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Saturday, September 8, 2012

Saturday, 9/8/12 update

The ES finally broke out of it's slumber this week with a rally off a triangle type correction.


Triangles always precede the last wave in a sequence - in an impulse it's thus always a 4th wave with the 5th and last wave to follow.  In this case the ES/SPX is in the 5th wave of a move that dates back to the Jun 25 lows.  In equities, 5th waves tend to be weaker than 3rd waves. Underlying A/D and Up/Down statistics for this rally are somewhat tepid and so are following form.

From a more long term perspective the ES/SPX is in an ending diagonal that commenced at the ES 1068 low of last October.  That move is in it's late stages. It's last leg, Intermediate W5, has been in progress since the ES 1262.00 low of Jun 4.   As a wave in a diagonal Inter W5 should have 3 legs (an a-b-c).   The key question right now is whether Minor Wave "a" of that move is still in progress or whether it was complete at ES 1357.00 in Jun 19.  If Minor "a" is still in progress than Inter W5 will take more time to complete than if Minor "a" and "b" are done and Minor "c" is under way.  The charts below outline these alternates.

Minor Wave "a" complete, Minor "c" in progress

Minor Wave "a" still in progress

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