Friday, January 22, 2010

1/22 - EOD Update

Where's The Right Shoulder?

Wow! What a day today! The evidence continues to build for the bears. It was an interesting day in the CiL (See the chatroom link below).

This is my take for now. The waves are not quite complete yet. I think 1072 is a good target for minute [i] because there is an open gap down there. But keep in mind 1085 will be a strong support level to break first so we must keep an eye on that.

Watch out though because (iii) could extend since it's the most common wave to extend. There is reason to believe this may be the case because by the looks of today, the move down should be considered impulsive. An impulse wave normally consists of 5 waves.

I only show 7 waves so far, which would imply there is some type of correction in play, but again, I think it is safe to say the move down today is not corrective.

Based on EWP, pg 32, 9 waves would indicate there is an extended wave within the structure. It could be wave 3 or 5. Either way, I'm looking for 2 more waves to complete this impulse lower.

If wave (iii) or (v) extends, then 1085-1072 may be exceeded.

Taking the 1150.45 high and a possible target of 1072 low for minute [i] a 50% retrace is 1114. Price broke well below the 50 day moving average. And where does that now sit? 1114! I think any retrace next week may find it difficult to get back above this.

Something else to keep in mind, Cobra mentioned in the past that there are something like 16 (lost count)open gaps down below. We may be heading down to fill them all.

My bottom chart is an update of the Bearish H&S pattern I'm following. The blue H&S target is near 1080 (very close to 1072). If price plays out as highlighted, this would then setup the red H&S piece.

If so, the bounce would be minute [ii] towards the 50 day MA and previous blue neckline which should now act as resistance.

I should be posting more over the weekend. Check back later!!


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