Market Timing Update (1/24/12)

[EOD] Stocks -
Chart 1 updates the larger count where the recent high is likely the end of [iii] (green) or [v] (blue) off the December low.

This morning's sell-off presented a potential head-and-shoulders structure with measured target around 1290-1300, if the current pullback is a small-degree 4th wave.

The decline from the nominal high is so far three waves down and three waves up - not overlapping so far, and with the upswing within its base-channel so far (Chart 2). This structure presents several options (triangle, flat, WXY, 1/2/1/2).  The market will sort it out.  Many wise people have mentioned that trading and analysis are not entirely the same animal.



[135pm] SPX update -

[1115am] SPX update -
A bigger three-down and a smaller five-up in SPX. Let's see if it morphs into a seven-up before overlapping. Otherwise leave room for a triangle/flat or something more bullish.

P.S. Adopting expanded flats in the squiggle since the the low this AM allows one to count a seven-up.  The plot thickens.


[640am] ES update -
ES about to loose trend-line support. Measured move from a potential HS targets the red lower trend channel line in SPX cash.

Market Timing Update - (1/23/12)

[EOD] Stocks -
This morning's high is likely the top of wave [iii] (green) or wave [v] (blue) off the December low (see chart in the 1030am update).

Odds appear to favor the still bullish green count wave [iii] based on the squiggle structure from the high. See chart in the 327pm update. Wave [v] could truncated but it's premature to speculate on that.

For the larger picture, see Shifting Odds (1/20/12) for details.

[327pm] SPX squiggles -
The best squiggle count from today's high is likely a zigzag down and an upward flat up. See the 2nd chart below.
[1030am] SPX update -
channel


[7am] DAX update -
DAX thrust out of a small degree 4th wave. ES in a similar position.

MTU Weekend Ed. - Shifting Odds (1/20/12 Close)

Have a healthy and prosperous Year of the Dragon !

Bottom line -
[1] The upswing off the December low in stocks is getting incredibly mature. The lack of confirmation between broader market indexes and INDU/NDX is bearish (less bullish) near term.
[2] If the Dow makes a new recovery high, odds would shift to favor a larger triple three correction or a leading diagonal bull-run off the 2009 low.
[3] However, a new recovery high does not exclude a (meaningful) near term decline. It had happened before with a 17.18% sell-off in the Dow.

Near term outlook
Markets continued to price out risks this past week, with SP500 up 2.04% and 10-year Treasury yield up 17.5bp. In fact, the Nasdaq 100 index made a fresh recovery high and the Dow is just 1.22% away. On the other hand, broader stock market indexes lagged: SP500 is still 4.2% shy of a new recovery high and the NYSE Composite Index is 11.36% away. With the upswing off the December low in stocks getting incredibly mature (Chart 1 and Chart 2), the lack of confirmation between broader market indexes and INDU/NDX is bearish (less bullish) near term.



Long term considerations
If the Dow makes a new recovery high, odds would shift to favor a larger triple three correction (Chart 3, red, cycle wave b) or a leading diagonal bull-run (Chart 3, blue, [1]-up or I-up) off the 2009 low. The long term wave structure of NDX (Chart 4) appears to favor the bearish cycle-wave b-up interpretation. Chart 5  presents these long term counts on SPX.




However, a new recovery high in the Dow does not exclude a (meaningful) near term decline and could even indicate that the Dow has topped. It had happened before.

Recall the Y2K experience. The Dow topped two months before SPX at the turn of the century.  A 17.18% sell-off in the Dow quickly followed before SPX bounced back to a minor new all-time high (and a major market top) in March 2000. The Dow, however, was not able to eke out a new high. See Chart 6.

Market Timing Update (1/20/12)

[1230pm] SPX update -
LD down or small-degree 5th wave up to finish [iii] or [v].










[705am] DAX, ES update -
the larger picture
DAX - first red bar this week, testing 200MA, let's see if 200MA holds.
ES - reacting to the wedging trend channel.

Market Timing Update (1/19/12)

[EOD] Stocks -
Getting closer. Earnings driven volatility in after-hour trading.


[12pm] DAX, SPX update -
Getting close.


[715am] DAX, ES update -

Market Timing Update (1/18/12)

[P.S.] ES -
This chart shows the ES perspective (see EOD entry below).


[EOD] Stocks -
For the near term, a meaningful pullback (for example, targeting 1280-1290 or better) is likely to surface before SPX reaches 1314.64 based on EWP rules with the assumption of a regular five off yesterday's low with no extension. See Chart 1.

As Chart 2 shows, the proposed pullback is likely
(1) wave [iv] off the December low, which puts SPX and DAX in sync (see 1130am entry below)
(2) the start of the larger wave (C)-down based on the primary count(see Chart 3).



[1230pm] SPX update -
wave 5.


[1130am] DAX at the close -
DAX poke above its SMA200 but closed under. Squiggle count could accommodate moderate upside, but is not guaranteed.


[650am] DAX, ES update -

Market Timing Update (1/17/12)

[EOD] Stocks -
SPX to regained near term support due to the overnight/European push, but promptly lost it by the end of the day.

The subjective primary count is that either the top tick is in or a deeper/lengthier pullback is necessary. In other words, odds does not favor an immediate rebound.

At the moment, odds moderately favor wave [iv] being still in progress given the wave structure in DAX etc and a number of 3-wave swings in recent days. See charts.

Chart 1 (SPX) -
[red] Top is in. Chart 2 (ES) offers a squiggle count based on this interpretation.
[green] wave [iv] triangle
[purple] wave [iv] expanded triangle, double-three, flat.



[11am] ES update -
Potential end of an ABC small-degree 4th wave decline ending with an EDT. DAX is in a similar spot.


[730am] ES update -
ES has regained near term support, but is also up against overhead treadline resistance. Squiggle count also appears nearly complete.


[635am] DAX update -
The SMA200 (around 6384) and the October high (around 6430) are first tests whether sub-waves are extending higher. But squiggles are nearly complete on a five up since the December low.