Monday, January 17, 2011

Market Timing Update (1/17/11)

[12pm] Count update -
The decline in the futures this morning has the potential to be yet another small degree fourth wave or the start of a meaningful decline as outlined in Hope Rally Ends Here (Jan 2011 attempt) (1/14/10). The following charts updates the squiggle counts on the March futures (ES, YM, NQ). The decline in NQ has been particularly impulsive so far but that in ES and YM still lacks a 3 or 3-type drop.

Making sense of the INDU squiggles -

The recent overlap in the squiggles of INDU has introduced substantial uncertainty regarding the near term count as well as the larger count, as similar overlap has not been observed in other broad indexes. Here are some observations.

[1] If the larger count of INDU in the 60-min chart below is correct, since [iii] of 5 is shorter than [i] of 5, the maximum upside potential in INDU is 11988.92. Given this cap, it seems that a nested 1s2s structure for wave [v] of 5 is less likely.

[2] Wave [v] of 5 may have ended based on the blue count. But the squiggle count is not ideal.

[3] Wave [v] of 5 may be tracing out a rare expanding diagonal based on the red count. If so, the decline in the futures should be wave b-down of (e).