Market Update - 7/8/2010

It is ovbious now that Minute wave [i] of Minor wave 3 has ended. The bounce back over the past few days has proved that. This means we are now in wave [ii] of 3.

As we know, wave 2's are typically sharp and quick. The 61.8% retracement of wave [i] is around 1085, and since wave 2's are usually deep, this seems like a good target. About 15 points higher from where we are now.

However, we have already retraced 50%. This could be a good spot for wave [ii] to complete, but the market doesn't seem ready to crash in a wave [iii] of 3. Remember, wave [iii] of 3 will be very powerful to the downside, more powerful than anything we have seen in the past few months.

Again, at this point, I don't think the market looks ready to completely breakdown. Wave [ii] doesn't look exactly complete, so we can easily get to 1085. But remember, the market loves to fool us... so don't be surprised if we do break down.

Breaking back below 1044 may signal the end of wave [ii].