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Saturday, October 6, 2012

Saturday, 10/6/12 update

The pattern in the ES from the Sep 14 high @ 1468 into the Sep 26 low @ 1424 was choppy, sloppy and clearly corrective.  However, the pattern since that Sep 26 low has been very much the same - lots of 3 wave moves and overlaps, not impulsive looking at all:


In fact, if you mentally flip the pattern from Sep 26 into Friday's high at 1466 you can see that it's almost a mirror image of the prior pattern - in other words, it appears to be a fractal.  So the best guess at this time is that the recent upswing is more likely a part of an ongoing correction from the Sep 14 high than the start of an upside impulse.  Yes, it could be interpreted as a series of nested waves 1 & 2's, and yes the pattern in the underlying S&P 500 is a little bit cleaner, but the sell off after Friday's high has a very impulsive look to it, very much befitting the start of a possible "c" wave down.  So for the time being the rally from Sep 26 low at 1424 into Friday's high at 1464 is being considered the "b" wave in a flat type correction with the "c" wave just underway.

Just for chuckles, here's a stab at the internal count for the proposed "b" wave, which shows it to contain a triple zig-zag with the last move itself being a triple zig-zag - it was the best way to account for the multitudes of overlaps:


Inserting this thinking into the bullish alternates presented last week produces the following:

Alternate #1 
2 hour bars

Daily bars


Alternate #2
2 hour bars

Daily bars


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