I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Thursday, February 24, 2011


First: This is a hypothetical count. I am not entirely convinced we are seeing a top yet. However, my trend system issued a slew of short signals today on the 60 minute chart for the sector ETFs. However the SPY is still trading above lateral and MA support. So I am definitely leaning toward a top being in, but I am still waiting for some confirmation.

Second: The SPX is giving confusing action with the lower low today, making the count very ambiguous. But like I have been saying for pretty much the last year, the Nasdaq Composite (not the NDX [Nasdaq 100]) gives much cleaner waveforms, and waveforms that are more 'correct'. By that I mean if you are unsure about the SPX, but the COMPQ is giving you a cleaner count, 9 times out of 10 in the last year the cleaner COMPQ count is right.

And today's lower low on the SPX was not a lower low on the COMPQ. In fact, it looks like a perfectly nice B wave for a zigzag. This makes the second wave on the SPX an expanded flat. You can try to force it into a 4th and 5th wave, but I think that's wrong. Classic B wave expanded flat fakeout undershoot + a strong C wave reversal. That's what I think.

Third: You will notice I am counting this as an A-B-C down from the top. I still hold to the idea that this is a correction within an ongoing bull market, not the start of P3. I think the next wave we will be in is either an Intermediate or Primary Degree X, too early to tell. But whatever it is, I think it will ultimately be another corrective wave.

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