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Wednesday, January 20, 2010

Wednesday updates

Finally, after one month, the Dollar makes a higher high today, topping out at $78.45, next stop, $79!!!
Here is the long-term look at the SPX, and as far as I can tell, that is now a completed pattern, and we should see at the least a large 10% correction, and more likely, something much larger, but I will take it slowly in trying to forecast future lows and wait for things to start playing out.

After the close, It is very possible that we finished up the 2nd wave of a larger wave down, if so, tomorrow we should see another sell-off, but even larger then today, a wave 3. There is only one valid count I have now, and that is a top is in, the only other way to have a higher high in the SPX, would be breaking the rules of Elliott wave by counting the last seven days as an expanding triangle, but there are just too many impulse waves in there to make it a valid count.

Breadth for the day ended at 2.85:1, I did see it up in the 5:1 level earlier in the day.

We also managed to make a lower low today, breaking below 1131.39, next support is now 1129.25, then all the way down at 1114.81. On the upper side is 1150.31, and 1150.41, in which we would be making new highs. We ended with what could of been a completed rising bearish wedge that counts out fine as an a-b-c for the 2nd wave. Things should be interesting in the morning, if the strength in the Dollar continues to build, we might finally have our sell-off the bears, and even some of the bulls have been waiting for.

FWIW, right before the close I went 50% short in WSS, and am still holding 50% cash to be on the safe side in case the count is wrong, that would allow me to either add more shorts if the market spiked up in the morning, or adjust my position by going 100% long if the bearish charts suddenly change to short-term bullish.

10:05, FWIW, I exited my 50% short position in WSS, now 100% cash
9:30, The VIX has now ran-up and hit trendline resistance, and still has that large gap from the open. Yesterday as the indexes were making new highs, the VIX did not confirm by making new lows.

9:15, Here is a look at the waves, making a very interesting situation in the counts, three impulse waves in a row rules out, what looks like an expanding triangle, and leaving only one possible count, wave 1 down.

8:36, This is the count that for now is making the most since, and if you read my blog yesterday, is also a valid count. Todays move down so has has a very impulsive look to it, and fits best as a wave 1 down. Breadth currently is running 5:1 decliners, pretty strong!!!
The indicators are showing over-sold conditions now, so this 1st wave may be close to its end.
Notice the trend break!!!

6 comments:

  1. nice one Col! i'm with you on this

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  2. Col, we are back on the exact same count again!! *ALL IS RIGHT WITH THE WORLD!!!* ... :) Nice post brother!

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  3. I agree you have the simplest and straight fwd count. But is an alternative that as per Daneric yesterday's post: http://4.bp.blogspot.com/_TwUS3GyHKsQ/S1YqyNGf9nI/AAAAAAAADns/kqD3q_QqMb8/s1600-h/djiapng.png
    that yesterdays peak was A up, today we had B down, and we just started C up (and it could be a new high)?

    Anyway, could that still be valid?

    Cheers.

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  4. nice set of charts, thanks col ;-)

    liked your comment, "...I will take it slowly in trying to forecast future lows and wait for things to start playing out...."

    forecast slowly, act quickly - that's a motto i could use for myself!

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