Monday, May 4, 2009
First off: I no longer like this chart. Today's advance/decline volume ratio was 19.32. That is just smokin'. And volume picked up.
The move up from the 826 low certainly can be counted like a double zig zag so far, at least on the cash index. The 1:1 ratio patterns seem too perfect. A double zig zag implies a corrective triangle wave as I have drawn. However look at the eminis in all hours I posted and you'll see the difference between the 2 zig zags. The first is very corrective in nature and the second is more impulsive.
If 907 was THE top and the market broke under 866 from here, then I would pull this chart back out for a good examining and say that indeed its a double zig zag.
However if the market pulls back a bit in a minor subwave (ii) (see my daily update for the bullish count chart) http://3.bp.blogspot.com/_TwUS3GyHKsQ/Sf9Lg-HuVfI/AAAAAAAAAeU/SUBGI0APgGU/s1600-h/15.png
maintains support above 866 and then breaks above 907, then this double zig zag is kaput for good. But whats interesting is that even when the market is in full bull mode, it manages to make it look like a possible bearish formation of a double zig zag!
Indeed, this rally of late keeps you on your toes...
But again, I no longer favor this chart. I think the 200 DMA is just too close and the market wants this mark before a significant overall rally correction.
Again 866 is the "key" to the bullish moves above 907 toward possibly the 200DMA. It cannot breech 866 to the lowside from here.
Posted by Daneric at 8:04 PM