Wednesday, March 31, 2010
Sideways Action Suggests a Triangle is Unfolding
In reference to my least likely triangle count I put up yesterday I stated that, "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." Well today it looked like my top WXY count was well on track with "decisive drop", but as usual, the market was bought up from that dip and the market continues to go nowhere overall. But into the close there was more selling, putting the market back down near the lows. Today was the last day of the quarter, so some flip-flop was probably expected. Unfortunately, the sideways contracting nature of the market is looking more like a triangle, which I'm moving up to be my primary count, and the WXY count is my alternate count. Also the fact that the bullish 2nd count mentioned yesterday is looking very unlikely also lends itself to the triangle being a high probability at this point. Triangles only occur in 4th, X and B waves, and so this would mean we're in some degree of 4th wave. Once the triangle is complete, it will result in a thrust higher that should be sharp and strong, but then very quickly be completely reversed to at least the apex of the triangle. So the result of this triangle will result in a sharp rally and immediate complete reversal.
A break below 1165.77 would severely weaken this count, and a break below 1161.48 would cancel the triangle out altogether and put the WXY back as my top choice.
My alternate count is the WXY combination correction I mentioned yesterday. It's pretty self-explanatory in that if this is correct it means we're in a wave c of Y down that should break to at least below the 1161.48 level before bottoming, but most likely will get to the low 1150s before doing so.
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.