05/10/12 – In The Area Of A Low ??? © ™

MY CHARTS

BUY/SELL SIGNAL IN FORCE

Bought on Tuesday 5/8/12 at 12:44 PM EDT
Sold on Wednesday 5/9/12 at 4:55 AM EDT – but not short

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LONG TERM – Up (black 3, chart #10.8)

INTERMEDIATE TERM – Up (blue 2, chart #10.6)

SHORT TERM – Down, likely close to a bottom

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WHAT’S HAPPENING

05-10-12 SP FUTURES 30 MINUTE BARS

In the above chart there is an interesting phenomena taking place.  The red numbers show the usual 3 larger steps.  Notice how each red step down only had 2 steps (white numbers).  Presently, the lowest low occurred on white 2 of red 3 down. Either this wave count is incorrect (possible) or we have something unusual taking place.  It’s not unusual to only have 2 steps in a smaller step but a rhythm for the entire move is odd.

If the rhythm of the 2 steps down holds, we would have already seen the ultimate low last night/morning.  The current decline in the futures has a 5 count in process and if they don’t violate the prior low, I will likely become a speculative buyer.  Presently the futures look like they have completed 4 steps down since the peak earlier today.  Whether this will sub-divide later is the big question.  As usual, you wait and see, or stab in the dark.

After the dive on May 4th, the yellow trend lines in the above chart have had a restricting influence on the market.  Cracking through these yellow lines with a significant move down would be a definite caution signal.  But if we are in the process of bottoming, the lines should keep the market in check.

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