Wednesday, November 7, 2012

Market Timing Update (11/7/12)

[PS] SP500 AD line -
Positive divergence from SPX AD line. See chart. See EOD update for the larger count.

[EOD] Stocks -
Let's take a look at the big picture following today's plunge, which likely better complete the larger structure. See 1145am update for squiggles.
Chart 1 shows a 7 large wave decline in SPX since its Sept high - now with positive divergences -  as the proposed corrective retrace of the June-Sept upswing (HR model point #6).
Chart 2 shows a 7 small wave decline in NDX since its nominal recovery high, as the proposed wave 4 correction.
For the very near term, a retest of today's low remains a possibility but is less likely to change the big picture.

[1145am] SPX update -
The risk of a sell-off as implied by the overnight ES (see 7am update) has materialized. There could be a potential short term (days) buying opportunity and probable near term (weeks) buying opportunity at these levels. See charts for counts. Size accordingly.

[7am] ES update -
Post-election. ES retested the neckline support overnight (Chart 1). If ES squiggles during the voting process are taken literally, it's prudent to upgrade the near term bearish count (Chart 2, red) of a post-triangle thrust or a wedge to about the fib-618 retrace. On the other hand, if ES holds up to the cash open, the cash SPX squiggle remains much more bullish than that in ES.