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June 17, 2008

The ABCs

Just a quick mid-day note on the action in the SPX. The late morning drop in price has violated the first wave up off the June 12 low. This action is important because it marks the gains of the past couple days as corrective rather than impulsive. Impulsive moves take 5-wave forms, but the 4th wave cannot overlap the first, hence the A-B-C corrective labelling.

stock chart

Therefore, I am leaning toward the short side at this juncture and suspect that substantial selling pressure will materialize within hours. A rise back above 1370 would throw this analysis back into chaos. Happy hunting...

 

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