Friday, May 4, 2012

Monday Rally or Bounce?

The market sold off today as I was hoping and it reached the target range I had and some more. It is a deep retrace so far and I am inclined to think of this as a W2 and we should have clarity early next week. If this is a W2 then we will see a huge rally next week that will break through the Trend Avg and then put in a new high. But if it fails to overcome the trend then it will turn the trend down and open up the possibility of a bigger correction. The leg I have marked as "C" is about 1.618 of "A" which if an ABC count then would open up for a rally on Monday. If we get a W4 and then further downside on a W5 then it will change the trend for sure and perhaps be the start of a W1 to the downside. Whatever the case, the trend will be a good indication of where to be positioned.

I opened up a long position today counting on at least a rebound to the TA, so we'll see what we get early next week..

Have a great weekend!

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