August 20, 2012 - Postmarket

The market went down, then up, ultimately closing flat.  Not even holy AAPL could absolve the market fully of its downward motion, since the SPX lost three hundredths of a point.  Also, the inimitable Mish is also concerned about the effects of automation on the job market.

Given the action today, I will defer to my alternate count - that the Friday EOD high was Submicro (5) of [3] of "v" of (c) of [b].

I suspect we completed wave [4] this morning and are currently setting up a terminal ending diagonal.  Specifically, we are now in Miniscule C of (3) of terminal [5].  The ideal setup is for wave (5) of [5] to top at 1422 - a perfect double top.  Treating the move as a wedge gives an approximate apex at around 3 p.m. tomorrow at just shy of 1421, but since C of (3) may not be finished yet, this could be adjusted later and higher.

I actually see the news hook likely to be the ECB's announcement of a "bazooka".  QE by either the ECB or the Fed or both is by now almost assuredly priced in.  If there is an ECB bazooka, the logical reaction is for European risk assets and the Euro to rise at the expense of US risk assets and the dollar.  In other words, you might get stocks and the dollar both falling simultaneously.

But, as always, time will tell.