Wednesday 8/25/10 wrap up

Current ES wave count looks like 5 waves down from Monday's highs were complete this morning.  The question here is whether this concludes wave 3 of the move down from Aug 18 or if it's only wave 1 in an extended wave 3.  It's traveled far enough to qualify as a wave 3 under Elliott rules, but it just seems to have lacked the punch normally associated with 3rd waves.

There are alternate bullish wave counts here, but they are awkward.  The biggest factor buttressing the bear case continues to be the lack of volume.  The effect is the same whether due to late summer vacations or lack of interest by potential buyers.  Volume has picked up marginally in the last two days, but it's still in the tepid area.

Still holding short ES from 1085, adjusted the S&R to 1075 towards the end of the day.  The Dyn Osc is poking above the 20 line, but until and unless there is an hourly close above the down trend line (thick blue line on chart) the short position will be maintained (barring an unlikely overnight stop & reverse).  Jobs report tomorrow morning, possibly we'll see a strong gap down open to kick off a 3rd of a 3rd down.