Saturday, December 12, 2009

The market sided with the bulls...

on Friday as we got our 5th wave up ending right in the zone (previously defined as 1107-1112) with the high coming in at 1108.5 during market hours but closer to 1110 during the premarket. The market then reversed and got to as low as 1101 before it trended up the rest of the day. This price action limits the bearish counts without a new high and clearly defines the key levels for both bulls and bears.

Bull Count:
Monday brings us a 3rd or C wave, and that usually means a gap up at or above key resistance at 1112 to start the day off. Now, what will be important to watch from there is how the market re-acts. If the market is able to hold the gap, then look for new market highs with a target of 1131.

Bear Count:
Should we gap up on Monday and immediately sell off and close the gap, then that would be our signal that wave 3 has begun. Confirmation comes as the market is able to break key support levels with the most important one being in the 1100/1103 zone. Of course, should we break 1100/1103 before we test 1112 that would also be bearish.

Best to your trading.
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