 Market Update

While not invalidated, there was a modification made to the primary wave count since the last update which moved the [C] wave ending diagonal completion to the high reached this week Monday.  Regardless of this, the probability of a complete significant top actually increased since the last update while the many alternate options still remain.

While the options are overwhelming, the message that the market has sent the last few months is simple: there are several upward zigzags within the action that imply a market that has very limited upside potential in the coming weeks or months.  If the primary wave count is not correct, there can essentially only be a complete or incomplete ending diagonal higher within the rally or a downward sideways correction since the October high.  Note that every option contains an ending diagonal higher unless there is a sideways correction underway since the October high which is probably the worst alternate count.  Ending diagonals are obviously trend-reversal patterns usually terminating patterns several fractal degrees larger than the one they are contained in, so the market should be completing some fairly significant wave.  An impulse wave since a late 2011 low is the most natural choice of terminating significant wave given the daily chart above.

During the past several days, a clear 3 waves higher nearly made a new all-time high, but price pulled back in dramatic fashion.  An impulse wave lower is likely complete or nearly complete at significant support.  A downward flat following the November high is possible, but this only makes sense if an ending diagonal higher since 11/7/13 is underway.  Remember that the 2nd and 4th wave corrections of ending diagonals are seldom sideways patterns.

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