Thursday, June 24, 2010

Market Timing Update (6/24/10 Close)

[4PM stocks] The current leg of decline is likely approaching its end. The squiggles shows the top scenarios. Given the deep retracement and the wave structure, one has to give serious consideration of one of the following two scenarios playing out
[1] Wave 3-down in a P3-type of sell-off has started at the June high.
[2] The market is going to new highs and the current pullback is a second wave retracement


  1. If it's a P3 where would the short term bounce occur?

    Thank you.

  2. Nice charts...

    did you day new highs? How are you coming to that conclusion? I'm new to this and would like to learn about EW and counts

    how high? 1300 just to squeeze the short?

  3. To ckorey -
    In a P3-type scenario, the short term bounce should be taking place at current levels. The present wave count suggests that either v of (i)-down is complete or [1] of v of (i)-down is complete. Thus, if v of (i)-down does not extend, (ii)-up is likely in progress. (ii)-up could correspond to quarter-end window dressing, for example.

    Given that v is much shorter than i, the risk of extension cannot be overlooked. But the positive divergence has been developing for some time as well.

  4. To NikeBoy -
    Regarding the possibility of a new high, in addition to several wave counts that accommodates it, I observed in Past Zero Velocity (5/21/10) that during the 2007 and to some extent the 2000 topping process, stocks did not top at the initial break-out of the VIX (Chart 4). Will history repeat itself or will this time be different?

    Past Zero Velocity (5/21/10) -

    VIX vs SPX chart -