Thursday, December 18, 2008

Bullish Or Bearish Triangle?

The Qs have been consolidating sideways in what appears to be a triangle. Given that we are probably in a larger triangle, which is made up of a number of corrective moves in both directions, there is no way to be certain which way they will break out. However, the likelihood is that Qs will breakout to the upside as long as they remain above yesterday's lows of 29.82. If yesterday's low is breached, then the high of the rally is probably in. The Dow must hold 8682 to keep the uptrend alive.

As I write this the markets are close to breaking down. The semiconductor index is rolling over which is a tell.

As I see it there are 3 possible outcomes: 1) either yesterday's afternoon high was a truncated 5th wave and wave C up is complete, 2) a small degree 4th wave triangle is nearing completion which will lead to a quick thrust up to complete wave C, probably tomorrow, or 3) a b wave triangle is underway which will lead to a slightly higher high, probably Monday. In the latter two cases, the 50dema in the Qs should contain the rally. If it does not, then we are likely headed to 34.

It is interesting to see the VIX falling with little upside response from the markets, but I think that as long as the VIX remains above the January high of 37.57, the trend in the VIX is up and we will likey see another spike 60. I don't expect we will match the October highs on the next decline.

QCOR has just completed wave A of a large correction. It may be a buy on a successful test of today's lows in January.

1 comment:

dave said...

Craig, is this your preferred count?: 11/4 is end of A; 11/21 is end of B; we're in & concluding C (as long as under 55E).

Regards,
dave