Monday, September 13, 2010


Zahary in the comments section pointed out the wave 2 rule violation which I have questioned previously. Wave 2 black retraces beyond the start of 1 black by just .13.

I apologize for this oversight and thank you Zahary for pointing it out. This helps us in identifying what to expect from this structure starting from 8/27 at the 1039.70 low.

We have 5 waves nearly complete, which either represents the end of this move up (if using a bear count) or just wave 1 (at a higher degree). Either way, once this leg is complete, the chances of a pullback of at least 50%-62% is great because if this were bullish, we would at least expect this type of pullback for a wave 2. If bearish, then of course the bear count sends us back much lower.

8:20 AM
I added the Fib extension for wave 1. Wave 5 = 1 at 1130 and would intersect the mid channel.

8:00 AM
I was in a hurry to get out of town last week that I completely ignored that ascending triangle. I was anticipating a completion to a wave 4 but at lower levels.Nevertheless, we were looking for wave 4 to complete before a push higher for wave 5.

Everyone has been keeping an eye on that 1130 level. Based on this new channel, that looks like a decent place to complete wave 5. The big question there is will that only complete wave 3 (black) as I have labeled? I think if anything, we will have to see what the market does at that level.

It may not hurt to take some long positions off since we will be at the top of the range here shortly. It appears the daily chart may form a hanging man candle should we close at the top of today's range so something else to be mindful of shorter term.

But as I posted last night, we cannot ignore the weekly MACD bull cross. I have been watching for this cross for sometime now.

Weekly MACD

The market has recaptured the yellow quarter channel after breaking out of that downward channel in red.

Congratulations to those who have held long since the 1040 dip. GL to all others.
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