Market Wrap for August 25, 2010

In yesterday's Market Wrap post, I mentioned specific target areas that I was looking for today. We hit the first target (1038) and turned tail to the upside. Notice the divergence of the MACD histogram. This is typically found between a 3rd and 5th wave as it confirmed that wave (i) purple was completed.  I must admit, the wave structure would have counted better if there was one more decline below 1038 but I can count a complete 5 wave structure down from wave iv (1080.25). The fact that it didn't results in a slight relabeling of the internal structure of the move down from 1098.5, but  it doesn't change the direction or the overall interpretation which was down going into today's session.

For tomorrow, this sets up a corrective rally that either completed at the close of today's trade or will develop in a more complex correction. Look for targets and further analysis tomorrow morning.

Best of Trading