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Monday, July 5, 2010

E-minis [Update 1PM]

[Update 1PM: Still looking for Minute [i] low of Minor 3 is the primary count.]
[Update 11:51AM: Though Europe was screaming and even the CAC was well over 3% up at one time, the US markets are showing a more muted enthusiasm.  The entire rise so far is still a big fat ABC three until proven otherwise.

A breach into the blue box area is bearish.  It seems headed that way. And we never got our new low for Minuette (v) of [i].]
[Update 11:25AM: I haven't yet abandoned the bear count of course.  After all, it has yet to move above 1048 for this not to be a Minuette (iv).  Its still only a "three" from the recent 1010 low and its showing signs of reversal down just like happened at 1131 peak....bulls better get their act together and hold the line.]
[Update 11:09 AM: Here is the SPX and the blue box area that ideally would remain open for the bulls.  Yet so far the entire rise from 1010 is still a big "three" pattern and not a 5 wave pattern. Of course if this is not Minute [ii], then we are looking at still Minuette (iv) peak of Minute [i] down.  So its at a critical spot for the bulls as they cannot afford to lose momentum. Market internals are starting to wane.]
[Update 10:50AM: PS - If that blue box area on my Wilshire squiggle chart gets traced into here today, that would be quite a bearish development in my estimation and maybe an early warning for a bearish reversal. I don't expect it to be traced into but my being "comfortable" with that makes me question....keep an eye on internals. If they start making a choking far they haven't.]

[Update 10:40AM: Wilshire squiggles.  Note the blue box virgin wave area.  If we stick the 50% Fib in the blue box area asuming the blue box is near the midpoint of the structure up, it would also represent the halfway point for wave (a) of Minute [ii], the top projects to around 11093. 10087 is the 38.2% retrace for the Wilshire assuming this is Minute [ii].  So wave (a) of [ii] topping out at the 38.2% Fib is the projection for now. That might be tomorrow or Wednesday. For the SPX, that means around 1057 SPX  for (a) of [ii].]

[Update 10:26AM: As expected, hesitation at the neckline and resistance. Market internals are still pretty good to the upside.]
[Update 10:18AM: Yet another view this time using 4 hour e-mini candles.]

[Update 10:10AM: Update of the 5 minute chart. Broke out of the base channel.]
[Update 9:50AM:  Thats what I call a belligerent gap up, 5.5 points wide (which assures its destruction is just a matter of time).  Of course the gap cannot close if your a bull or it will lose support and the market makes lower lows.  Market internals are pretty good of course but relatively speaking we have seen bigger recently.]
[Update 9:30AM: Same chart just more updates to it plus added base and acceleration channeling techniques which may work well here.]

[Update 9:15PM: A 50% retrace of the decline from 1131 is a full 1071 SPX.   The 38.2% retrace resides at 1056.87. If we imagine that the move up is a wave iii of (a) of Minute [ii], then we can see maybe pink (a) of Minute [ii] taking the market back toward this 38.2% Fib.

The chart below may be premature and presumptuous however I just like to make trendlines sometimes to see where they lead.

Now lets see how it play out.

[Update 8:10AM: If this is Minute [ii] of Minor 3, and there is very decent chance it is with Europe up big, etc, then a retrace of the move down from blue 2 is what is being watched.

The Wilshire makes a distinctive neckline of the H&S pattern.  The left most touch point is not shown but its a perfect fit.  Yet even so, it will take a full 2% up day just to start breaching through the underside (10935 is a 2% up day from Friday's close)

This candle pattern shows the wild swings in the NYSE up and down volume ratio and advancers/decliners ratio.  It really shows the massive back and forth for market direction and the bears are ahead on the score so far.

Basically there have been 3/4 nasty bear market internals days.  The first was the flash crash day.  One close over that the market fell away. Then came the May 20th day and the Wilshire managed 4 squeaker closes and then when it tried to "escape" that bear candle, it got whacked down.

Finally we have the bear day from last week. Its pretty simple: The market needs to reconquer this, hold as support, to prove its not a wave [ii].  We of course think it will not. But first things first: the neckline must be regained in order to even start "wicking" up that bear candle.

You can use all the other indicators or technicals you want like the 200 DMA or whatever. But this simple market internals "mapping" is really the key. It shows the technical scarred damage inflicted by Grizzly bears of late.  To heal those wounds, the scars must be erased.  A festering scar, unhealed, ensures more wounds to come.  And the technical scars can only be healed by higher prices above the scars and using that bear day as support.

These extreme bear days are mass market decision points that are extremely hard to reverse on a dime. A bull market works in reverse. Why hard to reverse, particularly quickly? Because it takes equal or more mass market conviction to reverse the damage. We basically have to change our minds of these key days.  

Also note the Wilshire hadn't yet had its "death cross" of the 50/200 DMA. But its surely coming.
[Update 6:45PM: Very nice pattern on the Euro/USD.  ABC zigzag Intermediate wave (2). If the price retrace is not adequate with a single ZZ, the market should double its form to achieve it. Since this is a proposed Intermediate wave (2) and the Euro has not even quite retraced a Fibonacci 23.6%, then this single ZZ may not be enough.]
[Update 5:35AM: Reversal and escape velocity from the down channel.]
[Update 8:45PM: New lows.]
Battling the channel line.
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