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Sunday, September 22, 2013

Sunday, 9/22/13 update

Another week where there are two possibilities that have significantly different implications for the short term.

But before discussing those, it needs to be noted that after extensive chart review it appears that the best count for Inter W4 is a double zig-zag that concluded on Aug 30.  The "c" leg of the 2nd of those zig-zags established a slight failure with it's low print of 1625.50 as opposed to the "a" leg low at 1624.75.

Intermediate W5 has been clearly impulsive since the Aug 30 low.  Five waves can be counted as complete into the Sep 19 high at 1726.75.  The question at issue is whether that high represents the top of Minor W1 of Inter W5  or the top of Inter W5 itself.  If it's the top of Minor W1 then Minor W2, W3, W4 and W5 are yet to occur.  If it's the top of Inter W5 that would also mark the top of Major W3 and some serious bear market activity should start to develop.  Supporting the case for the 2nd possibility is a cluster of Fibonacci targets right at or very close to that 1726.75 print of Sep 19:  Minor W5 of Inter W5 = 1.618 x Minor W1 at 1725.75; Inter W5 = .382 x Inter W1 at 1728.75; and Major W3 = 2.618 x Major W1 at 1726.75 (an EXACT hit).

As would be expected the SPX is showing the same Fibonacci relationships:

One other thing to look at, and that is a proprietary indicator called the Vindicator Buy/Sell index (sorry for the adolescent echos in the name).  The Vindicator uses NYSE Adv/Dec and volume statistics to measure buying pressure (green line) and selling pressure (red line).  It's kind of like the trin, but it uses a little bit different inputs and handles those inputs entirely differently.  Selling pressure as measured by the index crossed above buying pressure in mid-August and has been ramping up ever since, even during the rally sequence from the late August low.  There is a caveat here, and that is the consideration that the index is a 39 day moving average, so it is a backward looking measurement in that respect.  But the fact that the 17 days of strong price appreciation from late August through last Wednesday didn't curl the selling pressure line downwards may be extremely significant.  Are we seeing 5th wave distribution into an intermediate term top?  Maybe.  Could it be a long term top?  Maybe (he said with suppressed enthusiasm while rubbing his paws together and licking his bearish chops).


  1. Hi Al. Interesting post. The most recent daily TNA fingerprint sequence is similar to March 2012 during P3 MAJOR 1 UP INTERMEDIATE iv down. Major 4 is just fine with me...


  2. pick your favorite moving average (50,100,150,200) and there were fewer stocks above it on sept 18th versus aug 2nd, and fewer on aug 2nd versus may 22nd. You will know that these were the last three peaks in the s&p, each slightly higher than the next. This is just one of the many 'divergences' that seem to be exposing cracks in the foundation.

  3. yes it does appear that the market has been forming a major LT top in recent months. What's needed IMHO is a major catalyst of some sort, don't see one on the horizon just yet.

  4. sorry haven't responded, Sep & Oct extremely busy time in the orchard business - not sure what you're saying in your comment, one thing that's bothering me in the above count is the failure of Inter W4 to break lower than it did -

  5. well, if we had "the top" it sure is unfolding in a bizarre way. I guess the bears would start seeing nested 1s and 2s over the last 3-4 days, but the bulls might see this as a corrective wedge-ish looking thing that is 2 weeks in the making. If it is a corrective wedge, i could still see the next wave higher truncating below the all-time high.

  6. posted this on PL's site over the weekend... guess was kind of thinkin same thing... here would be a devious 4:

  7. I looked at that possibility as well, more inclined to the idea of an ED developing from the Jun 24 lows