Tuesday, February 22, 2011

Market Timing Update (2/22/11)

[Futures Squiggles]-
Here's a count on NQ

First, some thought on the larger picture.
As discussed in the weekend piece, we are entering a 0.236 Fib time month for a potential turning point. Also note that SPX has managed to stay above the decade-long resistance zone for only three days so far. Today's low is below the zone and today's close is at the lower end of the zone range. A rejection? An attempt to break out still in progress? We shall see.

Second, some observations for the near term.
[1] The decline so far is likely too large for it to be a small-degree fourth wave since the January low. Moreover, today's low in NDX overlapped its first wave advance since the January low, offering a strong hint that the advance since then has ended (barring a pretty low probability event of a contracting triangle developing in NDX). So odds favor at least a correction at a larger degree (see Chart)- much larger?

[2] However, the decline being a part or all of a small degree fourth wave correction remains technically possible but (much) less probable than before. See the following charts on WLSH and NDX.

[3] The structure of the decline from the high remains uncertain, both in cash and in futures.
The following chart shows a corrective count and an impulse wave count on ES. There's a relatively clear three-wave decline in futures so far, while there could be a five-wave or seven-wave decline in cash indexes to today's low.

Tomorrow's price action should be informative.

[1040am] Tracking count update update (SPX, NDX, Apple)-
This short term count on NDX is a close call. However, if it fails, it pays to keep the larger structure/count in mind.
[730am] Overnight update (ES, DX) -
Please see Bull market, B-wave and Beyond(2/18/11) for intermediate/long term count on the USD index.