Friday, November 13, 2009

Our wave 4 low played out well, but...

I'm still concerned about the ability for this market to reach it's target. Monday SHOULD be a telling day. Why? Because if we are in a 3rd of 5th wave, then a gap up is likely a strong trending day to new rally highs is in order. But if we got a failed 5th wave today, then Monday will likely give us a gap down and strong trending day in the opposite direction. Of course, maybe we are looking at a complext wave 4, and if that is the case Monday will be pingpong ;-).

But here is why I'm concerned.

- Today's move off of the wave 4 looked good until just after 9:30 PST when the market hit a massive air pocket and dropped like a rock. Was it impulsive? Monday will tell.

- We have weakness in the strong sectors (xlv-healthcare and xlk-technology) with their breakouts possibly being 'failed' if we have a strong move below today's low
- A move below last week's low would in effect confirm the non-confirmed highs in some of the indices creating A LOT of selling.

- the USD/EUR pair looks like it may have put in an impulsive move to the downside. Any follow through next week would send the markets lower...a lot lower.

But until price confirms the possibilities, here is what I'm looking for on Monday (in order)

- A gap higher with follow through to new rally highs (wave 3 of 5).
- A ping pong day consolidation in a complex wave 4
- A gap down with follow through to the downside (wave 3 of 1 of primary wave 3).


  1. This comment has been removed by the author.

  2. Agree with most of your analysis. But what i wanted to say was that your 1 min chart... somewhat looks like the 'weekly' spx chart. Not exact, but close enough for me to recognize it.

  3. You're right, after I looked at it, it does remind me of the whole move down off of the 10/07 top...

  4. If scenario 1 happens and we go to new highs on wave 5, what is the larger count?

    I assume that would mean we are still in P2, but I don't know where in P2 that would put us.

  5. Bob,

    In my Wed post I put up my larger count showing an extention of P2 with an initial target of 1128. This is the next swing high target. Should we reach it, then I'll evaluate the next swing high depending on the move down from where ever it actually starts. There is a count that puts the next swing high as the end of P2, but as of right now it would be the next A wave target.

  6. Holy cow! That's a lot of w x waves! If wave 4 alternates it will be a very simple wave indeed.

    I hope we go down on Monday so we can put this one behind us.