Thursday, October 7, 2010

Market Timing Update (10/7/10 Close)

[907PM] YM(indu)update -
An alternative set of count shown on YM - a completed five up or a completed zigzag

[815PM] ES update -
Morphing ... The first three waves of a bullish impulse done or a completed bearish double zigzag. The subsequent pullback will tell.

[4PM Stocks and USD] In SPX, we have a first sign of a respectable five-up which likely completed with the AH mini surge on earnings (Chart 1 ES). So odds favor a local low being in place.

Which local low? There's no change in the larger count - Chart 2 updates. Please refer to EOD updates over the past two days on a detailed discussion of these counts.

Today's low could be the green iv, orange d, and the blue ii. The green and orange are roughly equivalent in terms of the upside potential. As mentioned yesterday, the orange and blue count look attractive and the orange ED count would be "fundamentally appropriate."

A local low in the USD index is likely in place, with an ED in the five of five position (Chart 3) completing the decline in DX. Chart 4 shows the larger count. With respect to the bullish USD count (blue), this low is likely the end of wave (2) to be followed by a powerful wave (3) advance. Sentiment in the USD and the orange and green counts in SPX tend to support this scenario.

Regarding the bearish USD count (red), please refer to the discussion and observations with JD in the Real Time Update (comments section).