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Saturday, February 25, 2012

Saturday, 2/25/12 update

The ES/SPX has been a little difficult as of late (what else is new?), but it appears fairly certain that a top of some sort is being put in place. But also and again as usual, there are a couple of ways to label the recent action.

Early this last week it looked like Minor W3 topped early Monday morning, if so then Minor W4 was in progress all week. In this case the multiple zig-zag into Thursday's low would be Minute Wave "a" of Minor 4 and the run up into Friday's high would be Minute W "b" as per the following:
If this is accurate, then Minute "c" is in progress and should result in a decent sell off over the coming week or so. One note: it is possible that Minute "b" has not concluded, it could see one more spike into the low 1370's before concluding in which case Minor W4 would be classified as an irregular flat.

There is another possibility here. The count could be labeled with Minute W5 of Minor W3 still in progress. In this alternate Minor W4 is counted as bottoming at the low of Feb 10 and Minor W5 is labeled as an ending diagonal in progress since that time:
In this scenario Micro Waves 1 thru 4 of Minute 5 are complete and Micro W5 is done or close to done.

From a trading standpoint their is no difference between the two possibilities for the coming week, in either scenario a sell off is expected. The difference lies down the road: in the 1st alternate one final rally representing Minor W5 is expected before a much deeper and more serious correction, in the 2nd alternate there would be an a-b-c sequence necessary before that Minor W5 conclusion and ensuing deep sell-off. Which will it be? Hard to say.
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