The market continued lower this morning, right on track with my two top counts posted yesterday, although the internal weakness of this market suggests the alternate count for a "flat correction" is most likely not valid anymore. The 2nd alternate (bullish) has been completely eliminated. The primary count suggests this current decline today is wave 'v' of '(i)'. But looking at the internals of the market I'm not so sure of that anymore. As you can see above, the NYSE has 92% of its stocks trading to the downside, 93.7% of volume to the downside, and only 14 stocks in the S&P 500 trading higher today. This is a very weak market, across the board selling, with the bears firmly in control. This is not typical of a 5th wave which should have more moderate internals that diverge from the very weak internals of wave 'iii'. Today's internals are more like a 3rd wave. It's POSSIBLE that what I have labeled as wave 'iv' is actually a wave 'ii' and we're in wave 'iii' right now. So that's something to consider.
The action of the market later today and into the close will be important. If the market can rally back strongly and improve the above internals on solid volume then it's quite likely today's decline was in fact wave 'v' as charted above, and that a fairly large wave '(ii)' rally will be underway soon. If the market closes on, or near, its lows on the day then I might have to rework the count to make it much more aggressively bearish in the short term.
More later.
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.
3 comments:
It looks like the tape is currently testing the underside of the trendline connecting the May 6 low and last Friday's low. A failure of that test could trigger a big move down - if that happens, it would suggest that Friday-Monday was wave (ii) of minor 3 and we are now in wave (iii) of minor 3.
POSTED BY ROB:
Hey Todd,
I just tried to add a comment to your latest post, but my computer won't let me (I'm pretty sure it's a pop-up blocker problem on my end).
It looks like we are currently testing the underside of the trendline connecting the May 6 low and last Friday's low. We've been hovering around that line for the last couple of hours. If the test fails and a big move down ensues, it could be strong evidence that wave (ii) of minor 3 was Friday-Monday and we are now in wave (iii) of minor 3.
Just my two cents. Could you please post it in the blog comments if you think it's helpful?
Thanks as always for your excellent posts.
Rob
What do you think now since the close?
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