Market Update - 8/2/2010

1115 was taken out today, so it is clear that this is wave (v) of [c] of 2. We fell short of 1131, but I do think we will get to 1131-1135 before wave 2 is over.

There are two ways to count this Minor wave 2 currently. Both are pretty much the same and have virtually the same targets. There are only minimal differences. The first is the count I have been tracking for a while now. It seems that wave [c] is an expanding diagonal.

It doesn't look that great on the charts, but that doesn't mean it's not possible. The target is still around 1135.

The second count is that Minor wave 2 is an expanded flat. Basically, the low on July 8th was a truncated wave [v] of 1, and since then, despite breaking that low of 1040, we have been in wave 2. Also, this move up looks more like a series of a-b-c's than a 1-2-3-4-5.

So this count is more bearish in the long run. Since we seem to be in a wedge, and a contracting diagonal wave [c], prices could fall pretty hard and fast once wave [i] of 3 starts. Harder and faster than the other count.

So 1131 is the key pivot to the upside tomorrow. If we have a big bearish day tomorrow, it could weaken the bullish count and point towards the start of minor wave 3.