Tuesday, December 20, 2011

Market Timing Update (12/20/11)

[PS] GDOW update -
An update on GDOW for clues. Key observations -
Bullish count (blue) - The triple zigzag as marked is plausible but non-overlapping and slightly odd-looking. Perhaps a zigzag from the orth. high is closer to the truth assuming a corrective decline.
Bearish count (red) - Nine visual and non-overlapping waves down from the nominal high makes a nice impulse wave with an LD wave 1. Wave 2, however, is shallow. Today's rebound is likely A-up.

[EOD] Stocks -
A strong emotional advance today makes an excellent impulse wave (Chart 1, ES, below).As a result, SPX/ES retraced to the 0.618-fib.

SPX ended the day with notable negative divergence with technical indicators as well as with market breadth (Chart 1-ED and Chart 2-SPX, below), implying that a near term pullback is likely.

That pullback will tell us if today's advance is just wave C of an expanded flat (Chart 3-ES to the right, black and purple, Chart 2-SPX, purple, red?).

[325pm] SPX update -
Hitting 0.618 fib retrace. see 2nd chart below.

[1240pm] DAX update -
Initial confirmation of an upswing at 5775.24. The next overlap at 5919.56 to invalidate a 4th wave rebound, Dec high to invalidate a 2nd wave rebound.Let's see if it can.

[940am] SPX squiggles and ES update -
wave 3 off the ES low appears to be extending. Leave room for a rebound in the form of a flat - this could be wave C of that flat.

[635am] DAX, ES update -