Saturday, June 4, 2011

6/4/11 - EOW Update [7:15 PM Update]

[7:15 PM Update]
Must not forget about this pattern. It appears a backtest of the neckline occurred on Friday. Can the bears finally follow through or will this be a repeat of July 2009 and June 2010?

EOW Update

It goes without saying that it has been a pretty bearish few weeks for the markets. The following are things to consider among others:

1. The market closed below a long term trendline (connected by the 3/2009 and 8/2010 lows)
2. Price continues to trend lower within a descending channel
2. The market continues to close below key moving averages; 20 and 50 SMAs, 13 and 34 EMAs
3. Those same MAs have crossed below the 50 SMA.
5. A possible EW count highlighting a nested 1-2 down. I still don't feel too confident of this but technically it is valid.

But even with all this, I still believe a larger degree running triangle is playing out and this is still my primary count.

Minor 4 Triangle Option

If this triangle is correct and assuming that wave [c] is complete, three things stand out to me:

1. Notice that Minor 4 alternates in time with Minor 2. Minor 2 was approximately 2 months and in this case Minor 4 may end up being 4 months.

2. Wave [c] has retraced wave [b] almost nearly 62%, a very typical retracement level within triangles.

3. Wave [c] certainly qualifies as a complex wave here. Though I have a potential bear count, this wave structure still "looks" way too corrective to me.

Technically this count is ruled out if the market drops below the wave [a] low of 1294.05. However, I would say if wave [c] retraces [b] greater than 78% then the odds that this is a triangle decreases greatly.

60 Min
The possible counts for wave [c]. Either [c] completed Friday or we may see one more leg down after a quick bounce.

Minor 4

The other sub-options for Minor 4 are still in play here.

The Bear Count

This bear count still technically applies and if correct, a major sell off should be in store this week.
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