Tuesday, October 5, 2010
I just wanted to start out with this chart, another one I have been following for sometime. The self-similar patterns that are playing out are very interesting. I haven't had a chance to play with the larger pattern but if it does play out, it may favor the bears but that won't be for a bit, at least not until the middle of next year or more.
Ok What a day. That daily MACD was turned away from crossing down today. Those who took a position at the 1131 test yesterday were handsomely rewarded.
My top chart above shows a pretty nice looking 5 wave impulse with subwave v touching the center channel. Is this leg complete? Sure looks like it can be.
My 3 min chart that I posted at the EOD shows that we may have completed fives of that v in an ending diagonal. That diagonal may not be complete though because I believe the 5th wave of the ED as it is drawn on my chart is larger than 3. So it may still be in progress with one more little pop higher. However, given how powerful that move was today, it is possible we may still be in an extended wave 3.
We may also only be in a subwave 1 of wave v. We now have several support levels below to work with should we see a pullback beginning tomorrow.
Many are talking about the "long term" bear trendline that is drawn off the 1576.09 high (10/8/07) and 1219.80 high (4/26/10) that may provide some resistance. I show it in red above.
It is certainly something to watch. However, no one has talked about the other long term trendline that connects the 1576.09 high (10/8/07) and 1440.24 high (5/19/08). I show that in green.
We had broken through it and backtested it a while ago and not up against the red down trend line.
If my count is correct, we may see minuette (ii) pullback only to see minuette (iii), which would be the 3 of 3 gap over this red down trendline.
Here's a chart I have been watching for some time now and have posted here frequently. If this impulse up is not complete, that center channel looks like a nice target. That area is approximately 1185 if the market shot straight up to the trendline.
This chart I have posted a few times and it is located under my quick links under interesting charts(was option 6 under that link). P3 bear followers need to be aware of this possibility, especially if we are forming a flat for wave 2 or B white.
If that is the case, we retest the Apr 1200 high and then sell off in 2011 to form C white down either by 1032 (C=.618*A) or 956 (C=A).
All this is still longer term and things can change obviously. Just something to keep in the back of yer minds when trying to figure what may be happening other than a disastrous P3 (which I won't say doesn't exist because anything is possible but I think there are a few other things going on that may explain where we go better).
Here's another chart I posted in the past that indicates we may head back to 1200-1250, which also would fit in with the flat scenario just above.