Saturday, January 25, 2014

Friday 1/24/14 Market Update

Due to the sell-off, the alternate'' wave count from the last update is now the primary option.  This action has simplified the overall picture, reducing the amount of possible wave counts.  The only uncertainty when describing the multi-year impulse wave in the chart above is when it began, in October or November 2011.  If it started in October, the question then is did the 4th wave underway begin 1/31/13 or 1/15/14.

A downward correction since 12/31/13 seems to imply a flat down is underway with an impulse 'c' wave lower unfolding since 1/15/14.  If instead 1/15/14 was a temporary top, a zigzag-family correction lower must be unfolding that might be part of a larger sideways correction like wave 'a' of a flat or triangle.

The short-term waves suggest a complete impulse lower since Wednesday.  Wave [iii] is (barely) longer than wave [i] so [v] is limitless and there is also the possibility of a crash-like scenario if alternate''' is correct.  But look at the structure of wave [v].  It has a well-defined core and symmetry, so I believe any gap lower Monday, barring an extreme open of  20 or more points down, would just be an extension of [v], the stretching of a rubber band if you will.  Even if [v] is actually a first wave, there should be a bounce soon due to the subwaves within it.

While it does not impact what I do, there is also the fundamental argument that there was no news to justify the 1808-1790 sell-off; all the news came before it on Thursday and Friday AM.  This works well with an impulse as described in the chart above.

If the market bounces higher than ~1808 and the level holds, either the market put in a low and alternate' or alternate is correct, or the Wednesday-Friday decline was a first wave within a larger decline.

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