Market Update - 6/16/2010

The market does not want to let up on this up move. We squeezed out another high again today, although it wasn't a big break of yesterday's high. Today was also very choppy and volatile. Expiration coming up this Friday probably has something to do with it.

There is now a clear wedge that has formed from our lows last week. As long as we remain in the wedge, we are in wave [a]. Once we break to the downside, there is a good chance that we are in wave [b]. Until then, the trend is up.

1110 and 1105 are the key pivots. If we break below these, it could signal that wave [b] has started.

There is an alternate count that could also be in play, and this count is more bullish than the primary count. This count suggests that we are only in minuette wave (iii) of minute [a]. This means we still have wave (iv) and (v) to come before wave [a] is complete.

If this count does play out, Minor wave 2 could be a deep retrace, to perhaps 1150 or 1160.

It will be key to see how any pullback plays out. Wave [b] and wave (iv) could both be sharp corrections. In the alternate count, the wave (ii) was sideways. This means wave (iv) could be sharp, as wave 2 and 4 are usually not the same.

A deep retracement for Minor wave 2 could also set up a huge head and shoulders pattern. A lot of the head and shoulders in the past have failed, because everyone seems to know about it and then it never plays out.

Either way, it could be an interesting set up if we get a deep retracement for wave 2.