Daily Stock Market Update – 09/26/11 © ™

DAILY UPDATE FOLLOWS THE BREAK

WAVE COUNTS SIMPLIFIED

  • There are 3 peaks to a completed wave count. A reversal of trend takes place after a completed wave count.   Often times it’s as simple as counting 3 bumps on a chart . . . Other times, not so easy.
  • In a downtrend the same rules apply except you are counting 3 valleys instead of 3 peaks.
  • Each step must stay confined to a channel.  Laying a pen or pencil on the chart will help you visualize the channel.
  • As the trend progresses, all of the steps that make up the overall current trend will also be confined to a larger channel.
  • When the market breaks a channel (regardless of the perceived wave count), the current step has been terminated.
  • A single wave may sub-divide into another 3 waves.  I will also call this an extension.  When this happens (1) the trend is still intact, (2) the channel has widened and (3) instead of a total of 3 steps, there will be 5 steps.  (The charts will help you understand this concept.)
  • Sometimes I will use the terms step and wave interchangeably, but usually a wave is considered to be larger than a step.
  • Wave Counts In Charts – Numbers of the same color represent steps within the same wave.  For instance, red 1, red 2 and red 3 are steps within the same wave.  Different colored numbers represent steps in totally separate waves.  For instance, a red 1 occurs in one wave while a blue 1 occurs in a totally separate wave (refer to charts for examples).
  • Reading the glossary helps a great deal in the understanding of this blog.
  • Glossary Link

ABBREVIATIONS

  • DJI = Dow Jones Industrials
  • DJT = Dow Jones Transportations
  • SPX = SP 500
  • ES = SP 500 Futures
  • COMPQ = Nasdaq Composite Index
  • TSX = Toronto Stock Exchange (Canadian blue chips)
  • SOX = Semiconductors
  • XLY = Consumer

CHARTS

MY CHART LINK (updated constantly)

  • This link has my charts, which are always current and constantly updated during market trading.  They don’t lag market trading by 15 minutes which is true of many charts.
  • There are 9 pages of index charts.  Each page consists of (1) the same stock market indexes, and (2) the same time frame.  The time represented by each vertical bar is the same on each page but increases in length on each succeeding page.  The vertical bars on the 9 pages ranges from 1 minute to 1 month.
  • The final pages of these charts consists of growth stocks.  These are stocks that have constantly risen in price since 1990.  One qualification is that they must not be severely damaged in a bear market so they can’t rise to significant new highs in the following bull market.
  • The growth stocks show daily market action for the last 3 years and weekly prices since 1990.  This gives a good perspective to how they have behaved in the immediate past (daily charts) and how they behaved during good and bad times (weekly charts).

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DAILY UPDATE

CLICK ON CHARTS TO ENLARGE

  • Short Term
  • Is Step 3 Down Finished?
  • August 9, 2011 To Present
  • Multiple Bottoms Dating From August 9th

Was that the end of step 3 down???  We will have to wait and see because it could be the end of a sub-step.  The thought of a sub-step will be destroyed with a strong continuing rally.  For now I am still on the sidelines but this bottom has attracted my interest.

The new head and shoulders formation has not been completed and if it remains so, it will become a basing formation.

Looking at the first chart you can see a double bottom with August 9th.  This is what created today’s rally.

Today was “almost” a 90% up day.  That’s good but not good enough for a sustainable bottom.  If tomorrow is a 90% up day, that would be excellent news.

09-26-11 IND 60 MIN BARS

The second chart is the XLY, consumer sector and there are higher highs and higher lows since August 9th and that’s a good sign because this is the sector that propels our economy.

09-26-11 XLY 60 MIN BARS

The third chart is the BKX, banking sector and we “could” have an end to the decline in this sector.  This sector has been on the downside since February.  The wave count is murky and a trend line break would be a very good sign.  Looking at this chart since August 9th, there has been very little damage considering all that has been going on.  That gives rise to the thought that a base has been building.

Tomorrow is another day.

09-26-11 BKX 60 MIN BARS

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