Tuesday, March 10, 2009

Retrace a bit...

Its a really messy chart tonight. I think tomorrow we will have a bit of a retrace as today was way overextended. Nice rally that resulted in an all time high TICK of 1603. Whenever the TICK is that high there is usually a pull back in the near future. From the chart above, we see that there are all sorts of rising wedges (bearish). So what are the targets for the retrace? I marked them with the green dots. The 38.2 (70.5) and the 50 (69.9ish) are the most likely targets. I even have some time targets :-P Mainly because we need a retest of the large falling wedge (noted in a previous blog entry) that is denoted by the blue line. The third choice is about 70.14 which is where the bottom of this bull channel crosses the same blue line.

70.5 is the most likely as it actually preserves some ambiguity about the wave structures. The market never wants to make any thing totally clear so by hitting that target, its unclear if this is an ABC up formation or a 12345 up. If 69.9 is hit, we know that this formation is an ABC corrective formation as wave 4 would violate wave 1.

ps If you are on the 12345 count, then wave 1 started at 67.08 and ended at about 70...wave 2 consolidated down to about 68...wave 3 was today and peaked at 72.67...waiting for the wave 4 correction.

pps If you are on the ABC count...then A started at 67.08 and ended at about 70...B wave consolidated down to about 68...and wave C ended about 72.67 today...That ABC structure made up the first larger A up...now we are waiting for B down.

If anyone wants me to label those counts post a comment :-P Otherwise I will label it when it becomes clear which of those counts is correct.