Thursday, May 21, 2009

Two views of market decline

First, pure trend following (Daily charts):

Looks pretty dire, eh?

Let's add some Elliott Wave analysis:

Just a mild Wave 4 before final push up?

Throw in a three-day weekend and possible downgrade of USA credit....

...heck if it was easy, everyone would be a trader.



Rob g said...

allan push up, or did you mean down? cant believe mkts down and faz is flat.

rob g

Anonymous said...

Or it could be a simple consolidation pattern prior to higher prices. If it were this easy, anyone could do it.

Sentiment is no where near ready for a top. Not even close. Its going to take a lot more time before we get a correction in this bull market.

Anonymous said...

Two important things that traders must never forget:

1) Dont fight the fed
2) The trend is your friend, and, you guessed it, the trend is up.

Anonymous said...

Disagree, sentiment is pointing to at least a short term top, with a possible move down to Dow 7,800. Let me explain: Trader bullishness is at 85% now vs. 2% on March 9th. At the tip top of the market in October, 2007 trader bullishness was at 89%! 85% is way too positive. Also bear markets end with PE ratios at 5-8. They were at 12 in early March. Watch the XLF (which was up a few pennies); if this index breaks below $11.25, it could dip to $9.40 taking the market with it. I still think we could see Dow 9,500- 10,000. A test going below 6,500 could occur this fall or next year. Trading is never easy, and there are many head fakes.

Anonymous said...

Remember you counted current counter trend wave as wave 4 of primary wave 1 and wave 5 might have started since 5/8.

Did you change your wave count?

Anonymous said...

This has got to be the longest wave 4 in history! Perhaps instead its primary wave 1 up with wave 5 already completed in early march.