Friday, January 16, 2009

Stock Market Declining in 5; Jan. 16, 2009

Yesterday's sharp rally is typical in a bear market, but appears to be short lived. With the decline this morning, it has created a clear 3 waves up on all the major indices. It could unfold in a more complex correction by rallying more, but it will be just that, a correction. The above chart shows a possible 5 wave decline unfolding. It's even possible to count the drop into yesterday as a 5 wave decline, which would have the rally yesterday into this morning as a wave 2 rally. But that would mean we're in a wave 3 down now and the market internals and movement does not support that. So I favor the above count for now.

Nothing has changed in my forecast. The market is on its way to breaking 740, the low of 2008.


Michael K. said...

Do you think this correction rally will last til Obama step into office at 12 pm on 1/20?

Todd S said...

See my latest post "large strong rally phase underway"