Markets gave us little on Friday: little change and little clarity.  What they did give us is more scenarios to consider and more questions.  For Monday that leaves us waiting and watching for clues to the near-term direction.

Markets on Friday

On Friday the Dow started the day by pushing to new lows at about the 61.8% retracement off the june lows before pressing back up into positive territory and then settling back to just below even for the close.  The 61.8% retracement was an impetus for us to recognize the possibility for a completed move down which we published intraday.   By counting out a double zig-zag, we can get to a complete move.  Doing so has the benefit of count a triangle b wave within (w) so that this move that looked like a classic triangle could be counted as such.  Nevertheless, the rate of decline since June 21st and the lack of significant wave overlap makes it is more likely to see this current move down as impulsive rather than a completed correction.  So if it is corrective, it’s more likely to be incomplete.  We’ll keep it on the list of potential counts as one that supports the possibility that we could go straight up from here.  It won’t become a preferred candidate until we see price signal that up is more likely.

[Click image to enlarge]

 For our yellow count on the 15 minute chart we moved the location of (v) to Friday’s low.  Technical indicators remain consistent with the possibility that this represents five waves down on the Dow.  However they also are consistent with the end of five down on June 23rd.  Lows on June 22nd stil are possible from a wave count perspective, but don’t agree with technicals.  Further complicating the fifth wave into our yellow (v) counts out well as a 3-wave move, one which has already been sufficiently overlapped so that it cannot count well as a an impulse in progress.  That has led to the introduction of a black alternate to suggest the possibility of a flat correction of five waves down into June 23rd lows.  While this count remains possible, the move up from Friday’s low does not appear impulsive in a way that would support it as an unfolding (c) of a flat.  To paraphrase Bob Precther, if the wave count isn’t clear, then the move probably isn’t over yet.  What is clear is that we need to see more price action unfold to have a clear sense of where we are. 

We did suggest some guidelines for watching technicals to help us going into Friday’s session.  Unfortunately, the market skirted falling into either scenario.  15-minete EWO did head up to test zero, but it did so after a an additional move down.  The new low ruled out the possibility of a completed five-wave structure just before Thursday’s close.  At the same time, the move down Fridasy morning wasn’t sufficient to indicate an impulsive beginning to a new leg down.  Again, we’re in limbo.  Sigh.

Outlook for Monday

We usually like to find something to hang our hat on that we can watch during the day session to guide us.  Unfortunately, what we really need on Monday are some clues for direction.  If anything emerges then we can try to get out an intraday update.  In the meantime, any significant outlook remains elusive.  To have some confidence in a direction, we need to markets pick a direction, not only by starting to move, but by having wave action that confirms it.  Without the direction of impulsive and corrective moves confirming a count, it will be difficult to have any confidence in near-term direction.

  • Share/Bookmark