Projecting Technical Repair ~ The Risk Averse Alert

Thursday, August 25, 2011

Projecting Technical Repair

Ever so slowly the market's underlying technical state is beginning to improve with stabilization of the market's volatility over the past couple weeks...


If anything, there's a good case for supposing wave (2) of C will take some weeks to form. Plainly, technical repair is at but an early moment in its development. Yet improvement in the NYSE Bullish Percent Index is unmistakable with the NYSE Composite Index printing lower today than on August 15th.

Yet with $BPNYA's RSI still in the danger zone (below 30) there's reason to think that, even at this early moment in formation of wave (2) of C the anticipated lift toward respective index 50-day moving averages is not likely to develop with haste. Rather, an initial a-b-c corrective wave forming but wave a of (2) is likely to see some days forming its "b" wave before a decided lift approaching respective index 50-day moving averages occurs.

Per likelihood that, the huge disparity between $BPNYA and its 200-day moving average will be significantly narrowed before wave (3) of C unfolds, one's sense of the duration required for wave (2) of C to develop should become clearer. The extent of technical damage this month's decline has produced is not likely to be quickly repaired, so some weeks spent trading sideways-to-higher appears rather probable.

Fast Money
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