Saturday, June 14, 2014

Is this a Top?

The continued sell-off on Thursday has allowed us to eliminate some wave counts in the medium and short terms.  The longer term options remain unchanged however.
We are monitoring a wave higher that began at the 2009 low that should be either a single zigzag or impulse wave higher.  Months to years more of additional price action is needed to better determine which option is correct.
There are various impulsive possibilities since the wave [C] of b low.  If the market is drawing out an impulse wave higher from (4), the best way to fit this into the larger picture is by having an impulse higher from [E] to A of (3) where [2] to [3] is its 3rd wave and [4] to A of (3) is its 5th wave.  In the 5th wave, the structure of the individual subwaves is acceptable but its 4th wave crosses under the core of the 3rd wave with near wave crossing and its 5th wave is truncated with the ensuing correction essentially not existing for months.  These behaviors are not typical so this wave count is not preferred.
There can be an impulse wave higher from [4] to (1), but its 2nd wave (A) and 4th wave ((i) of [i], not drawn) are much different sizes.  So this possibility is also unlikely.  If there is an impulse wave higher from the (3) low underway, there still must be an impulse wave from [4] to (1).  Therefore this option is also unlikely.  It also has a complex impulse underway since (3) which certainly does not help its standing.
A sideways pattern underway from the wave (1) high is a reasonable option if the wave is used as a 4th wave and paired with [C] that is a 2nd wave.  This is in an impulse wave underway since [A].  The other sideways possibility from (3) is adding significant complication and not improving the situation for any wave count so it is a weak option.
An ending diagonal higher from [4] or B of (1) remain clearly the best options because they have no structural problems.  An ending diagonal higher beginning at (2) is not preferred because it requires a weak impulsive from [4] to (1).

The sell-off this week following the Monday wave C high is now clearly larger than any corrective waves from B.  The single zigzag option discussed last time from (4) to ii of (a) of [w] also has a small 'b' wave in relation to the current sell-off.  It is now likely that an impulse wave that began at B has terminated.
We are left with two possibilities.  The first is a double zigzag possibility from (4) where 'w' terminates at (b) of [y] of B and 'y' is underway since B where its 'b' wave is currently underway.  The second is an impulse wave higher from the (4) low where its 4th wave is unfolding.  Both of these call for the correction underway to extend for a greater period of time so better corrective wave proportionality is obtained.  Getting under wave [iv] support will generate some concern for these wave counts.
The double zigzag possibility from (4) is not the best option due to the added complexity and the fact that (c) of [y] looks most like a 5-wave pattern.  The impulsive option is better, but as discussed above following the first chart, this possibility is weak due to the requirements of the waves preceding it.

There is an interesting character to the sell-off since C.  The only two options that stand out here are a triple zigzag or an impulse wave lower still developing.  The triple zigzag is 'w' to b of (a) of [ii], 'x' to [ii], 'y' to [B] of w of (ii), 'xx' to (ii), and 'z' to i.  The reason for only these two possibilities is that (i) is shorter than [i] and i so there cannot be a complete impulse wave down.  Also the corrective waves [ii] and (ii) are so large in relation to the other corrective waves that this limits the possibilities significantly.
There can be an impulse down beginning at [ii] where (ii) is the 2nd wave and ii underway is the 4th wave but not without a major problem.  Wave ii has retraced nearly all of the core of i, going deep into wave i territory.  It is not typical of 4th waves to retrace so much.
The bounce following the wave i low has a somewhat corrective nature where the advance to the high just after [W] does not work well as 5 waves and (B) of [W] is small relative to [W] to (B) of [Y].  So a set of 1-2 waves higher does not make a great deal of sense, nor does a sideways correction from (A) of [W] to (B) of [Y] (wave (A) of [W] territory was barely reached).

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