In Gann theory bull markets are normally 50 or 100% moves off the low,or some other fraction like 33% or 66% The Russel is 250% off its low and trading outside its upper bollinger band and at previous highs resistance ! Fed support or not,are we really expecting a new upleg from here ? This count would argue for a B leg correction,followed by a final C leg up.
As unlikely as it seems, that's a potential cup-n-handle that would proceed the final blow-off. At 2 degrees. Wyle
ReplyDeleteGN cross post - Golden Nugget • Sept 17 '12 1 of 2
ReplyDeleteSome are just interested in what might happen next and not necessary interested in why, So I will post my best opinion at this time and the explanation and analysis below that for those who are interested in wave counts etc..
In conclusion, watch for a wave 4 pull back to maybe 1450's spx followed by another impulse leg higher...to maybe 1490ish + or -. Then wait and let the market tell us what to do next because that next 5 legger up may indeed be the end of the upward pattern from the 1266 low.
SP~ Last time I saw one of Dan's charts it looked like he removed all of the wave 2's and labeled the advance from 666 low as "A" up "B" down followed by a triangle. So glad to see him drop the wave 2's and break up the correctional pattern as he did. Good job. Those wave 2's were making my brain hurt. I see the correction starting at 2000 high~ a wave 3~ so now in a wave 4 that may last for many many years. No big wave 2's in a big wave 4, just a bunch of abcde's and "X" waves. Which makes for a very tough trading envirnment for EW analysist.
LOOKING AT SHORT TERM: It appears to me the last high near 1474 ish spx was a wave 3 of a wave 5. (iii:v:5:c:B, or iii:v:5:c:X), But what all of this means is, if I have it labeled correctly, we should see a wave 4 pull back ( maybe to 1450's) followed by a wave 5 up ( to maybe 1490 + or -). SO if the pull back is in abc fashion as it appears right now, I will continue to be a buyer. But, after the next 5 legger up is complete, there is a very good chance the correctional leg up from 1266 will be complete. So at that point, it might be wise to stand on the side line and let the market tell us if the upleg is indeed over.
Looking at bigger picture: WHen we look at the pattern all the way back to 666, we see a 3-3-3-3-3 pattern, whereas the 3 leggers are getting smaller in size. It sounds like a dia. tri. 5th wave but the pattern fits better as an abcde or, an abcxabcxabc, or even possibly an abcxabcde. But here is the beauty, regardless of the wave count labeling at this point, they all seem to end at the same place...Maybe near 1490's plus or minus. After it ends what should we expect next? It can create another abc "X" down wave and then continue higher. Or it may just turn down and create another huge leg of 800 to 900 points. What follows an abcde pattern is usually a violant thrust that goes beyond the distance of a connecting "X", so if it is an abcde pattern, we might expect this high to be a major top. Also, if it is an abcxabcxabc, that puts two "X"'s in the pattern. Very rare to see a complex correction leg with three "X"'s in the pattern. So the odds slightly favor this completed pattern from the 1266 low as also being the completed pattern from the 666 low. This means our next bullish 5 legged move up might end the pattern up from 666 low, so any further buying should be done more cautiously after seeing the next 5 legger up to 1490ish perhaps.
GN 2 of 2 --If it does indeed turn out to be a significant top, we will need to label the leg. 666 low was most likely "a" of 4 OR, c of 4, so the leg up could be: B of 4, D of 4, or a connecting "X" wave which begins another correctional 3 legger to the down side. One might also argue it is a diag. tri. 5th wave, but it doesn't really have that look to it. Also, it is almost too big to be a "D" wave, leaving us with a "B" wave OR an "X" wave as the best fit. Lets look at both.
ReplyDeleteIf it is a B wave top, we should see a C wave down to 600 to 700 range. If C is equal to "A", then a sell of near 880 points would be a strong possibility. If this leg up is an "X" we should have a similar target, but instead of a 5 legger C wave down, we will see an abc or abcde pattern down.
If it is an "X" wave, the face of the market will take on a complex correction look that may unfold as a giant flat correction whereas all the legs are measuring to somewhere nesr 850 to 900 points.
Many fundamental analysist will say it is crazy to expect a short term or long term top (end to an upward pattern) after such bullish news, but if we go back and look at all of our past big tops, we will discover most of them died shortly after "GOOD" news, rather turning down after bad news. Most tops are made when news is the most bullish and most lows are made when the news is the most bearish. It often happens this way. Maybe because the good news sucks in all the remaining bullish money and there is simply no one left to continue the buying. When there are no more buyers, the markets can't help but go down, regardless of the news. And the same is true when lows are made. There are no more sellers, so the markets must go up regardless how bearish the news might continue to be.
Happy trading. Phil R Up, Oil Genius
Gn addendum -- The sell off from the 1474-75 spx top is correctional. A wave 4 as expected. Notice how the bars lay together? A big bull flag from the 1436ish low. WHen it is finished, we will get another impulsive wave 5 up. But after that....I will stop buying long, and sit on my hands. Odds are high we will see a trend change. My behavior after the next 5 legger up, is not "picking a top", but rather, being prepared for one! The odds of a top near 1485 to 1495 are high enough that I won't buy long again from that level unless the SP can "prove" it still has legs.
ReplyDelete1475-21= 1454, 1475 - 26 = 1449, and 1457 is wave 4 of previous degree.
Thanks...I saw those GNugs comments
ReplyDelete