Thursday, November 17, 2011

Market Timing Update (11/17/11)

[P.S.] Worst/Best case scenario -
A thought experiment of the worst/best case scenario for bulls and bears is useful at this juncture. In this section, the words primary/alternative are used only to indicate left and right portions of a complex label, without indication of likelihood.

Let's start with the easier-to-count chart of transports (Chart 1).
The worst-case count for the bulls and the best-case count for the bears is the primary red count - today's low is (i)-down of [iii]-down as indicated.

The worst-case count for the bears and the best-case count for the bulls is the alternative red count and the green 4.  Both counts have a zigzag completed at today's low and call for a (near) immediate rise to new highs.

The rest of the counts are sandwiched in between these two, such as the further downside potential of wave C.

Now moving on to the more complicated chart of the Dow (Chart 2).
The worst-case count for the bulls and the best-case count for the bears is the purple count of a string of 1s and 2s. Today's low is [3]-down of i-down of (iii)-down of [iii]-down as indicated. 

The worst-case count for the bears and the best-case count for the bulls is blue count where a zigzag completed at today's low.   A (near) immediate rise to new highs is expected.

The rest of the counts are sandwiched in between these two, such as the further downside potential of wave C.

Given the divergence between transports and the rest (higher high in TRAN), I think that odds favor Nov 15th high being the start of an initial or final decline.

[EOD] Stocks -
While the low of terminal/initial decline could be in, there could be one more small-degree 5th wave before it completes.  Because on a squiggle level, it looks better if there would be a wave 5 decline following a wave 4 bounce (Chart 1), depending on where wave [ii]/[b] actually topped (Chart 2).



[1250pm] Chart clean up (INDU) -
Triangle dies, potential EDT (bullish) or LD (bearish) survive. See chart.










[1110am] Count update (TRAN, INDU) -
Transports continue to offer clearer waves. The much discussed triangle survives SPX by less than an index point and ES my 2 index points.


[707am] ES update -
potential triangle and EDT or wave C/3 down.
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