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>>Today's action--if we can stabilize in here and not go much lower might
indicate a completed C wave--and keep this flat possibility intact. This wave
has been so viscious and relentless-that it seems to guarantee there is more
downside to come--but C waves are supposed to feel that way when they end.<<
It is quite possible that we did complete a C wave from 7/31 today. The
entire larger ABC started 7/20, and I believe there is evidence of a bottom at
this level, although I don't have the move confirmed complete.
What I like to see is the wave 2-4 trendline (Aug 3-4) break violently, as it
did near the close today, and then survive a retest of that same trendline
from the high side. So, I would like to see weakness tomorrow to test that
line. If we fail to stay above the 2-4 trendline, that will confirm that wave
4 of C is still ongoing, or wave 5 of C has started. Either way this is not
the time or place to go long.
The other factor necessary is some kind of traditional bottom pattern to be
evident. Something like an inverted Head and Shoulders pattern, or a double
bottom, or one of those diamond patterns. We did get an acceptable double
bottom, although is was less than ideal in my mind. The problem I have with
the shape is the fact the second bottom, late in the day "took out" the
earlier low. As an important low approaches, by far and away the more common
feature to see is a "failure" of some kind. A failure to take out the
previous low. It didn't quite happen like that today, implying the strength
is not overwhelming.
However, I'll be watching the market reaction to that trendline very
carefully, and the behavior there out weighs the "failure" business.
I have had move up from June to July labeled as a B wave ever since we started
to retrace more than 38% of that move. I actually wasn't totally convinced
until we had retraced 62%. If the move down from July 20 does stop now as a
three wave affair for wave C (larger degree C than the C that started July 31)
then by default we must be in a triangle or something more complex than a
simple Flat.
That's where I stand at the moment anyway.
Peter
http://tiger.golden.net/laird/Comment.htm
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