The Market Pulse

A Bearish Continuation

Today was really exciting if you were following along with the call from Heard on the Street. Of the markets I featured, Crude (2.50), Copper (7.60), Euro (.02) Nasdaq futures (70), Emini S&P (40).


What we learned today

• The Euro and the emini S&P remain tightly correlated.
• NQ-057 confirmed that w.2 had ended on 9/20/11
• ES-057 eliminated two bullish alternate counts.

Nasdaq

Today the Nasdaq futures gapped down at the open confirming what I believe is 3rd wave price action. The break of w.x low confirmed that the high made on 9/20 is complete and that new lows should follow over the next few days.

Although there are several ways to count the decline from 2285.25 (w.(ii) crest ), I'm looking down in this market. My initial w.(iii) target remains at 1981. Technical studies do not suggest a w.(iv) bounce. However, should one develop, price should stay below 2144.5.


Emini S&P

This chart was featured in Heard on the Street  as alternate counts where w.4 or w.(2) would
unfold as a flat correction. Both these interpretations were eliminated today due to the fact that price made a new low.

So that leaves us with two counts. An expanded flat with w.B targeting 1146 -1165 as in the above weekly chart and...

where w.5 is unfolding. The minimum expectations have been met to conclude that a five wave decline now exists from 1357.25. I haven't defined clear targets as the count still needs to prove itself by continuing to act implusively and extending further to the downside. A rotation back above 1106.75 would concern. There are several fibs that may provide support but a fib cluster surrounding 1165-66 provides the highest probability zone to look for a reversal.

Now that five waves can be counted, the implications are very bearish as a three wave relief rally {w.(2)} should follow that once complete will be followed by an even larger five wave decline w.(3) that draws price significantly lower than current levels.


Let's see what develops overnight and watch the Euro for further tells about the ES_F short term direction.


Best of Trading