Wednesday, February 19, 2014

Wednesday 2/19/14 Market Update

There is some change to the short-term wave count from the last update, but a wave [4] correction still appears to be underway.  Momentum higher is clearly being lost and today the market put in a correction as large as any seen since the rally began on 2/5/14.  This is important because the size of corrections help determine what options exist and which are better than others.

Breaking down the waves higher since 2/5/14, there only appear to be several options for that rally; an impulse higher is still developing with its core not yet seen, a complete impulse higher, and a complete double zigzag higher.  The momentum required for the first option seems impossible.  A complete impulse higher is better, but the structure of the wave is a bit strange; it would make the most sense as a first wave since an all-time high was not seen and its first wave was so large (although it seems very stretched), but it seems very large and very strong to only the first wave within [5].  A complete wave [5] is better than a complete wave (1) of [5].  A double zigzag counts well, makes better sense within the larger picture than the other options, and could even be the first wave of [5] if it is an ending diagonal (a fairly rare occurrence however).  It is the best option.

Putting this all together, in the short term lower prices are likely coming even if the primary wave count is not correct.

Wave [4] appears to be underway as a flat where the February low will be tested, but a triangle or something more complex is possible.

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