Potential 5 wave completion straight ahead...

...well another rally faded to new lows today, and it looks like we may be at the end of our wave 1. Key support begins at 1008, and I would look for a wave 1 low somewhere between there and 1000. I really don't think the market will get to 980 since it appears that our wave 4 was put in higher on the price charts than I thought it would.

Anyway, here are some charts. Wave 2 should break the hourly 34 SMA (currently at 1063 and falling about 1.5 pts an hour) to confirm that wave 2 has begun.

We're extending...

Based on the price action, I don't believe we've finished our minute wave 1 of minor wave 3. The bottom line is I'm expecting this wave 1 to finish in the 980/1000 area before we have a retest of the 1040 support line in a wave 2. I'm looking for continued downward prices (possibly choppy) on the way to that area to create plenty of divergences on the daily chart.

Best of luck!

Tomorrow should be the high...

Today's price action appears to be consistent with a B wave triangle, which means tomorrow should be wave C of 2. My target for the high was modified slightly based on the triangle pattern, but it is still sitting in the same spot.

An open below today's end of day low would mean that we are in something more bearish, and I would expect follow through to the downside on any gap down. I wouldn't be surprised to see a gap up though, a failure to close the gap (wave 2 of C), and then a push to the wave 2 target throughout the remainder of the day.

Best of luck!

Weekend Update

Friday brought prices right to the front edge of my wave 1 target zone. There are a few different ways to count the price action on its way down depending on how much you consider the globex session etc. In the end though, we should have a wave 1 low (I'm labeling it as minute) and we should be in the wave c of 2 tomorrow (assuming the selloff on Friday holds).

This gives us a wave 2 target beginning at the 38.2% retracement (1092) and all the way up to the 50% retracement (1099). However, the energy that is being built up could be released at any time and there is no guarantee of an easy short entry.

The support line on the chart is where prices will accelerate to the downside once that support line has a confirmed break. From there it should be a quick drop to 1040 where some buyers will try and catch the knife, and after bouncing around a bit, price should really go.

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!

So far we are in an impulse...

...and I'll go ahead and keep that count until proven otherwise. Right now we only count 3 waves down, but a lower low tomorrow would put in 5 waves. We have good ratios between each wave at the appropriate degree, so that also gives me confidence in the count.

Since we haven't had an acceleration gap down yet, I would love to see one tomorrow. Let this run down to at ~1070, and then that gives the market a perfect target for a wave 2 before this thing really gets going. I know there are lots of counts out there calling this a B wave, and I mentioned today that I needed to see some more price action to the downside to start filling in the rest of the needed boxes to count this as an impulse. We are now only one more lower low to complete that requirement.

Should we move above the 34 SMA (hourly) before hitting a lower low, then we finished a B wave. Currently that SMA is at 1109.25 and falling about 1/2 pt per hour at the current slope.

Best of luck!

Tomorrow is critical...

...and you may ask why. Well, today's price action may have signaled that we just finished a wave B instead of in the beginning of minor wave 3.

First, I'll show you the 5 min chart.



#1 - we have what appears to be a very obvious triangle pattern that formed and completed today.

#2 - the size of the triangle does not match any of the other corrective waves we've had, so I cannot match it with a previous 2nd wave.

#3 - triangles that are not 4th waves are B waves.

#4 - today's price action ended at critical support: ~1090. The market has consistently shown us over the past weeks that this is a key level.

#5 - if today's price was the low for this move, then waves a & c would be equal.

Now, does this mean that there can't be a bear count here? Something potentially more bearish? Sure, and some times what appears to be an obvious triangle later appears to be a series of 1-2 counts. So this chart shows that potential.



#6 - we have yet to have an acceleration gap during this whole move down off of the top. If we are in an impulse move, tomorrow would be the perfect day to gap down and not look back until we at least get to the 1070 area where the market would want to work off some of the move before heading lower.



Best of luck out there. Be ready to get long if the market tips that way.