Thursday, June 10, 2010
What Does Today's Monster Rally Mean?
Yesterday's post called for a large downside drop today in a wave 3 at multiple degrees. Well a big move DID occur, but to the upside unfortunately. This was a complete surprise to me. The internals of the move were very very strong making me believe this is not going to be just a one day event. Unfortunately there is not that much room to the upside left for the S&P before it breaks above 1105.67, the start of its 5 wave decline. So I'm not confident that level will hold. If it doesn't hold, then it's still possible that wave (ii) is still unfolding and that the current push higher is a wave "c" of a "flat" correction. This would mean a slight push above 1105.67 before topping and reversing. But I don't like this count much at all since the current rally of the past few days does not look like a "C" wave at all since they are usually composed of sharp impulsive 5 wave moves. Not always, but usually. Also, this would have wave (ii) become quite long and wide, especially in time, compared to wave (i) that it would start to lose EWP's guideline for the "right look". Although it's not likely, it's still possible, so a break above 1105.67 would still put this alternate count on the forefront. But for now, I'm expecting 1105.67 to hold, and perhaps some more rallying or flat action tomorrow and maybe Monday before the next leg down. Notice the MACD is already diverging bearishly on the rally. So perhaps the rally won't last as long as I think.
Side note: I posted the 3rd video of Prechter on the top right of this blog if anyone's interested.
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.