Monday, September 19, 2011

1:20 PM EOD Update

Last Friday's EOD Update called for a most likely end to the rally that started on 9/12 to cap off wave (a)/(w). From there I expected a pull back that would target 1190 to complete wave 3/c/y of (b)/(x).

Today the market tagged 1188.36 before rebounding. So far so good.

Intraday, I was expecting a possible wave x bounce but noticed that the internal count would justify a 1-2 i-ii bounce off the 1188 low. Please see the 1 min chart below for this count. So far so good there to.

So bottom line, the primary blue count has the market working on wave i of (c)/(y) of (Y)/(C) ahead of the FOMC meeting.

The alternate count has the bounce off today's low as a wave x of (b)/(x) [follow blue count] and a wave y down is to follow (see the RUT chart below as to why this may be possible).

Even with the RUT's bearish head and shoulders potential, I favor the primary (obviously or it wouldn't be the primary)  for the following reasons:

1. 15 min MACD centerline cross
2. The market's move out of the base channel accelerated and so far has successfully backtested the top of the base channel (See the 1 min chart below on this) and remains within the acceleration channel.
3. The market bounced at 38% retracement of wave (a)/(w), which would satisfy a proper retracment for wave (b)/(x).

So until a lower low is made, I stick with this. We should know more by tomorrow.

Blue Count - Primary


5 Min

1 Min

RUT - 15 Min Head and Shoulders


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