Thursday, August 7, 2008
August 7, 2008; Triangle Possibility
Well the market made a slight new high like I thought it would on the day, but then rolled over much lower eventually. The initial drop today looks like a 3 wave affair which is not consistent with EWP's impulsive moves with the larger trend. NYSE breadth ended very weak at 80% of all volume being to the downside, but it's still short of the 90%+ I was looking for. With this decline today, it brings the possible B wave triangle into play. See my chart above. I trace out the projected path of the market over the next few weeks. A break of 1234 in the S&P would eliminate the triangle scenario and increase the odds heavily that wave 3 of (3) down is underway. Until then, either this triangle scenario should trace out, or the combination correction (a-b-c-x-a-b-c) I posted earlier today will play out.
Tomorrow should prove an important day. Even though it's Friday, any follow through with the selloff today will hurt the odds of the triangle pattern being underway. A rally tomorrow will increase the odds of the triangle being underway.