Whew! One Crazy week! However I Think Next Week Will Make Last Week Look Like a Walk in the Park :)
Lots of crazy moves up and down this week. Lots of volatility. And fun was had by all ... sort of ... well, not really :)
The most obvious question is: Did we reach the top (end of P2) last week, or if we have one small wave up next week, will that be the end of P2?
The best answer anyone can give you is: maybe.
That's all. I have opinions and thoughts on this matter, just like any analyst does. But they are irrelevant.
The top will happen when the top will happen. And we will never *know* it is the top when it occurs, we will only know after a confirmation move. What would be a confirmation move? I would like to see a clear impulsive *MINUTE DEGREE* wave down (5 full Minuette degree waves), followed by a 3 wave Minute degree correction with a lower high on all the major indices (SPX, INDU, RUT, COMPQ, and NDX), and then followed by another Minute degree wave down.
I think a move of that size will a) obviously break the 7 month wedge lines and b) be too large to ignore as a bull market correction because c) a 5-3-5 is either a 1-2-3 in an impulse or a zigzag, and I don't see another realistic Minor degree zigzag X-wave to extend this out to be a triple zigzag (I think we are in the 3rd zigzag now by my preferred count).
So thinking about P2 some more, there are a few things that we would expect to see at the end of P2. The final wave of P2 should have:
- Low volume
- Low volatility
- Low breadth and decreasing breadth as it moves up
- Daily divergences of technical indicators (MACD, RSI, and TRIN more importantly)
- Lots of extension with little pullback and possibly a 5th wave extension for a blow-off, not because of a bullish move but because of little bearish resistance.
And so while I am not calling the top here, I am remarking how much this current wave from Oct 2 fits nearly all of the criteria above.
But again, this post is *NOT* a declaration that P2 is over.
The above was what we need to see regarding a confirmation move, and some thoughts as what the end of P2 should look like. I have already talked about several count options for P2, both bullish (rally extends out as far a December and goes up to 1150-1200) and bearish (P2 is done with this wave) in this post: EOD Count Oct 12 with a Bunch of Charts and Count Options. For my thoughts on this matter, check out that post.
This post will be some observations about P2 and will be some observations about the current wave. But mostly it will set up some of the action that we will be likely to see in the next week.
... Continued in the comments section ...