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Sunday, September 29, 2013

Sunday, 9/29/13 update

In the first few days from the Sep 19 top the ES laid down a very impulsive looking sell-off.  But that impetus certainly subsided last week, and the pattern for the last few days has been one of three wave moves in both directions with lots of overlaps - not a lot of conviction in either direction.  So this move from the Sep 19 highs is really looking more like a correction than the start of a major bear market.  Of course, the current activity could morph into more impulsive bear action, but right now that's not what is evident.  Going with that thought, a reasonable short term count would be that of a zig-zag, with the "a" leg terminating at the lows of Sep 24, the "b" leg at the highs of the same day, and the "c" leg forming an ending diagonal that is drawing to a conclusion as below: 

Long term view:

One troubling aspect in the above count is the nature of the August sell-off which is labeled Intermediate W4.  It's relatively shallow and short lived as compared to Inter W2, which occurred in late March through early June of 2012, spanning over two months and dropping about 160 points.  In contrast, Inter W4 lasted less than a month and traveled only 80 points.  Also, Inter W4 in this count failed to drop below any number of lower trendlines that might be drawn below the action since the bottom of Inter W2 - i.e. it didn't drop out of the Inter W3 channel.  So the question is whether it actually was Inter W4 or part of Minor W5 of Inter W3.  If Minor W5 is still in progress, then quite possibly what's developing is an ending diagonal.  That count looks as follows:

What's really interesting is taking that ending diagonal thought and applying it to the LT bear alternate being maintained by this site.  As can be seen, it fits in very nicely and gets the ES to the long standing target of 1745.25 for that alternate:

1 comment:

  1. Yes the sharp decline last night and this AM changes the 1st chart but doesn't rule out the zig-zag possibility - yet.
    Here's the ending diagonal count: