Wednesday 2/12/14 Market Update

There is no change to the wave count from the last update.  The waves today look corrective and suggest more upside to come.  The action is a bit wide, but a continuation higher seems most likely given the action today and other possible wave counts for the rally higher since 2/5.

A flat higher as alternate' depicts is possible, but this pattern is a bit odd looking.  A complete impulse higher since 2/5 also does not look complete.

There can be a zigzag higher underway since 2/5, but [4] already looks sufficient in size relative to [2].  These corrections also alternate between sideways and sharp corrections which is typical.

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.

Wednesday 2/5/14 Market Update

The primary wave count has been changed to an alternate wave count from the last update.  The reason is that the waves lower since 1/15/14 now look considerably more corrective than impulsive.

If an impulse lower has unfolded or is unfolding, there are a number of broken guidelines within this wave.  For example alternate' above has a small, momentum losing core "3rd of a 3rd" wave and a very large but shallow, sideways wave [ii].  If an impulse down is complete since 1/15/14, there are serious proportionality problems with its corrective waves.  On the other hand a double zigzag down as described above has no problems whatsoever.

The rally ensuing from today's low looks like more than 5 waves for an impulse.  This suggests a sideways correction since the Monday low is incomplete or the market is drawing out a larger upward impulse that began today.  Because of proportionality, a sideways correction underway for several more days, as that option seems to call for, does not work well with the primary wave count.  The Tuesday-Wednesday drop surprisingly works best as an impulse wave lower, not a zigzag pattern.  Therefore it is most likely that [4] is complete to the downside.

Note: Friday an hour before the open is the monthly jobs report.  I would expect a positive reaction from this as the market seems poised to have some large up-days in the very near future.