Friday 3/7/14 Market Update

An impulse higher since the 10/4/11 low still appears to be unfolding where new all-time highs in the months ahead are very likely.

So far there are only 3 waves higher from the February low.  This wave can be the first wave of an ending diagonal, a zigzag, or an impulse wave higher developing.  A more complex option is a double zigzag developing but nearly complete.  The important thing to note is that all options point to a continuation of the bull market in the months ahead.

An ending diagonal higher is possible, but this is not a pattern typically seen.  As discussed in the last update, a zigzag higher (or the more complex double zigzag option) works best with the technical picture of the market; the market would need to put on quite a demonstration of strength for the next month if an impulse higher is underway and not even half-way complete to regain the momentum that has been lost during the last few weeks.  The catalyst of the jobs report on Friday was a chance at regaining some momentum higher, but instead the market put in its 3rd consecutive indecisive trading day in a row with price again closing nearly unchanged.

In the short-term, no matter the wave count, the market correction looks incomplete since the last all-time high on Friday.  The reason is the low, sideways action that is the rebound from the day's low.  A weaker option is the complex flat+zigzag double since the Tuesday high.

Wednesday 3/5/14 Market Update

There is no change to the long-term view from the last update.  Given the structure of the rally since 2/5/14, wave [4] still appears to be underway as a sideways correction.  A swing lower is expected, but the rally that began in 2009 is almost certainly incomplete.

So far there is a 3-wave advance higher since 2/5/14.  It would be extraordinary if this rally develops into 5 waves because of the shallowness of the correction the past few week and that fact that a number like 2000 would be expected at its termination.  In other words, it seems like it would take an impossible amount of momentum to yield an impulse since 2/5.

A zigzag family pattern higher is far more likely.  A single zigzag is the most simple and preferred (especially since (A) was a double zigzag), but if the market continues to flirt with new all-time highs Thursday and/or Friday, a double zigzag (alternate'') will become the favorite option.

An ending diagonal wave [5] could be underway since 2/5 (alternate'), but keep in mind, as always, that these patterns are just not that common.

The waves today were confusing, but even if alternate'' is correct, there should be a test of 1869 again to give proportionality between the 'b' corrections of a double zigzag higher from 2/5.

Friday 2/28/14 Market Update

Wave [4] still appears to be underway as a sideways correction with corrective wave (B) nearly complete.  [5] may be underway, but price should still approach 1825 before any meaningful advance resumes.

The primary wave count with ending diagonal C of (B) of [4] looks excellent.  The best alternate wave count on the scale above appears to be alternate'.  This option has a somewhat strange double flat congestion area with other structural concerns and states (2) of [5] is underway.  It remains to be seen if the C of (2) pullback to complete (2) would be enough to recharge the market for another soaring advance for (3) like was seen in February.

Alternate'' has some structural concerns and retraced almost nothing, so it seems to be a bit of a stretch.  It also complicates the picture since February.  The action it calls for moving forward is basically the same as the primary wave count (one more new all-time high), so there is not much point in considering it.

The next all-time high, or near all-time high reached by the market should prove to be an excellent shorting opportunity.  This level could be achieved as soon as the open on Monday.  If [5] is underway, price should still reach at least 1825.  But far lower prices are most likely where [4] should be underway as a flat or triangle.