Monday, July 6, 2009

Wave 2 Should End Tomorrow

Today's rally off of the low was only the end to minute wave 1/A. It hit precisely in my target for a bounce and we are now in our minute wave 2/B. Assuming we have more upside left after today's last minute rally, I'll expect the rally to die somewhere between today's close and SPX 915. The 34 hourly SMA should hold back any rally (a minor close above but shouldn't be more than 3 bars). It will be the next move down that will be the telling sign of a move to new lows or just an orderly correction.


  1. Would the globex overnight/morning high at 898.25 count as the bare minimum needed for a wave 2?

    I'm skeptical, however, it would be fitting that it'd screw many bears over and indicates a truly weak bounce (fitting, too, for a crashing wave 3 to unfold, somewhat like what we saw today, however...this truncation -- albeit that's a premature assessment -- or double-bottom at 882 so far has me uncertain of the path ahead of us).

    Love the site, too! Been a leech for a few months now and am so glad to have your commentary (along with Mole @ EvilSpec and Mortie @ BostonWealth, I get my EW fill AND some -- my point being you're top-notch, amongst the best out there IMHO!)

  2. Zach - we actually met the bare minimum at the close yesterday exceeding the 23.6% retracement. There are a couple of options to consider:

    (1) we never finished wave 1 and we are subdividing making yesterday's bounce a more normal wave 2 (near .786 retracement of what would be wave 5)
    (2) we are putting in some kind of flat corrective move and we'll see one more move to the 900 area.

    Now, we do have a breakdown in the technology sectore with the nas100 clearly breaking down. My biggest concern right now is the relative strength in the financials. Whatever the direction, the market is going to make it hard for everyone to make money except those with the strongest convictions.

    And thanks for the encouragement. I hope you keep coming back!

    BTW, I have posted a couple of times over at BostonWealth (as Rich), but I only do only once a week or so over there and try to keep the posts with different content.