Wednesday, April 01, 2009

Do you feel lucky?

The failed analysis of last night blew up in our shorts today as the market confounded three, count them three, Sell signals generated on Tuesday's close and instead rose up from it's gap down opening. What pray tell is happening?

The market thrives on uncertainty, making only the most nimble and dedicated traders survivors in a myriad of structural possibilities.

The one constant in all of this resides in this chart:

This is the Weekly SPX chart, suggesting that we are in an elongated 4th Wave that when complete will result in signficant new lows below the temporary bottom put in on March 6th.

Here is a Daily look at this 4th Wave rally and potential high level before the market turns down in earnest:

My analysis remains steadfast: That we are looking into the barrel of a loaded gun and the only thing missing is the timing on the pulling of the trigger. Yes, there is more upside shown on this chart, but do you really want to play it?

Well, do you?



Anonymous said...


I'm pretty ignorant of Elliot wave, so if there's an obvious answer to this question, I missed it due to ignorance.

I assumed the big wave 3 down ended in November, followed by a wave 4 which ended in January, and then Wave 5 which ended March 6.

How can you tell that my count is wrong? I appreciate any thoughts you may have on this.

Allan said...

That entire five wave cycle you describe may be a Primary 1 Wave, which would mean we are in a Primary 2 UP Wave now that is complete, about to be complete, or will travel another 100 S&P points and then be complete. After completion, a devastating Wave 3 crash.

Or, that entire Wave 1 down you describe is only Waves one through four and the fifth wave is still to come, a devastating surprise fifth wave decline to new lows.

What do the two scenarios have in common? A devastating surprise decline. The nickels and dimes that you might pick up on this rally will pale in comparison to the gains made by being on the right side of that coming decline.

It's a matter of when, not if.

Dave said...

Allan, not sure if you have seen this or looked at it from this angle:


Anonymous said...

Allan says we're going down...


Anonymous said...

When markets turn they are difficult on most models, methods and market theories.

Up until last week, my primary count was we still had 5 of 5 of primary 1 to go and we were going to make a new low. That was blown out of the water last week when wave 4 of that wave went above the bottom of wave 1 of that wave.

My primary count is the Dow is in primary 2. I think that is Pretcher's count too.

Given 2 retraces 1 significantly, I'm looking for an advance up to 11,000. That would be the 61.8% retracement of the entire sell-off or primary 1.

Myself, I bought a 1/3 of my positon at 7289, and was hoping for a pullback. That pullback is still possible. Let's watch it.

Realize this is my 401k account so it is very long-term.

I do believe will will have a major move down, but it won't be for another year or two.


Anonymous said...

Good summary Alex. I think we'll know for sure in another two weeks.