Saturday, February 8, 2014

Friday 2/7/14 Market Update

The wave count from the last update remains unchanged.  The rally that began this week should continue until the last all-time high is tested and then probably exceeded.  This move will almost certainly conclude the move higher that began 10/4/11.  After that impulse wave concludes, the market should begin selling off to a level that will be at least proportional to the large 7/7/11-10/4/11 decline.  The alternate wave count in the chart above is not a bad option and it will not be clear which option, the primary or alternate, is correct until the market sells-off in earnest.

The bearish scenario at this time is a termination of the multi-year impulse higher realized at the last recovery high followed by an impulse down, then a flat higher as alternate' depicts.  The 'b' wave of the flat is very large in relation to 'a' however which is not typical in a flat (or a second wave).

The short-term waves also do not work well with alternate' (or alternate'') as an impulse wave higher since the Wednesday low is not the choice that comes most natural; there is not good balance to this wave.  [5] seems to be moving higher in a simple fashion (as waves tend to do) without much subdivision where its core has not yet been seen.

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