Tuesday, December 30, 2008

Could it be an impulse!?

Today we got our anticipated follow through and then some and then some more. After looking at the price pattern I have to say that we could have the makings of an impulse wave. We need one more shallow down and up move to make the pattern complete. If we go straight down, then I think we end up w/ another ABC and we should be breaking to SPX 840 in the near future.

Let's assume we get our down up move tomorrow morning. Then the question is: was this impulse wave a 1 (as in SPX 960 here we come) or is it a wave A (as in we'll probably kill this rally around SPX 900). The pullback should be our key. Wave 2's have to challenge the new trend. That is why they are deep retracements. In this case, the Bulls would begin to question the CIT and the Bears would start dreaming of all their fat profits. We should get at least a 61.8% retracement and I wouldn't even put out a move greater than 78.6% if this is a wave 2. B waves on the other hand don't have to be deep and can be as shallow as 23.6%. On the 5 min chart I marked the areas where I thought the B wave might end or the wave 2. For a strong bull case, they should be prayijng for a deep retracement.


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