Bull Face?

It ain't over till it's done.

The rally from 1,011 of July 1 is as confusing as it is since we are inside a corrective trading range from the April 26 high of 1220 to the July 1st low.

Basically there are an almost infinite way by which corrective patterns can form as compared to only 3 different types of 1-2-3-4-5 impulsive waves either on a rally or a sell-off.

And then there are at least 13 different forms of corrective waves that imitate impulsive waves making it a lot harder to determine whether a correction has finally completed and a sustainable rally (or selloff) has already begun.

The search for a C-wave up or a 3nd wave up is still ON since the major indeces have already made a vertical run up from July 1 to 13 and they did not reverse immediately either after July 13 or July 27.

Traders are speculating, since early August, of a potential C-wave wedge to form. Friday's price action will give them more fodder for their cannons:

- img02.imagefra.me/img/img02/8/8/6/aarc/f...

We will see how it works. Too early to know whether a wedge is forming or not.

It is still too early to make a definitive analysis - but for speculation purposes; the highest probability pattern that is halfway forming on the intraday chart is a potential Bull Face:

- img38.imagefra.me/img/img38/8/8/7/aarc/f...

The largest Continuation InvHnS I have traded is Gold that started forming in March 2008 and ended in July 2009 on the weekly chart. It is also a Bull Face with a target of 1,353. My 1-2-3-4-5 target for GC futs is 1,299 nominal measured from the last low of 681 of Oct 2008 with maximum allowed 1,367. Whether gold will extend or will keep extending to the upside is still unknown. Therefore, it is not advisable (for those not well versed with Elliott Wave analysis or other conventional counter-trading techniques) to short gold until the "Acid Tests" similar to what I used for SnP500 weekly chart in May to June 2010 have been satisfied.

Continuation InvHnS is usually the consolidation range that precedes the last leg of a rally. Therefore, I assume SnP500 (and gold) will reverse to the downside once the C-InvHnS (and it's target) has completed it's course.

The lousy Jobs Report last Friday is not the end of the world. We still got the FOMC meeting in Tuesday. Two days to prepare for an a-b-c consolidation range (on Spx 60min chart) for bull and bear traders to take their positions.

Let's see how it works.


Addendum August 9:

- I started selling some "excess" LDK bought at the May and June lows since it is already at the 5th wave run from the July 1st low on the daily chart and will be hitting the downtrendline resistance on the weekly chart at the $7.75 area. It is not clear whether the 5th run will become the shortest wave or be the longest wave since the 3rd is approximately equal to the 1st. If shortest then no more than $7.52 maximum target is expected. But if the 5th turns out to be the longest; then it can run up to the extended target of $8.22 with the double top at $8.53 a major resistance. Maximum allowed for an extended 5th is $9.29 with a potential throw-over wave (to account for the first tiny run up from July 1 to 6) toward the fibo extension resistance of $9.50.

Better safe than sorry. Take some profits off the table if you followed my advise in May of buying LDK based on the bull flag pattern on the daily chart. LDK is a long-term hold (target $26 nominal to $32.54 extended for a 1-2-3-4-5 rally on the weekly chart) but I bought excess shares (for early part of the run profit taking) to reduce the impact of losses just in case it goes into an unexpected meltdown.

August 9 EOD Update:

SnP500 went up today carried by the momentum of Friday's afternoon rally.

For the potential Continuation Inverted Head and Shoulders (or a Bull Face) I was expecting last week to form; the Right Shoulder will need approximately equal time with the Left Shoulder to form. That makes Wednesday 1:30 pm as the potential termination time for the Right Shoulder.

But since the FOMC rate decision is tomorrow (Tuesday) at 2:15 pm; the C-InvHnS Scenario is more at risk of getting mauled than being able to form unfettered.

VIX was a triple bottom last Friday's low and the 4th test (after a pullback up) should have been the entry for a sustainable run down. Instead VIX broke the triple bottom today which is considered "too hasty" and a recovery run back above 21.80 level may unsettle most bull traders. 21.18 area is the downtrendline support on the weekly chart that may provide a reactive rally bounce for VIX so I am more risk averse to making a new long trade for stocks/etfs now going forward to tomorrow's FOMC meeting.


Post FOMC Update:

The BullFace got "mauled" today but not completely obliterated.

- img38.imagefra.me/img/img38/8/8/10/aarc/...

Since the right shoulder has sacrificed price; there is a higher probability the BullFace can complete the right shoulder before 1:30pm tomorrow (Wednesday) if the markets are intent to extend the rally toward the 1150-1155 area for the SnP500.


Euro$ Aug 11 10:30 am Update:

- Euro$ broke 1.296 early this morning. Most likely the 3rd wave on the daily chart has already completed and the 4th has started.

IF Euro$ breaks below 1.26; then most likely the 1-2-3 wavecount is wrong.

- - Indu is testing the broken Right Shoulder resistance (now support) today and the daily 200ma support.

Dow Jones is the last best hope for the bulls. Once it re-enters the Head and Shoulders consolidation range; price actions should become a lot harder to analyze.