Well... that was a surprise. The S&P reaffirmed the US credit rating but rated it's debt as negative. The market was already trading lower at the time but this news certainly accelerated the move.
The chart above shows the possible wave labeling based upon today's trade. It fits well within the context of the analysis made in my weekly edition of Heard On The Street .
As constructive as today was to the downside, by the end of the day, the market rotated back into the territory of w.i circle... creating possible pair of 1-2's. This implies selling pressure greater than today's action for tomorrows trade. There can be no mistake about it as price should decline on massive volume and thrusting in nature.
Anything less and the wave personality doesn't fit price action and the count is suspect.
However, I might be ahead of myself here. While the wave labeling in the previous chart meets the requirements for a completed corrective wave, the time relationships is a bit short. Normally, most corrections of a previous price structure occurs in a minimum of a .382 time relationship. From the chart, you can see that the termination point of w.(ii) of 1303.75 is well shy of this relationship and therefore implies that w.(ii) is still unfolding. If so the current wave labeling would be called into question. Possibly what we are witnessing is an indication of just how weak the market is and justifies the third wave extension. We'll see tomorrow.
Best of Trading
ES201106 June contract shows that w(ii) is not complete as discussed last night or that the larger pattern may be suspect. I'm setting critical resistance at 1319.25. A break of this level would eliminate the preferred count of a pair of 1-2's.
ReplyDeleteON session has pushed price above critical resistance of 1319.25. Assuming the market opens above this level, the 1-2 pair will be negated. Look for an updated wave count tonight's edition of "The Market Pulse"
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