Market Timing Update (2/7/11)

[Bearish count] INDU -
Note the red squiggle count on the second chart.

[EOD] Stocks -
Chart 1 shows the larger count with the top two tracking counts.
Chart 2 shows an intraday count of SPX.
Chart 3 (right) shows an intraday count on YM with all the overnight actions.

[2pm, 218pm] INDU squiggles -
The proposed triangle is invalidated (left). A potential double three 4th wave (right).
[1130am] Mid-day update (SPX) -
Note the larger count. According to the larger tracking count, the current rise is either the blue [v] of 5 or green [v] or 3.
[815am] Overnight update (stocks) -

MTU Weekend Ed. - A Potential x Wave (2/4/11)

Stock market update
The broad stock market is in between important support and resistance levels.

A significant 10-year resistance zone (1313-1330) lies ahead. The market sold off sharply around these levels in 2001 and 2008 and pulled back moderately in 2006 (Chart 1.) Note that the February high in SPX is 1310.87. If the market can break above this resistance zone and turns it into a support zone, meaningful upside potential is likely.

At the same time, the late January low (e.g. 1275.10 in SPX) in stocks is a key support level. If that support level is breached fairly soon without a reasonable advance first, a correction of the advance since at least the July low is likely in progress.

Please see additional discussions on corresponding wave structures and potential targets in "near term assessment" below.

A potential x wave
This section extends the analysis in Dip or Top (1/28/11) from RUT to the broader market, on observations that

(1) At its recent high, the Russell 2000 Small Cap Index is only 48.59 index points (or 6.01%) away from a fresh all-time high,

(2) The S&P 400 Mid Cap Index has already recovered to a new all-time high (Chart 1, 3rd panel),

(3) The broader stock market, while still meaningfully below its 2007 peak partially due to weaker performance by financials (see Were it not for financials … (1/21/11)), continues to sub-divide higher.

The likelihood that the current advance is an x wave has been rising (Chart 2.) Theoretically, the proposed x wave can theoretically end either below or above the 2007 peak. It can either take on a simple form (as it has so far) or can become complex and extend in time. Therefore, there’s a great amount of uncertainty regarding the timing and the level of the end of the proposed x wave.

At the same time, it remains premature to exclude the drastically different scenarios that the advance over the past two years is EITHER a 2nd wave advance for the broader market OR the beginning of a multi-year impulse wave advance (see The Big Picture (2/21/10)).


Near term assessment
The late January low (e.g. 1275.10 in SPX) in stocks is a key support level. As the two top counts in Chart 3 and Chart 4 show, the market is either wrapping up the advance since the July low (blue count) or is still within an extended 3rd wave of this advance (green count).


If the less bullish blue count plays out, a meaningful pullback should be in sight. An immediate decline below the late January low of 1275.10 in SPX will significantly increase the odds that a correction of the advance since the July low is already underway. As Chart 1 shows, a significant 10-year resistance zone (1313-1330) lies ahead. The market sold off sharply around these levels in 2001 and 2008 and pulled back moderately in 2006. Note that the February high in SPX is 1310.87.

If the more bullish green count plays out, pullbacks will likely remain moderate and respectable upside potential exists. If the market can break above the 10-year resistance zone and turns it into a support zone, meaningful upside potential is likely.

In that case, a potential target for the end of minor wave 3 is around 1350 but it should not exceed 1398 as [iii] of 3 is shorter than [i] of 3.

After a potentially sideways minor wave 4 correction to alternate with minor wave 2, minor wave 5 could advance the SPX another 100 index points since minor wave 1 is 118.33 index points.

Market Timing Update (2/4/11)

[EOD] Count update-
For the sake of completeness, the pink count calls for a top of an ED. The Chart also updates the rest of the options.

[330pm] PM update (Stocks)-










[1110am] Mid-day update (Stocks)-
[810am] Overnight update (Stocks)-
[725am] Overnight update (DX)-
The USD index needs to deliver a 5th wave to complete a five-up.

Market Timing Update (2/3/11)

[EOD] Stocks, bonds, USD and Gold -

Stocks - While the possibility of further extension of the current wave at a couple of degrees exists (see the green counts in Chart 1 and Chart 2), the wave structure does look quite complete at a couple of degrees (with perhaps one more squiggle high overnight and Friday AM). See the blue counts in the following charts.



Bonds - This chart shows two competing counts for TLT on its sell-off since the September 2010 high. A five-wave decline has either ended in December 2010 (green count) or is ending soon (blue count). If the green count plays out, a minor degree wave 2-up rebound is tracing out an expanded flat. If the blue count plays out, the current fresh low is likely wave (d) of and ED wave [v] of wave 1.

USD - The USD index has reversed its near term trend smartly, while the larger count remains ambiguous. We'll focus on one wave at a time.


Gold - The primary count on Gold is that a multi-month 4th wave has just ended. If it is the case, the 5th wave advance is likely to extend given the relative size between the 1st and 3rd waves.








[1030am] Count update (stocks and USD)-
The high is in or a second wave retrace in stocks. USD is doing well.

[8am] Overnight update -

Market Timing Update (2/2/11)

[EOD]Stocks
The primary count is that wave (iv)-down since the 1/31/2011 low ended at this afternoon's low. Wave (v)-up is in progress. If the market choose to extend, this afternoon's low would be labeled iv of (i) since the 1/31/2011 low. Wave (iv)-down theoretically could extend down with this PM's drop as wave [1] of c of (iv), but that may count better as a 2nd wave retrace in an extension. See the blue counts in the following charts.

The alternative count is that a five wave advance since the 1/31/11 low completed today, with a new high in INDU but truncated 5th in SPX and NDX. If the market decides to extend, the current top would be labeled as wave (i)since the 1/31/2011 low. See the red counts in the following charts.
[1130am 1150am]Mid-day update (ES, YM) -

[820am] Overnight update (ES, DX) -

Market Timing Update (2/1/11)

[EOD] stocks and the dollar The following three charts update the primary and alternative tracking counts on SPX since the July 2010 low. At the close, a small degree 4th wave is likely still in progress, to be followed by a small degree 5th wave higher. The chart to the left offers a squiggle count on ES.

The USD index made a lower low in what appears to be the 5th wave down from the recent high.

[1050am] USD update-
USD index approaching the end of a five down.

[920am] Overnight update (ES, NQ)-