I shouldn't be surprised at this since I've come out and called for sharp selloffs the past few months and probably each time the market has made a fool out of me. Looks like my bearish calls have become quite a contrarian indicator. I'm going to change that though.
With today's rise above 1322.88, the move down earlier this week is a clear 3 wave drop. So the simplist interpretation, which is what I usually follow, is that it was just an ABC corrective decline and the market should be resuming its uptrend now.
But not so fast bulls, the bearish count is still intact technically. The 3 wave decline may just have been a very small wave ((a)), and now we're in wave ((b)) which took the form of a "flat correction". Once complete, the market should then undergo a large wave ((c)) down as part of the larger wave Y of the "combination" correction I've been tracking.
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The next possibility is that the impulsive wave count is still intact and the funny shape is just a "flat correction" after wave (i) completed. I don't like this count that much because the flat correction is quite long and deep, which is unlikely for a flat correction. Although it's still possible so I'm keeping an eye on it.
Today's gap up formed what would normally be an "island reversal" but since the S&P was not in a confirmed downtrend we can't say that is the case. However it is interesting that we have a down gap and up gap in the exact same spot. If the bears don't drop this market soon and close the upward gap from this morning, I'd say that would be a very bullish sign for the days ahead.
So I was slapped by the market today and we are left with several options. I like to choose the simplist of outlooks because that's usually the correct one, which is that this week was simply an ABC decline and now the uptrend has resumed. The other options I mentioned are certainly still a possibility and any sharp reversal this week will probably move this bearish counts up on the probability chart. So I'm just a spectator now.
Now if you'll excuse me, I'm going to play in traffic for a little while.....
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.
8 comments:
Todd - Yes, and quite a slap it was. Question: could the "b" of the a-b-c correction really be a wave 1 down and the gap up this morning be part of a wave 2? Probably stretching too far with that one . . . But, you're right - very weird that the gaps are almost exactly the same.
Strange market. Just when I get a good grip on the wave count telling us a significant decline is near, it all gets erased . . .
Yes Dave, it can be. But it just doesn't look right and the degrees of waves are way off. I'm afraid that in counting it that way we are falling succumbing to our own bias. I think if anything, the impulsive decline (3rd chart) with a flat correction for wave (ii) is the best way to count the decline impulsive still. But that's just my opinion.
This RFH (Rally From Hell) has "short squeeze" written all over it. Good bet a 5th is in progress. A peak is very close at hand and once it starts the decline it will be relentless, likely volatile too, since those with the power will try to manipulate it ever higher at every chance. Considering commodities and fx movements, the market may get a parabolic blow-off.
Patience is the hardest part.
TAfool
Maybe I shouldn't put this here but....I think after this decline the market will launch to the moon because of a decimated dollar. One look at the expansion of the money base should bring shock and horror. ( http://research.stlouisfed.org/fred2/series/BASE ). Like Fukushima, our system is totally out of control.
Yeah, I got squeezed.....and slapped! The ABC decline this week is possibly a wave 2 since it was quite sharp, and now we're in a 3rd wave higher of a larger 5th wave like you mentioned. Judging by how short and shallow the wave 2 was, this 3rd wave higher would probably be quite strong and last a little while. We'll see. Speaking of blowoffs, have you been following precious metals.......wow.
Full credit to you for changing your call. Yours is one of the few wave blogs that actually apply objective analysis and not just repeat the prechter rubbish :)
Thanks Scott!
You'll get use to that face slapping Todd...I have! The market? IMO...if you're long you should be selling into strength. Market turn is coming. Sentiment is extreme in many areas....the USD, equities and PM.
http://www.youtube.com/watch?v=p6xNft9MutQ&feature=related
I suppose the question isn't "if", it's "when"? But boy has that been the billion dollar question the past year or so. When you feel you see that turn has been confirmed, please share :-)
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