Tuesday, July 12, 2011

W4 Correction in progress

The market plunged afterhours last night but in the morning it seemed like nothing had happened as the 50 day moving average held. However, the close was bearish and it points to a 5 wave down from 1356 which would make this an A leg. Given the fact that I have the W1 peak at 1298, that would technically be the line in the sand for this count. However, there is the possibility that the impulse wave from 1262 was W1 and not a W3. And if that is the case then the market has room to go all the way down to that level before going into a W3. For now, I will trade it as an ABC move and we'll see where the market falls. If this is a W4, then it will have to be a Flat. If this is a W2, then we will test the 200 day moving average again. I exited my margin position at the close since it went under the 50 day ma. I might pick it up again if 1300 gets tested to play the B wave and hope that it is a flat to get the most out of the trade.

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