After the intra-day high on May 1, the Wilshire 4500 (roughly representing the S fund) has declined 6%. The chart below shows the wave count. There may be a wave counting variation as a and b could be waves 3 and 4, and waves 3, 4, 5 could be a, b, 5. Regardless of varying technical interpretations, I think it is clear that wave 5 has ended and now a A,B,C counter trend rally is underway. But it may not get far. The standard fibonacci retracements show a range of 691-701 or 2.3-3.8%. I think it would be prudent to get out near the 0.50 fibonacci retracement or 696, if you are already in the market or want to play this bounce. This counter trend rally most likely will be short and may be over as early as Friday.
I suspect more loss is ahead for the market, because breadth has turned down. Below I have shown the New York Summation Index (NYSI) paired with the 6 day ema. The NASI has also declined and issued a sell signal. If the Facebook IPO is going to hold up the market, it better act soon.
Further, the Wilshire 4500 intra-day reading yesterday of 675.56 and today of 675.59, have technically breached the neckline near 677 of a head & shoulders pattern. I know an intra-day low is not the same as a close in the daily timeframe, but a candlestick pin has been thrown through the support. This is an ominous indication. Another 6% decline may be in the works, as soon as the neckline is taken out, presumably after this counter trend bounce ends. Thanks for reading.
I suspect more loss is ahead for the market, because breadth has turned down. Below I have shown the New York Summation Index (NYSI) paired with the 6 day ema. The NASI has also declined and issued a sell signal. If the Facebook IPO is going to hold up the market, it better act soon.
Further, the Wilshire 4500 intra-day reading yesterday of 675.56 and today of 675.59, have technically breached the neckline near 677 of a head & shoulders pattern. I know an intra-day low is not the same as a close in the daily timeframe, but a candlestick pin has been thrown through the support. This is an ominous indication. Another 6% decline may be in the works, as soon as the neckline is taken out, presumably after this counter trend bounce ends. Thanks for reading.
