Monday, January 19, 2009

Market collapse imminent

Having posted earlier this past weekend highlighting three speculative Longs for consideration, it's only fair to warn all that I believe that there is an imminent market collapse in the works.


The formal definitions are above, my meaning, is somewhat less precise:

In the next few weeks.




Here is the Weekly chart of the DJIA. Lets not make this anymore complicated then it has to be. The prices have broken down out of a wedge, or triangle, or bear market rally and that is the suggested Wave 4 of a five wave sequence down.

Shown below is the software's (Advanced GET) projection for the end of Wave 5:


According to typical Wave 5 measurements from the end of Wave 4, this next down leg will result in a descent to between 6,000 and 3,500, basis the DJIA.

This is not something to fear, this is something to to exploit by riding the trend as far down as it goes, with any instrument of your choosing. As I stated in an earlier blog, this next leg down will be followed by a powerful rally, a bull market of historic proportions. It will probably only be a second wave to be followed by more mayhem, but we can plan for that if and when this next leg culminates as now expected.

A

27 comments:

Mike said...

who knows...maybe I'm a bear at heart.

I love seeing those days of major liquidation....major selloff.

Especially when you can play it.

-Mike

Anonymous said...

pish posh. market won't collapse until at least Thursday at 2:05 PM Pacific time.

EWshitPullItOutOfMyAssGuru

Piecemaker said...

Allan,

What are your favorite "instruments" for riding this trend? ETFs are the easiest for the common man. Any you like?

I'll take my answer off the air, thanks!

Anonymous said...

Why such DOOMS day prediction? OK so it falls, big wooopi! It will all come back. And my 401K will go up, I dont care any more. If the market tanks.

Anonymous said...

Allan:

Wow that is one heck of a drop prediction following one heck of a drop we have already had. If you are right about any of this, you are a God.

John K. in DC

Anonymous said...

Allan, can you point us toward info on "the get" even "the advanced get?"

How long hav you been "getting" it?

Obviously, you trust "the get."

Thanks for sharing. We've been warned.

Anonymous said...

allan,

ACTC in the news again...

http://www.orlandosentinel.com/features/lifestyle/orl-fakeblood09jan20,0,7952059.story

dk

Anonymous said...

FAZ.

Anonymous said...

You asked for my comment and here it goes.

This is the challenge with Elliott. It is an art, something that can not be back tested or even agreed on. In the end, only the market knows what the count really is, traders can only theorize what the count actually is as it is actually unfolding.

I disagree the target is 3,500 to 6,000 on wave 5, because I do not agree with the count.

We are in a wave 5 I agree, but the wave 1 of this degree is from 13,100 to 10,8000, in my opinion.

I believe 1 started at 13,100 (May 2008), 2 began at 10,800, 3 started at 12,000 and 4 started at 7400 and 5 down began at 9100.

5 = 1 target is about 6,800. We could get 5 = 1 x 1.618 or 1.382, but this decline doesn't have the juice in it to do that, in my humble opinion.

What do you think?

Alex

Anonymous said...

..maybe you are right Alex - if so, 5th wave you mentioned (of a lesser degree) would be equal to end of wave 3 in blue circle - and only then we should wait for a stronger 4th wave up of higher degree, and a 5th wave down (higher degree again)... Nonetheless many thanks for all your posts Allan - pretty valuable stuff...:)
Ivan from Slovakia

Anonymous said...

Safe to say we can all agree the Dow in the 5th wave of something, so the market is likely to fall.

The previous 4th wave was about 1700 pts, so the 61.8 of that is about 8025, so that will act as temporary support.

When we break that, the Dow should give way. I'm looking for a drop to 6800 to 7187.

Alex

Anonymous said...

By the way, I think we'll get a good rally in Crude. It closed today at $38.85. It looks strong to me.

We have so many banks on the ropes, this 5th wave down could take out one of the biggies, and then this 5th wave could drop us to 3,500.

What do you all think?

Alex

Anonymous said...

we are going to see bank nationalizations and everything that comes along with that. Shareholders will be wiped out (as they should be). I'm not an EW guy at all, but I agree with Allan's reading of the charts here and the news is bearing this out as well. Since this crisis started I've pinpointed a buy range of around 600 on the S&P 500, and it's looking like we're going to see it sooner rather than later.

rob g said...

allan,
i wanted to open a position in nnvc, but was waiting for a cheaper price, its amazing how the share price holds up in this declining market.

Anar said...

In regards to oil... A Breakout is imminent see chart: http://tinyurl.com/8zrpes]

DXO baby!

Maybe DIG?

But if oil does rally, which I think it will, DPDW will be a good one...

-anar

Anonymous said...

Nationalization? Man I hope not, but if it has to happen, I hope they reverse it later.

You can see how government influence is already spreading. Citicorp was opposed to the mortgage cramdown law, and now that they are partially government owned, they have done a 180.

Alex

Anonymous said...

Anar,

I like your crude chart. I like Crude. My minimum target is the high of a couple of weeks ago of $50.

I do believe that will be a correction of a larger degree, though, but worth trading from the long side because the market is so oversold on a longer-term basis.

Alex

Anar said...

Alex,

I agree - which stocks you looking at?

I have own DXO and looking to get into CAM, DPDW(speculative small play ala allan)

Any good charts you like?

-anar

Anar said...

Allan,

Do you know of any studies that shows effectiveness of Elliot Wave Theory in a highly volatile market? I have been reading much about Elliott Wave, but wondering if you have heard of any studies...

Thanks again!
Anar

Anonymous said...

I also agree with the wave count at 5. However my down target for the end of the 5th is a Dow of ~6200. I've noticed some fundamentals based analysis which tends to agree with that target.

aldigit (from IV)

Anonymous said...

Anar,

I grew up a bond got and got into commodities. I never traded individual stocks. I don't see anything in those stocks you mentioned, but that doesn't mean anything, because I have no experience analyzing individual stocks.

I got out of my 401k at 13,400 on the way up and regretted it all the way up to 14,100. I got lucky, because I really don't follow the markets like I did 10 years ago. It is more like a hobby today.

I'll be looking to get back in with a good percentage of my 401K when the Dow gets into the 7187 to 6800 area. I suspect it will be a slow grin to that target, because the market seems to lack juice on the downside.

Concerning Elliott, I never did a computer study on it, but tested the H&S and double top/ bottom using a computer and strict rules back in the late 1990's. Both seemed to work.

You can read the summary here.

http://store.traders.com/-v16-c11-084rev-pdf.html

Elliott has too many rules for you to back test it with a computer. It is an art that a trader either learns or doesn't, and something that can't be tested, in my opinion.

Alex

Tom D said...

The formation on the second chart (first one too) looks suspiciously like the famous inverted head & shoulders bottom, one if the most reliable of all chart formations.

Then too, can St Barrack and his holy tribe laying two down trillions more of bucks in the streets be all that bad for stocks? But that's funnymentals and not hard science like EW TA or patterns.

Tom D said...

Here is a chart of the H&S by the famous ATHBO (see the lowermost chart on the page)...ATHBO has been bearish since ewrly last year unthil this past week:

http://athbo.squarespace.com/

Allan said...

Anar: From my understanding of EW theory, the question is whether EW is effective at all, regardless of volatility. But it doesn't matter whether EW is effective or not, as long as you build a trading model that is effective it can be built on anything, trends, moving averages, trade triangles, stochastic, RSI, chart patterns, tidal forces, astrological minutia and virtually anything the mind can imagine. Find something that works, then use it.

A

Allan said...

rob g: you should have a core position in NNVC immediately, without regard to price. From there, you add or trade around additional shares and if it goes lower, add more. Don't go home without it.

Allan said...

Tom D: that's the scary part, throwing to the wind trillions of paper money and yet the market still goes down. Just what is it ahead that the market is warning us about?

Allan said...

I would write a new blog tonight, but I'm tired and uninspired, you know the feeling. Despite today's rally, nothing has changed in my analysis. Hard down soon, or re-evaluation is in order.

A