Memorial Day 2014 $COMPX update

We just hit a long 3 day weekend for Memorial Day. Typically, the market participants are refreshed and bullish upon return from holidays.  So the odds are against the bears in that aspect come Tuesday.  But the chart of the $COMPX is not bullish looking no matter how I view it.  The action since the recent bottom has not been motive.  It has been corrective looking in nature, all choppy and undecided.  At 4210 the chart will hit the 61.8 fib so there could be a pop out of the gate and then the selling could begin.  I think wave 2 should be finished very shortly.

Below are the 60 and 15 minute charts.  On the left hand 60 minute chart the structure of an ending diagonal is apparent.  We saw blue a, then an easy to count a-b-c down into blue b and then 5 rail bounces with a throw over on the 5th wave.  Each of these rail bounces is supposed to be an a-b-c.  This 3 wave structure should consist of a 5-3-5 sequence where:

• The c wave is the most powerful and should contain a gap in its 3rd wave (it does)
• C often throws over the top channel rail (it did)
• C should be made up of 5 easy to read waves.  See the right hand picture, this is apparent.
• If 3 of C is the extended wave of the C wave (which it is) then 5 should be about the same length as wave 1.  It will be the same length if 5 moves up to the top of the vertical blue line.
• The whole 5th wave also seems to count well as an ending diagonal as shown by the orange lines in the right hand picture.  If this continues to hold, we should get a few points up at the open which putter out quickly and then reverse with some gusto back down through both rails of the ending diagonal.  If it does then and then goes back up through the diagonal then the pattern is bust and caution should be exercised.

 

There are other possibilities but this is my top model for right now. That could change very early Monday AM.  I will say that there are a lot of people out there calling for pullbacks and that is not how bull markets typically end.  They usually end with everyone saying "Dow 40,000 soon".