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Friday, July 30, 2010

DJI + S&P 500 - Could it be a top?


DJI yesterday made a small new top, while no other indices did that. It could be a indication that the wave 2 correction is over, but no matter what it is a sign of weakness.

As can be seen below the S&P 500 didn't make a new top alongside DJI. If this turns out to be a top, the we had a Truncated fifth wave in the S&P 500.

A break below 10,264.85 and 1,088.86 would add confidence the bearish case, as what should have been wave 4 will enter the area of wave 1, which is not allowed under the EWP.

My preferred count is still that we will one more rally higher, but be aware of this possibility.

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