Wednesday 5/12/10 wrap up

Steady and very orderly ramp up today, extremely bullish feel to it.  The Sell line bottomed today and will give a sell signal when it ticks up from its lows.  That trade should probably be taken but cautiously, with todays rally the bear case is in considerable jeopardy.

Elliott wave count is open to question here as well with today's action.  The rally today could be counted as a 5th wave to the whole rally from last Thursday, in which case we've completed or are close to completing the first wave 1 in another longer term sustained bull move, and the sell-off that ended last Thursday was it for a while.  One thing notable in today's pattern is the hesitation in that same ES 1169 area.  Alternate bullish count follows the next chart.

I did a write up at HOB a couple weeks ago  http://hotoptionbabe.com/2010/05/06/some-long-term-possibilities/ which laid out three alternate long term ideas, the last of which was that the rally up from the Mar '09 lows will be an "X" wave separating two major bear markets.  An X wave is part of a corrective sequence, so it should move in 3 wave patterns.  The next chart is a possible wave count for what we've had so far since Mar '09, and proposes that the sell off that ended last Thursday was the C leg of a running flat correction.  If that is true, then we have in fact embarked on another multi month rally path.