8/30/11

We are presented with a quandary.

The market appears at though it still needs a Submin v up to complete Minuette (v) and thus Minute [c] of Minor 2.  But RSI (not shown) and MACD don't look too thrilled about it.  Slopes have been decreasing, and where I marked the end of (iii) (if it is the end of (iii)) has it less than (i).

I think we are in a fifth wave - third waves do NOT move in diagonals which this clearly is, the market having fallen markedly below its 1214.28 interim high--and more importantly, closing below it.  The wave (iv) is sharp and not typical of fourth waves, but alternation is a guideline not a rule.

The futures have fallen to less than the equivalent of the sky-blue line - while I am not concerned unless they open below it, it's still an indicator of impending bearishness.  Upside potential is now only 1237.43 (where (v)=(iii)) and at this rate it may struggle even to hit 1228.  It should be pointed out that, if I am right and the 1220 top is Submin iii, wave v (and therefore (v) and therefore [c] and therefore 2) are limited to 1229.18.

It is therefore highly likely that I will open a short position tomorrow.  With a tight stop, mind you, but...