Summary
Without any change being forced into our basic outlook, we are expecting a continuation of the correction seen during the last week, with a possible completion of a potentially first five-wave sell off at the February 8, 10 low (4675.40). Since the low of February 8, 10, we have so far seen a three wave rally, which seems to be too small in time, as well as in price to be considered as a completed correction of the move down since January 06, 10. It is therefore that we have marked it as a potential wave a of an expected abc correction, which would complete wave 2.4. If this scenario is correct, we would expect a wave b.2.4 sell off to start in the upcoming days, which may take the index close to or even below the February 8, 10 low at 4675.40 to around the 4635 to the 4610 mark, to be followed by a wave c.2.4 rally, taking the index back above the February 11, 10 high at 4843.80.
Our bearish alternative scenario takes the February 08, 10 low as the first wave of a possible extended fifth wave (second image). As per this alternative scenario, the February 11, 2010 high can be a completed 2.v.C.4. If this scenario is correct, then we are likely to see a steep continuation of the sell off without much more correction in the upcoming days.
- Long term outlook: Up
- Medium Term Outlook: Down
- Short Term Outlook: Sideways to Down
- Long Term Revision Point: Break below 2252
- Potential Longer Term Targets: 6357 and above
- Highs/Lows: Last 30 days: 5310.85/4692.35, Last 6 Months: 5310.85/3918.75, Last 12 Months: 5310.85/2539.45
Without any change being forced into our basic outlook, we are expecting a continuation of the correction seen during the last week, with a possible completion of a potentially first five-wave sell off at the February 8, 10 low (4675.40). Since the low of February 8, 10, we have so far seen a three wave rally, which seems to be too small in time, as well as in price to be considered as a completed correction of the move down since January 06, 10. It is therefore that we have marked it as a potential wave a of an expected abc correction, which would complete wave 2.4. If this scenario is correct, we would expect a wave b.2.4 sell off to start in the upcoming days, which may take the index close to or even below the February 8, 10 low at 4675.40 to around the 4635 to the 4610 mark, to be followed by a wave c.2.4 rally, taking the index back above the February 11, 10 high at 4843.80.
Our bearish alternative scenario takes the February 08, 10 low as the first wave of a possible extended fifth wave (second image). As per this alternative scenario, the February 11, 2010 high can be a completed 2.v.C.4. If this scenario is correct, then we are likely to see a steep continuation of the sell off without much more correction in the upcoming days.
