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Thursday, October 22, 2009

Thursday Updates

The McClellen Oscillator moved up a little today, but still has not caught the 5 day MA, and the Full STO, is still in a downtrend, bearish signals!!
From a long term perspective, today's rally fits into the big picture just the way it should. If we are in the start of P3, it would not start crashing in the first week, people would not be running around in panic mode, and CNBC would still be Bullish. Topping is a process that takes time, The full strength of P3 might not be seen for months after the start, just as we stair-stepped up in this bear market rally, which BTW, was a very strong and quick moving rally when looked at in larger time frames, we most likely will stair-step down in P3. Markets do not move in straight lines (well, I might change that if we get into iii of 3 down).

The ES mini shows a full five waves down, with a nice looking 4th wave made in after hours.

This is what I have for counts at 11:30, either had wave 1 down already,and are in wave 2 now, or we could have wave A down and be in B, at the present time, or worse case, we are in wave 3 up!!

After the Bell- I am still sticking by the counts I have posted on the chart above, volume today was a little lighter then yesterdays sell volume, advancers were over decliners 2:1, not the stuff rallies are made of. This move sure put the bears at risk, and it would not surprise me if lots of stops got triggered, and bears being forced to cover pushed the market up further then it would of gone. The market quickly jumped back into over-bought conditions with the buying today.

If the previous movements are any indication, this is what may lay ahead, a sell-off down to the first trendline of support, with a bounced off of it, in either a wave "B", or hopefully, wave 2, then further downside breaking thru the trend. The bears have two major trendlines of support to break through to get down to the most important level, 1019, then this will become a very critical level for the bulls to defend, bulls lose this one and the odds that we are in a new trend change sky-rocket.

The Vix still has one more trendline to break, and an important price action of 29.56 to exceed to get things back over to the bears side.

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