Monday, November 1, 2010

Market Timing Update (11/1/10 Close)

[4pm] Stocks and the Dollar

In stocks, we either have a truncated post triangle thrust up this morning which suggests that the top is in based on the bearish count. It is a tempting scenario especially on what appears to be a completed wedge in NDX (Chart 1). But this scenario remains probable but a less likely one, IMHO. Please see Moment of Truth II (10/29/10) for additional discussions.

The more likely scenario is that today's pullback from the open gap completes wave-E of the proposed triangle, with an upward thrust to follow over the rest of the week.

The following charts (Chart 2 and Chart 3) updates the bullish and bearish counts on SPX and the chart to the right (Chart 4) offers the corresponding squiggle count.

The wave structure in the USD index is getting very interesting again in the sense that both the bullish and the bearish squiggle counts have nice forms again. We'll see if it is a triangle (bearish) or a complex wave two pullback (bullish).