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Wednesday, May 13, 2009

The More Bearish Alternative Count

Last night I said the alternate count was that the market had formed a wave [i] at Tuesday's low and the late Tuesday rally yesterday was a wave [ii] peak. Today I adjusted from that alternate count because today's squiggles support something else ahead of that more bearish count. I also perhaps am fixated on those 200DMA's of the SPX and assume support will bring in buyers. But in any regard, I am willing to allow for upside surprise (theme of P2) for now until the key 865-880 support span gets seriously tested. I want to see how that interacts first. In fact I will be a long buyer for a short term trade at 875 and set stops. Who wouldn't? At least a bounce back to 898 mighty be very profitable...
However I was surprised to see EWI did indeed call yesterday a Minute wave [i] low and wave [ii] rally in their update tonight. That implies any bounce will be capped at, say 900 max, and then a very bearish "third of a third" will just smash right through all that hard-won breakout support.
It could happen of course which is why I list this bearish scenario alternate count. It doesn't yet "feel" right that the market is producing such large impulsing down patterns already and that the hard-won support will just get taken out after only a weak bounce up.


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