Wednesday, September 9, 2009

We should see some more weakness tomorrow

After looking over the charts from several different perspectives, I can't help but come up with a completed 5 wave structure at today's high. The sell off that began at the top also sports a 5 wave structure (on the 1 min chart), so that means we should see some follow through tomorrow morning. If we don't see follow through to the down side, then the only other pattern I could come up with is an extending wave 5.

If we do see weakness tomorrow, then I expect the 1019 area to hold. If it doesn't, then we are likely looking at a failed wave C and the beginning of primary wave 3. If it does, then the market is looking at solid shot of the 1050-1070 zone.

I do want to mention that the amount of bullishness out there seems perfect for a top. Certainly with the gov't telling us the recession is over couldn't be a better time for a primary wave 2 top. But until price action confirms it, we still march up. Watching the USD is likely the key to the turn around. The low it put in today could very well be near its low too, which would spark a selloff in the equities. Watch it closely.


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