Thursday, January 2, 2014

Market Timing Update (1/2/14)

[EOD] Stocks -
Pullbacks in stocks are in line with our longer term view. See 2014 Outlook (12/27/13). Squiggles from the all time high are subject to various interpretations as Chart 1 illustrates:
[blue] a completed double three.
[black] a five wave decline - wave 1 or A? wave C of an expanded flat?
[red] an incomplete diagonal

The opening downward gap is likely to be filled based on the market's historical tendency. See This Gap is Different (8/23/13).

Based on the options on squiggles and gap tendencies, we are tracking the anticipated top (Chart 2 - black and red) as well as an EDT still missing the overthrow (Chart 2 - green).
The EDT count looks appealing at the moment.

[10am] SPX update -
On the squiggle level, this morning's drop is likely (c) of an expanded flat [iv]-down. A breach of wave [i] high invalidates. See charts.