Tuesday, June 30, 2009

Minor Wave B is over

With today's impulsive move off of the high and the break of the prior low pivot, I am nearly 90% certain that minor wave B is in, and we have started our minor wave C of intermediate wave B.

Let's examine the facts:

1. Rejection at the 34 SMA. This happens frequently enough that the first wave of a trend change gets rejected at the 34 SMA as it happened on today's hourly chart. The wave 2 should retrace enough to close above the 8 SMA, which it did today. The retracement also met the minimum expected: 38.2%.

2. The 10 day average true range is sitting at a spot that caused bulls problems throughout this bear market. The market is itching for a volatility breakout, and those are generally associated with downside action as fear is stronger than greed.

3. Over the last several months, the high or low of the month has been identified in the first trading week of the month, and often in the first 1 or 2 trading days of the month. This would fit nicely with tomorrow's high being the high for July as was very closely that of June noting a change in the monthly trend.

I look forward to seeing how wave C unfolds. My extreme low target for the week is 844 and that is where I will start to take profits and sell covered puts/calls depending on the security. 815 is my median target for wave C with the .786 retracement being my maximum target near 730.

There was nothing really scary about the move off of today's lows, but a break of the lows should come tomorrow and with it should go July's high.


  1. Overall, your counts looks pretty similiar with eurodollar and same waves would fit for it.

    Something ZigZag anyway - pretty boring products actually in recent weeks or months; both, SPX and Eurodollar.


  2. Hey Rich, we've broken 930...whats your take on whats happening? Does this signal perhaps that we have not completed minor b? Am wondering if i should exit my shorts.

  3. How does todays movement play into your analysis?

  4. iv - certainly wave B was not over - gotta love the market to prove you wrong when the odds are in your favor. I'm once again watching the line in the sand at 940.

  5. suresh, everyone needs to manage their positions according to their trading plan. I'm watching the 786 retracement of wave A for a decision on my shorts.