I had been expecting a continued decline in the markets until the count of the Extension was complete with the caveat that if the channel was broken to the upside in a meaningful way the count was wrong and the correction had arrived. The channel was broken to the upside with authority at the open this morning demonstrating that Minute Wave [i] was complete at Nov. 2. This has forced me to revisit my count for the decline:
Please see the chart below for the Primary Count on the S&P.
Click on the chart for a sharper image.
Lessons Learned:
1. The NASDAQ Composite is more representative of NASDAQ than NDX. A higher high on NDX on Oct. 26 had been driving my count in part. I will no longer be using NDX to guide counts.
2. Inside days are often reversal days. (Guideline)
3. The DJIA made a clear WXYXZ Corrective count in the decline. As with NDX, the Dow may be a poor guide although it is noteworthy that it does channel well.
And furthermore,
4. Peaks in A/Ds and D/As continue to occur at Threes within their own counts. (see chart above)
The candlestick for the day was a Gravestone Doji. Higher prices were repulsed and the close was next to the open. After a Bullish run the Gravestone signifies a Bearish reversal. Since we are in what appears to be the beginning of a Correction the Gravestone seems to suggest that the Bulls lack conviction. It is also quite possible that the Minute Degree [ii] Correction is already over, although I would give this a much lower probability.
Yesterday I was expecting an extension down to continue for at least one day to complete the wave count. The breach of the channel to the upside has forced an alternate count to be used with no Extension.
I expect that Minute Wave [i] was completed on Nov. 2 and the market is now in Minute Wave [ii] Up. The Impulsive Wave Down from Oct. 21 lasted for around 8 days. This wave should be corrective in structure, fail to make a higher high, and last roughly half as long or 4 days.
Pat McNeill
http://patmcneill.blogspot.com/
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