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Wednesday, October 27, 2010

Wednesday, After the close, updates!!!

A very bearish sign, the Summation Index is starting to accelarate to the downside, any follow-thru tomorrow will be big for the bears!!!
The Bond bubble might be breaking, yields have made a dramatic reversal in the last couple of days as money moves out, the biggest question is where all the money is going next, the Dollar, or Equities!!!
My bet, with the over-bought conditions in equities, it will be the Dollar that is over-sold.
There is still no sharp spike up in "Down" volume, something that will help confirm a top is in, and a new downtrend is in process.
Here is one bearish way to count the squiggles off of the top, but take warning, an expanding Leading Diagonal is VERY rare. Odds are extremely low this count is correct, but the bears have been patient so why not throw out this possibility, with the way the SPX has been behaving, nothing is out of the question. A gap up open, followed by a hard sell-off tomorrow would be early signs that this count might have legs. A retrace for this pattern can easily go up to 78%, so if the SPX breaks down with-out another higher high, this count would be valid!!!
After the close, The SPX bounced right on the trendline and at the previous low of 1171.71, both were acting as support. The over-all wave structure from 1196.14 still looks much more corrective then impulse, and the market internals today also were not heavily on the bearish side, with Breadth closing at 1.87:1, decliners, with no large increase in volume. The longer-term signs are definitely pointing to a top, but the SPX needs to break below this support in an impulsive fashion with increased breadth and volume to confirm a new down-trend. Tops are rounded and are processes that take time to play-out, with bottoms being sharp, quick, and very decisive. Once this market does start selling off, there should be little question about the intentions of it, but as long as the SPX continues these corrective, over-lapping waves odds are better that this current uptrend still has a little life left into it.

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