Daily Stock Market Update – 08/30/11 © ™

WAVE COUNTS SIMPLIFIED

  • There are 3 peaks (or valleys) to a completed wave count. A significant reversal takes place after a completed wave count of 3 peaks (or valleys).   Often times it’s as simple as counting 3 bumps on a chart . . . Other times, not so easy.
  • Each step must stay confined to a channel.  Laying a pen or pencil on the chart will help you visualize the channel.
  • The 3 steps that make up a completed wave count will also be confined to a relatively larger channel.
  • When the market breaks a channel (regardless of size), that step (or wave) has been terminated and the market has begun a counter-trend move.
  • If you believe that wave counting is voodoo, please read along for awhile and reserve judgment until later.
  • Reading the glossary helps a great deal in the understanding of this blog.
  • Glossary Link

************************************************************************************

  • Short Term
  • Uptrend
  • August 9, 2011 To Present
  • Step 2 Up Is Underway
  • Action Status – Buy Signal On 8/29/11

Today was a consolidation day after yesterday’s surge in prices.  It was disappointing in that it wasn’t a solid follow-through from yesterday but it’s not unusual after a 90% up day to consolidate.

Here’s a chart that shows an upward diagonal forming.  I would like to see prices breakout of this formation on the upside, otherwise it could mean lower prices and possibly another stab at the bottom area.  Dropping back into the prior lows and holding could also be a renewed signal for higher prices.  Another correction scenario is a decline back into the area of last Friday’s low.  The best alternative is higher prices.

I’m not a seller here but I’m watching carefully for a break of the lower line.  We’ll see what Wednesday brings us.

08-30-11 SP 500 5 MINUTE BARS

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