We finally saw the follow through that we have been expecting for quite some time. With the S&P 500 giving us sloppy wave pattern to the upside for the last month or so, we finally are getting some clarity regarding the overall pattern.
Our primary count now is that we are in the heart of a 3rd wave down in a (c) wave of wave 4. Our expectation is that we should get a bounce into tomorrow, with a target region in the 1349-1353es region. This region represented the prior lower support region, and is also the region where the .382 and .500 retracements of this 3rd wave reside. A move into that region should be shorted.
Wave (1) of red wave iii was approximately 14 points, we can expect this wave (5) to have some Fibonacci relationship with wave (1), and the most common is 1:1. Since we may even expect an extension due to the weakness within the market, a 1.382:1 is also quite possible. This means that the next wave down can be 14 or even 19 points. If the market tops at the .382 retracement, then we may see a drop into the 1334-1330es region for the bottom of wave (5) of iii.
We should then see a red wave iv retracement, and we will calculate that target once we have bottomed in the red wave iii.
One thing that I want you to take note of are the technicals on this drop today in this 3rd wave. If we take a look at the MACD, we see a significant drop, along with oversold levels in the Slow Stochastics and RSI. Additionally, we see a significant concentrated pick up in the selling volume. Lastly, the McClellan Oscillator is significantly oversold, and reached a reading of almost -260. ALL of this is indicative of the 3rd wave of the 3rd wave down we witnessed today. This supports our current count.
Based upon the size of the pattern thus far, it is become increasingly more likely that we may be targeting that 1316es region, and, with a significant 5th wave extension, may even move below that level towards the 1300 region. But one nice point of confluence is that the Fibonacci 3.00 extension of the (a) wave, as we have it counted, is the 1316es level. So, for now, this may be the most likely target.
For those of you that bought at our target region in the VXX last week at 24.07, this trade is turning out nicely, indeed. The VXX is currently in the inverse mirror count in the VXX to the ES. At this time, we have completed the wave (3) of a larger wave 3 within the c-wave. In fact, we hit the target of the 1.00 extension EXACTLY to the penny, and seem to have entered into the wave (4) consolidation within this 3rd wave up. The target levels for support are usually the .764 extension (25.67) and the .618 extension (25.32), with the possibility that it may even bottom at the 25.19 level, which is the level of the wave iv of the wave (3) up. So, our buying target region is between 25.19 and 25.67. Let’s watch how it plays out tomorrow to narrow that range down a bit.
The next target up in the VXX is the 1.618 extension which is the 27.75 region, but it is quite possible we may see an extension past that level. Remember, 5th waves in the VXX are the strongest and often extend, and we are about to go into a 5th wave in this 3rd wave, so we will have to keep our eyes on it. Ultimately, our target is the 29.50 level, with the potential to move up as high as the 31.45 (.382 retracement), or 32.42 (level of wave (2) of extended 5th wave). |
发表于 2012-3-6 18:11
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发表于 2012-3-6 19:21
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