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Wednesday, September 1, 2010

E-minis

Prices held up nicely overnight.  Look, I have to admit, the down move looks just as well as a "three" I am not going to argue its not. Its one reason I was looking for another wave down for the past few days.  I am just saying it could be trying to disguise its intention by being a 5. It has enough squiggles to be a potential 5.

Its up for you all to decide.  If its a three, then that is suggestive for a rally above 1131, its that simple. We have the big inverted H&S pattern which already suggests that 1130 is going to be challenged yet again.

But we also have a big downchannel and other factors. And I too have learned its what happens after the rally that matter.

Some other factors I am considering such as this chart http://4.bp.blogspot.com/_TwUS3GyHKsQ/TH7ABpsJFOI/AAAAAAAAHW4/OEt46hnP6lA/s1600/cumulative.png before we can say whats happening.

Obviously if this is Minute [ii], a deep retrace is possible of around 72-74%.  Thats about 1103-1105. If prices get that high, hey we'll have to see. The gap beneath 1100 seems a valid target.

I also admit the media was blaring bearishness.  I am a member of Sentiment Trader so I do mull over reams of sentiment data every day.  I will not deny that a "I-cannot-believe-this-rally-is-happening"  could be on our doorstep and be persistent as it was in March/April.  We just don't know until we see the follow-through.

We'll just have to take it one day at a time. A good hedge may be to short bonds via TLT if your not the buying long type.

An early e-minis because I needed to reevaluate the wave count on it.  This works for me.  Certainly there is resistance above.  You see where wave "i" of (v) ended? That would be the logical spot for a wave (v) to end. But for whatever reason, the market was not yet ready to rally, so the wave extended therefore turning that into "i" of (v) instead of (v). Pink (i) has 5 waves (you can see) so its a plausible LD off a top - hence the deep retrace.

And if wave (v) would have ended at "i" of (v), it would have pretty much had the "right look". An extension makes us see an ABC. I don't buy it.

I think my mistake is that I didn't recognize (iii) as the wave (iii) even though I had seen it was the strongest wave (internals were worst) down.  I had it labeled as (i) and that will trip you up I suppose.  That was an error on my part and I learn from it.

Hey its plausible. Good luck I'm going to bed.

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