Wednesday, March 25, 2009

The waters are once again unclear

Well, today looked good up until the last 30 min of trading when the market reversed and the trendline held on the close. There are two most likely scenarios I'll be watching for tomorrow:

- scenario #1: We finally break through our overhead resistance and make a run for the top of the channel. This would put us in the 860 range to end this first larger A wave. (top chart)

- scenario #2: We immediately start down with our 'c wave' to finish off this larger B wave, breaking the trendline and sending the indices down. I have become less a believer in this scenario watching the futures strengthen in the overnight session. (bottom chart).

Hopefully tomorrow will make things more clear.


  1. Hi Rich,
    watching your count, i see some fundamental mistakes, hope my ideas will help you:
    1) I see a big a'-b'-c' structure of (A), now we are in a', which is not finished yet.
    2) a' consist of a''(672-803), b''(873-765) and c''(from 765 to 8xx)
    3)c'' looks like LDT or zig-zag
    4)c'' should be min 62% of a'' = 846+ min target
    5)c'' broke the line, which is only possible if it is LDT
    FIN) I thing we are in the last 5 of c'' LDT or in c''' of c'' - so or so we have not finished the UP-Move, but may-be in 1-2 days it is over

    Hope it will help you

  2. somnus, all critiques welcome. Now, I guess what I'm unclear is how your count is materially different than my top chart. According to EW rules, c wave have to be 5 waves. Now, it is possible for a c wave to be an ending diagonal triangle but not a leading diagonal triangle, not sure if this is what you meant. Either way, we both believe more upside. When I do an EW extension for my 'y wave' of .618 of the 'w wave' I get a target of 851, and since that is very close to the top of the channel, I have that as my target. Either way I think we are saying the same thing. However, if we break today's lows tomorrow, then my 2nd scenario would play in.

    Best of luck!