Friday, June 3, 2011

XAO Short Term $30B update

The negative mood appearing in the MSM this week on the $30B loss on thursday may be an indication that a medium term bottom could almost be in place.

The index has unfolded exactly as described in the previous XAO post, however the attempted thrust up out of the Channel doesn't look like a 5 wave advance and this may imply something else is occuring. The pullback has been sharp and it's looking possible that a triangle is unfolding as a valid ending to this correction.

Further drops from here are still valid but the low at 4560 cannot be broken for this count to remain valid.

The MACD is divergent on the 60min chart below, implying weakness in the current down trend.

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