Tuesday, March 30, 2010

Market Probably Finishing up a Double Zig-zag

TOP COUNT: Double Zig-zag




The market did top last week, but unfortunately it has moved more sideways than down since that time. In doing so, it has allowed the internals of the market to "recharge" for perhaps another push higher. The top count this evening is a "double zig-zag" which is the result of two ABC corrections that collectively are labeled as WXY as you can see from the 10min S&P chart above. This count seems to make the most sense as I would think the market still should decline a bit further to alleviate the overbought condition and lack of momentum currently, along with the head and shoulders formation shown in the chart above. If correct, we should shoot downward in a strong wave C tomorrow to below 1161.48 to complete wave Y. From there, we will most likely find a bottom soon and rally to new highs on the year. If the market rallies strong tomorrow with good volume and strong NYSE internals, then the short term bears better go back into their caves and allow for the market to continue higher for the foreseeable future.


1st ALTERNATE: Bullish Count




Today's extension of the 5 wave rally higher made the nice 5 wave advance I labeled yesterday look a little more mutated today. This is why it has moved to second place on my list of probable counts. This count suggests a much more modest decline will occur tomorrow which will be followed by a roaring wave (iii) higher. If correct, then the rally should be accompanied with strong volume and and NYSE internals. So it might be wise to watch the amount of NYSE advancing stocks and volume sticks on the smaller time frames to see if strong buying interest is entering on a rally tomorrow becuase it will probably result in eliminating the short term bearish WXY correction mentioned above, and putting this bullish wave (iii) count as top choice.


2nd ALTERNATE: Triangle




The least likely count is the triangle scenario which would have us moving sideways in a tight range for another day or so before thrusting upward to a new high on the year. This is less likely simply because wave "b" is quite wide and makes it an awkward and therefore unlikely triangle. But no rules were violated so it remains a possibility. If we don't get a decisive move tomorrow based on the above two counts, then this count will probably move up to be my top choice.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

1 comment:

moola said...

Todd, you are a very good market technician. It is good to go along with the market rather than to fight it at this stage. The correction will begin when least expected.Moola

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