Wednesday 3/12/14 Market Update

The primary wave count has now changed to alternate'' 2 from the last update.  Even if this wave count is wrong, it is extremely likely that the wave higher that began 2/5/14 is not yet complete.  It remains true that the bull market that began in 2009 has at least a couple of months of time remaining before it completes.

So far there are three waves higher since the 2/5/14 low.  There is a sideways correction underway since [3] or an impulse higher is underway since 2/15.  When considering the subwaves, a double zigzag higher from the 2/5 low is only an alternate count, alternate', due to the lack of proportionality between the 'b' waves in its zigzag legs.  The short-term chart below strongly suggests a new all-time high coming soon, thus a zigzag higher since 2/5 is not likely (unless the impulse higher developing since the March low is wave 'c', but this seems a bit complex).

The structure lower since the Tuesday high looks like a clear zigzag.  Really the entire structure down since Friday is essentially impossible to label as impulsive.  I suppose this whole move could be wave 1 of a leading diagonal lower, but this seems amazingly complex and in a pattern that is very uncommon.  A better option is alternate': alternate with [a] of Y at the Friday high then [b] completing at the Tuesday AM low followed by an extremely short and truncated wave [c].  This is a strange and poor option because of the proportionality problem between [a] and [c] however.  Far more likely is a test of the last all-time high.  That level should not stop price because of the already large size of the pullback since the last all-time high in relation to the impulse higher since the March low.

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.