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Monday, September 20, 2010

Monday after the close!!!

This long-term Fib fan chart really sums up the day.
After the close, The bulls dealt the bears a tremendous blow today, taking out the old high of 1131.23, with conviction and closing above it. Along with that break, also went the triple top formation that would have been a very bearish structure if 1132.23 held. The SPX plowed higher all day closing near the high of the day. One problem I am seeing on the counts at the close is that the RSI is now very close to making a higher high, which normally only occurs on the iii of 3 wave, not in a 5th wave. If the SPX and RSI head higher tomorrow making new highs, then the odds are favoring that we are in a 3rd wave up. As of now, I am semi-leary on that idea because volume was on the low side today, although buy volume did account for 92.45% of the total volume, total volume was less then 1B on the NYSE.
Breadth was also strong, closing at 4.42:1, advancers, but still not up at the levels we were seeing earlier in this rally, again, this suggest more of a 5th wave, and not a 3rd wave.
The short-term trend does remain bullish, and now the longer-term trend is also bullish, with its first confirmation of this new trend up at 1173.57, the last major previous high before the biggie at the top.
The Trend Finder whip-sawed back and forth today from neutral to slightly bullish, and never could hold an over-all bullish signal for more then an hour. Which is fine with me, cash is a great place to wait while the market sorts itself out. As of now, the longer-term indicators are bullish, with the short-term bearish. Any sort of follow-thru tomorrow for the bulls will surely kick the Trend Finder into a bullish trend, and a sell-off would kick it bearish.
One other aspect on the counts that bears need to be aware of is that the SPX has now surpassed the 61.8% retracement level, and in the past, odds start dropping quickly that a 2nd wave will in the end be the correct labeling after that level has been reached. The good news for the bears though, is that the "C" wave is now very close in size to the "A" wave, which is text-book EWT.

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