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Sunday, May 26, 2013

Sunday, 5/26/13 update

FINALLY some selling in equities.  The question is, was that a two day flash in the pan and back up we go?  The odds are pretty good that we've seen an intermediate term top IMHO - seasonally there's been a spring downturn in recent years, sentiment is at bullish extremes by a number of measures, momentum indicators have been pegged in "overbought" territory and (not least) there appears to be a completed 5 wave bull pattern at last weeks highs.  And then there's this:


The NYA appears to have been repelled at the middle tine of the Andrew's pitchfork in the chart for the 3rd time since the Oct '11 lows.  Also, the volume study shown has marked the onset of selling 3 out of 4 times in the last few years when it hits close to the .70 mark (that volume study is a simple one - 30 day sum of up volume divided by 30 day sum of tot volume).

So assuming that last weeks highs mark an intermediate term top, the current EW count on the bull alternate shows a Minor Wave 3 complete and Minor Wave 4 in it's earliest stages.  In this count Minor W2 was a flat, so Minor W4 needs to be a zig-zag or triangle to satisfy the EW rule of alternation.


A possible target for Minor W4 is at ES 1553.75 which is a .382 retrace of Minor W3 and an area where two prior 4th waves of lesser degree have occurred.

Internal count for Minor W3:


Zoomed in on Minute W5 and after:


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