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Friday's Market Outlook 4/23/2010

Bottom Line: Cut and dry…at least for the short-term. Based on the intra-day subdivisions, if the YM (Dow Mini’s) breakout, the tape should extend.

We are using $11103 (YM) as the important pivot point. If we see this level taken out, it means the recent decline can no longer be labeled as a Wave 2 (down) and thus the clearest way to see the wave structure is as another Wave C (up). If correct, the next upside target for the YM’s is $11170 to $11214. Cash targets are $11120 to $11260.

If $11103 is not taken out, then our previous call that the current decline is indeed falling in five waves is still on the table. This is a crucial piece of our analysis in the short-term. If we see it breakout, we are going to add to our longs.

We like CTSH and V as two names that should extend. The chart of the RUT shows a higher high, so the risk appetite by traders is still high.

Interestingly enough, as we mentioned yesterday, there are several  Point and Figure sector charts that have rallied back to double tops and have NOT yet made a higher high. Stranger things have happened, so we are going to react, and quickly I might add, if the level above is broken.

We are still bearish crude and gold and bullish bonds and the dollar.