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Sunday, August 29, 2010

Sunday observations

The Summation Index has hit a bump in the road, the distance from the previous days red bar did not increase, but instead decreased, a sign of consolidation or a quick correction. The RSI supports the idea the SI will continue heading south after this brief correction is wrapped-up because it is far from entering into over-sold territory where it normally bottoms before reversing higher changing the larger term trend in the process.
The chart of the percent of stocks above their 50 day Moving Average is still bearish and will stay that way until it crosses above the blue 20 day MA. It still has room to run to the downside before reaching over-sold conditions.

Here are the two of the three ways that the SPX can be labeled, thanks to the flash crash there is more then one decent way to label where the 1st wave down truly ended, and that brings up the problem on trying to get the 2nd wave labeled properly. The gray count is the only bullish option, and that is a short-term bullish option, a delay of the eventual sell-off for another month as the "C" wave of 2 up plays out.
The green channel line, where the SPX is currently bumping its head is VERY important in determining how things will play out in the next month, a break above that channel line opens the door for the "C" wave to head towards 1131, It must hold for the iii of 3 count to stay valid. This current i-ii (blue) wave combo needs to stay smaller in both terms of price and time because it is one degree smaller then the previous 1-2 (blue),and it is already near its maximum now, any more upside would upset that balance invalidating the whole count (Blue) as I have it labeled.

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