Weekend Update 12/11/10

Running a trading blog is a little like being an athlete - when you're wrong there's no hiding it.  I was wrong in my analysis and wave count in Wednesday's update, so I've redone that count.  It looks very much like the 5 waves down into Wednesday's ES low was the C leg of a (very) irregular flat Minor W4.   Thursday and Friday were a choppy drift upwards that at this point are best viewed as part (or all) of an ending diagonal Minor W5.  The conclusion of Minor W5 will also mark the conclusion of Intermediate W5 of the rally that started in early July.  So some significant selling should ensue once Int W5 tops out.  Of course, there is always the possibility that Int W5 will extend and we're only seeing the end of Minor W1 of Int W5.  But there are any number of intermediate term technical indicators in an overbought situation right now.  Thus an extension, although possible, does not seem probable.

ES hourly

ES daily

 
Next week is Op Ex week as well as quarterly futures expiration, which have tended to be bullish.  Also, historical tendencies are for equities to rally into Christmas.  So I'm not expecting any real fireworks for a couple of weeks.