Thursday, December 2, 2010

Market Timing Update (12/2/10)

Senior indexes are within points of making new recovery highs, after TRAN and RUT made it yesterday.

There's no change to the primary scenarios discussed yesterday. The impulse wave to new highs count now has substantial momentum while the bearish flat wave [b] discussed in recent updates is not totally out (but is getting to be stretched - see discussions on the bearish count below). Thus odds favor the bullish scenario of a fresh minor degree wave advance unless the market turns very soon (also see discussions on the bearish count below.)

The motive nature of the advance is undeniable. The trick now is to count a complete one.

The following charts, using mini-dow, offer an update.

The black count refers to the bullish scenario of a fresh minor degree wave advance. To allow for plenty of upside potential, one could just lower the labels by one degree, but the internal counts remain applicable in either case.

The green count refers to the bearish flat wave [b] of a continued correction. One version of the green count has wave [b] very close to its end if not already. Note there's negative divergence on frames lower than 30min, and also 60min in futures (but not in cash).

However, the validity of this particular bearish count is being pushed to the limit by the market. Since the mini-dow made a lower low of 10916 on Nov 19th, the proposed [b]-up is an expanded flat. If (a) of [b] ended on Nov 21st at 11244, (c)=1.618(a) at 11396 while the orthodox high is 11400 and the nominal high is 11431. If (a) of [b] ended on Nov 25th at 11189, (c) is already unusually large per the usual guideline even if (b) of [b] ended on Nov 30th at 10963. So the market needs to turn pretty soon for this count to survive.

Ironically, NDX (via NQ) looks relatively more corrective (bearish) potential at the moment ...

[720am] Overnight (YM, NQ) -