Today the markets began the year with a bang. The wave structure counts well as indicated by the daily and 60 minute charts. W.(2) may have ended right at one of the potential targets (1271.5) that I mentioned for the termination of w.(2) during my 12/27/2010 post. There was a minor decline at the close but we do not have any evidence that this rally has indeed ended. Given this information it is prudent to be cautionary. I've also labeled the chart where w.5 =w.1 at 1291.75. Should the wave structure continue to subdivide, this upside target would certainly be the next level to look at for the termination of w.(2) and a subsequent failure.
Tomorrow I'll be looking for the market to prove itself with a follow through day. If this doesn't materialize, I'll be looking at how the market reacts surrounding 1227.5.
Best of Trading
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