Friday, June 25, 2010

Market continues lower...

Sorry about the late post...but here is what I see for today.

We got our first acceleration gap of this move down and it happened at a great spot as the market opened below the trendline, which was one of the confirmations I was looking for. Let's take a look at this 15 min chart:

On my previous 5 min chart (yesterday's post), I had already marked my subminuette (green) wave 4 based on the move that happened during the globex session. But looking at the cash chart and especially the 15 min chart, that 4th wave never registered. So I moved that wave 4 to Wednesday's high and my minuette wave 4 to yesterday's mid day rally. According to this updated count, that would put us in our final minuette wave 5 that has a target of 1060.

Those who have been following me for a while know that I like to use the 34 SMA to distinguish between wave structures of higher degrees of trend. In other words, a wave can continue to subdivide until you get confirmed close above the 34 SMA of the chart you are using. Right now, I'm tracking this wave on the 15 min chart. You can see that the 34 SMA was challenged a couple of times but rejected each time. We'll know we've started minute wave 2 once we get a confirmed (multiple bars) price close above that.

Once we get our wave 2 confirmation, here is what I'll be watching going forward:

- A wave 2 target in the 1090/1095 area. There is the open gap from yesterday that should get closed.

- I'm expecting this minute wave 3 to subdivide significantly. I may modify degrees of trend based on future price action.

- If we're going to get trend change on a Friday it should happen early in the day.

- Just as the 34 SMA on the 15 min chart has shown resilent on the way down, I expect our 34 SMA on the hourly chart to hold the wave 2.

Best of luck!
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