One signal change and one new Alert for the Alphahorn Swing System.  The signal change is for the DOW as the DIA closed below its stop price of $160.78 confirming the taking of profits for UDOW and the entering into the DOW short SDOW just before the close.  Those trades are reflected in the table above.  The other Alert going into Friday remains for Energy, which closed just above its stop of XLE $86.19, a close below that level on Monday will confirm the signal and the exit of ERX for ERY.  The DOW could quickly flip back to a long trade should the markets rally on Monday and the DIA closes above $160.79.  The Financial sector is now on a sell/short Alert.  To confirm the exit of FAS for FAZ, the XLF must close below $21.78 on Monday.

My best guess about the immediate to intermediate term is that the top of primary wave [3] is not in, and the bottom of this pullback is also not in.  I’m looking for an immediate term bounce to be followed by a lower low that will take the NYMO to below -50.  So, I favor the count on the 30 min chart that shows a [b] wave coming to be followed by one last push down.  But, these wave counts are merely a vehicle to put a bigger picture on the Swing System, which has the better profitability record.

The wave counts have been of little help this year due to the relative attractiveness of various possible counts.  The 30 min chart is beginning to look over sold and the key indicators have reached over sold and are beginning to exhibit positive divergence, so at the very least we should see a nice bounce beginning perhaps as early as Monday.  The SPX daily chart of this same count shows that we are finally seeing a pullback worthy of being labeled a minor wave 2.  The Dow daily chart shows a slightly different bullish alternative that has minor wave 3 already in progress.  And of course, the bearish alternative that primary wave [3] has topped remains viable and would become the favorite count should more indexes join the DOW to the bearish side.