Friday, August 19, 2011

New Lows Diminish

As the SP500 approaches a new correction low, which will probably happen Monday, the number of new NYSE 52 week lows has diminished.  This strongly suggests that another rally will ensue.  The next rally may last longer than the last one did since it appears that 5 waves down are nearly complete.  The most bullish outcome would be for a rally back above the June low, which would make the total correction a 3 wave affair.

But traders should keep in mind that even if the outcome is more bullish, new index lows should follow this fall as the correction extends as has been previously explained.  The spike in new 52 week lows at the 8/9 swing low is enough to convince us of that fact.

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