Wednesday, December 1, 2010
Minuette Wave (b) Almost Complete; Euro Correcting
Short update tonight, I don't have much time.
Internals today were very strong and suggest we'll get some follow through at least tomorrow morning. The wave count suggests the follow-through will be limited though. I discuss more details of that below. Volume was not that impressive, but looking at the up volume on the NYSE, and the 484 advancers on the S&P, I'd say the bulls were firmly in control today. But we've seen the bulls and bears exchange blows back and forth the past couple weeks, so I'm not jumping on the bull train just yet. In fact, the rally we saw today has been expected for quite a while. Just check out my prior posts.
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The wave count suggests that Subminuette wave y is near its final stages. Today was probably a Submicro wave (3) within Micro wave ((C)). So tomorrow, and perhaps Friday, we should get some sideways and up action to complete Minuette wave (b). From there, we'll see if the triangle remains on track. Minuette wave (c) should decline modestly, and stay above the Minuette wave (a) low in the 1174 area. I expect tightening sideways action in the market into the new year.
We can maneuver in and out of the short term ups and downs all day, but the key is the bigger picture. Looking at the decline from 1227 it looks choppy with several overlapping waves. This means it's a correction. Just like the decline from the highs this April, we don't want to get too caught up in a Primary wave ((3)) outlook simply because we want it to be a Primary wave ((3)). Only a break below 1129.24 would get me thinking about this even being a possibility. But right now, the decline from the highs looks choppy, and regardless of how Minute wave ((iv)) unfolds, the bottom line is that EWP is telling us it's all part of a correction. Trade accordingly.
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The euro appears to have found support at the 1.30 area and might be in a corrective rally phase for a few days. With it possibly being in a Minor wave 3 down right now, I wouldn't get too cute and play the upside here in my opinion. The larger trend and path of least resistance is firmly down. The weekly RSI is still far from the oversold territory it usually gets into before establishing a major low. But some shorter term RSI data suggest the euro is oversold so a short term pop may occur for a few days. As long as it stays below the Minor wave 2 high I have posted above, I would short rallies.
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.