Wednesday, August 26, 2009

A rather disappointing day...

Wednesday's have been great range expansion days lately. Unfortunately, while today had lots of movement up and down, there was not a directional bias to be had. And since we were unable to take out Tuesday's high or Monday's low, we go into Thursday with little to work on.

The move off of the high has not been awe inspiring if you are a bear. While there were quick bursts of selling, it seem to dry up as quickly as it started. That leaves us with a few different patterns to consider:

Most Bullish
This gives us an A move down, B triangle, and C move down to end at our trendline. This pattern gives the bulls the greatest upside and most likely to attack 1050 next week.

Bearish with Another High
This pattern works out to one large 4th wave triangle that should finish with a high in the 1040 area before it reverses.

Immediately Bearish
This is where you get the most creative with the waves. It is a series of 1-2s with irregular flats in between. While sometimes these creative patterns end up working out, the odds always favor the simpler patterns. Under this scenario, we should blow right through the support trendline and move to 1000 tomorrow.

Where do I lean? I like the Bearish with Another High the best only because it seems to give us all the ingredients for a primary wave 2 top. Otherwise, I think we go to the Immediately Bearish scenario because I don't think there is enough bullish strength left to get to one more high, but we'll see. Best to your trading!

1 comment:

  1. There is not much participation in this mkt I think, as soon as it hits the edges nobody so much as tries to initiate any form of expansion at all. It must be the goldman bot passing the ball around with the jpm one all day... or maybe just goldman passing it from one hand to the other while taking commish from you and rebate from the exchanges with a third... cant make up my mind between the first two..but i like the idea that whichever way it looks first is a headfake