Previously I left readers with the bearish pair of 1-2's and a bullish count. At today's open, price pushed above critical resistance of 1319.25 and negated the 1-2 pair leaving the bullish continuation count with w.4 still unfolding. To review those charts click here.
Unfortunately, the fact that the market has retraced a significant portion of the decline from 1335.75 to 1290.25 also places this wave count in jeopardy. At the time of this writing, price is already challenging 1335.75.
As I have mentioned in the 4/18/11 post, since w.2 was a sideways correction, w.4 MUST be a sharp correction to adhere to the rules of alternation. At this point, I can label the structure beginning at w.3 in a number of ways. Until the number of possibilities are narrowed to a select few, I am unable to make a high probability forecast.
What I am relatively sure of are the clues that technical pages provide. Note the vertical line that corresponds with a RSI reading that held 40. This is a signature of a corrective price structure. Also note that the ROC made a minimum break of the zero line another signature of a corrective phase. Today's move pushed RSI just shy of 60. Bear rallies usually contained within a 60 reading of RSI. If RSI pushes beyond 60, odds are that w.4 ended at 1243.25 and w.iii of w.5 was underway.
As soon as I am able to identify a high probability count, I'll update everyone. Until then....
Best of Trading
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