Thursday, April 29, 2010

Market Timing Update (4/29/10 Close)

SPX is likely to have additional near term upside potential while the RUT looks ripe for a turn. See discussions below.


The expected deep retracement discussed in yesterday's update has materialized. The rebound is likely incomplete. The likely incomplete rebound, breadth and volume tend to support a new high in the form of wave [v].

Chart 1 shows the top three counts on the SPX since its early Feb low.
[Blue] A new high in the form of a wave [v] up.
[Red] Wave B-down of (Z) is in progress and the current rebound is (b)-up of B-down.
[Green] The top is in. The current rebound is (ii)-up.

Chart 2 updates the squiggle count since the recent peak.
[Green] There's a small chance that today's high marks the end of the wave (ii) rebound, which has traced out a flat-x-flat when taking into account of overnight price actions. But this scenario is far from certain as
(1) the competing counts are as compelling if not more, and
(2) the decline from today's high is not as impulsive as desired and stopped right around EW guideline supports, and
(3) the fact that the RUT made a higher high into the close.
The market needs to sell-off immediately to validate this interpretation.

[Red and Blue]
These counts both suggest additional upside potential after this small degree 4th is complete.

Chart 3 and Chart 4 offer the primary count for the RUT. The RUT looks ripe for a turn though. The recent high in the RUT (749.95 on Apr 26) is close to the fib target of 753.34 discussed in Targets for a Good Turn (4/23/10), and the wave count looks complete.
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