Thursday, December 9, 2010

Market Timing Update (12/9/10)

[7pm] Bearish squiggles -
Here are the bearish squiggles in ES and YM, assuming a high is in. Invalidation at any new high.

[EOD] The market appears fractured, with non-confirmations across indexes at various degrees of waves. It seems to suggest either that some kind of top is not far away and the subsequent drop is likely to be swift OR the markets are in a fourth wave consolidation (say (iv) of [i] or [b]).

Two primary tracking counts (Chart 1) for the time being. It would be three tracking counts if we count the possible fourth wave consolidation (green) mentioned above.

The red count says some kind of top was in at the overnight futures high, with a truncated high in the cash index. The top is most likely wave [b]-up of B-down since the early November high OR wave [i]-up of the hope rally three.

The black count proposes an ED in SP500 futures, with one final push higher. Note that this proposed ED is not present in other futures, nor in cash indexes, and is statistically rare according to the textbook. However, given the theme of fractured markets discussed above, it's possible to have an ED in one market and not in the others.

Specifically for the March ES, assuming an ED and wave E already in progress, we have
D=0.681xB, C=0.943xA, max for E is 1241.75 to 1242.25.

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