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Friday, May 15, 2009

The Bullish Count

I got this idea mostly from Kenny. The market sure counts well in the form of zig zags and actually counts better as zig zags (almost) rather than 5 wave impulse structures. I always believe the market likes to fool the E Wavers though and what looks like a zig zag might be a 5 wave structure. They count adequately as both. Maybe thats meant to be - a "hybrid" and even the market is not sure of itself just yet.

This chart shows a triple zig zag from peak. And you are not allowed more than 3 correctives in a row. So that would imply the move to solid support, 878, means the move is over and the market is ready to get bullish, perhaps back toward the 200DMA in a B wave up as part of a flat.

However techincally to do that you must hurdle a lot of broken support, trendlines, channel lines and other such technical hurdles. All that stuff was tested and failed several times. Why all of a sudden would it pass the test now necessarily? If anything the move lower is ready to intensify further still after this rope-a-dope last 2 days.

I don't favor a bullish market as explained in other posts tonight. Too many down moves since 930 and failed backtests have "flipped" the count solidly bearish. However this IS p2 and you must be ready for upside surprise. If everyone is buying at 875, well here we are at 875 pretty much.

Also the weekly candle is decidedly bearish. And on the 30 minute chart there is going to be a bearish 50/200 crossover first thing Monday. That hasn't happened yet on this rally from 666.79. It will come Monday. Monday will be another key day obviously.

I just felt any bulls reading this might want some hope.


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