Thursday, November 11, 2010

Market Timing Update (11/11/10 Close)

[1050pm]Futures Update
The proposed double three structure for the December Dow mini (YM) is tracking - see [4pm] and real time updates. The "final" C-down having surfaced in after-hours trading. Let's see if it morphs into something else.

In contrast, the December SPX mini (ES) has been "stubborn", with the 1202 area yet to be broken. The labels in the second chart (ES) highlights the most bullish count (iii) of [iii] of 3 for illustration purposes as well as food for thought.

[4pm USD] The moment of truth for the DX. Is it an expanded flat correction or a bullish trend change?

[4pm Stocks] Plenty of ambiguity at the moment. Perhaps it is an indication of the inherent complexity of a corrective wave, or of the complexity sometimes seen at the onset of a larger decline.

The recent decline is a fourth wave of an uncertain degree according to our primary count.
[1] The decline to date technically survives as (iv) of [v] of 3 but appears too large. This count is practically ruled out.
[2] The decline to date is also not large enough to be excluded as [iv] of 3. This is one of the more appealing counts on NDX and can be readily mapped to SPX (Chart 1 and Chart 2).
[3] It could very well be minor wave 4, but it could be a premature call.
[4] The possibility that this is the start of a protracted decline as C-down of an expanded flat or a triangle, OR some thing even more bearish also exists.

For the moment, [iv] of 3 is a personal favorite while the other counts need to be recognized.

The squiggle count from the nominal high in $WLSH and Nasdaq indexes and that from the proposed orthodox high in $SPX and $INDU is not at all clear either. To offer a flavor of key possibilities, Chart 3 offers a count of $WLSH which maps into other cash indexes well. Chart 4 offers a count of the Dow futures which does NOT map into the SP500 futures. The Dow and SPX have diverged several times during the recent decline.