You have it, Roughly... But Remember... It's all Chart-Astrology.... As they say TA is more art than science.
October-Feb SPY
Throwing Elliot waves at this entire move since October.... we get ONE MORE LOW.... And Wave 5 of that MACRO move Started on Feb 4th.
5 Day Chart SPY
Possible Micro Wave1, of Macro Wave 5.
Unmarked= Thursday Possible Micro Wave 2(Developing, Developed)
As a Thesis, Wave One of that "Macro wave 5" COULD have ended Yesterday Morning(see above chart. Yesterdays Correction Being Wave 2 of the Macro Move....
Now, we Should be starting Micro Wave 3 of the "Macro Wave 5"... This should be longer than "Micro Wave 1" Which was 8 Pts on the SPY...
So, Micro Wave 3 should be greater than 8Pts bringing us lower than 126.31 (8 minus Thursdays high)(roughly the jan 22 level or LOWER)... Then we catch a bounce... Wave 4 Then a Final move down.
Fibonacci: I try and run as many possibilities as possible, and see how many match up. But roughly using the Nov 26, or Jan 9th, feb 1 levels at the 50% mark... and numerous variations the Target hits 124 to 116 on the SPY....
(This chart Uses 140 as the 50% Fibonacci move)
Giving a 122.25 Target
In Reference to your Fibonacci, The Feb1-feb7(8pts on the spy) move.. As a Wave1 Should be a minimum of 50% of the Entire move. Which takes us to 124 SPY.
This is Fibonacci on the Micro Wave 1. As 50% of the move, it gives us a 123.5 Target
5 day SPY Chart
This is a less Bearish Model. Double bottom target.
one more low in the SPY, Maybe double bottom model, or 76.2 Retrace of the jan22 move.
Remember it's all Chart Astrology, but because people do follow it can make it real. That level 124-116 is equal to the July 06 range... and it makes plenty of sense for us to be there.
When this is over We should get a Hella correction(which was part of my model for 145 upside last week)... A nice Wash out here, then a Rally till Q1 and Q2 Earnings... Feels right. Lot's of people saying 6 month recession... it's all over Fed fixes everything, stimulus package.. all great reasons for a Solid Denial Rally.
But Remember, Of This Bear Cycle... This COMPLEATED MOVE(October-Feb) could be Wave 1 of a 5 wave Bear SUPER CYCLE... Which is where I get my Thesis of a WAVE 3 Correction/Crash in October. Maybe Wave 5 Crash Ending October 2009.. Or it could drag out 2011 .. hard to model out that far. and alot depends on things that happen over the coming year/Years.
Basically a Crescendo finish Wave 5, of us Realizing that Supply Side Economics is the Achilles heal of Capitalism. And the Destruction of American Style Capitalism.
Not to get too Bearish...
Then the Phoenix rising from the Ashes. Eco-Friendly, Techno/ Eastern Philosophy Hybrid Social-Capitalism (milton Freedman/robert Reich...Esque) Taking the place of this JOKE Economics of Narcissism AKA Supply Side Economics(I keep having these Daydreams of Piles of Supply side DVD players in China, with nobody able to afford them. Companies going bankrupt.. Because... OOPS I guess you need Demand to go with your supply side economics.),... Till we hit a Global WAVE 5....
Then we have to Start Wave 1 of Planetary economics(We may have started this in the 1990's)... and this is Wave 2 Correction in that move, which coincides with wave 5 of American Capitalism.. Peaking in 2000, And now Correcting. The Bull Rally 2006-2007 Being Wave c of the Bear Correction... and Now that continuation of that Bear correction Starting October.
Final Decline of American Capitalism.... Wave 2 Correction of The Global Cycle... Wave 3 impulse of the Global Cycle Should start at the end of this correction.... But the correction could go on for 3-10 years
Which I liken to the beginnings of the Type 1 "Kardashev scale" in Physics.
I'll run some charts.... LOL
It is all Chart Astrology. and all it does is shows the Bell curve of trend Adoption, which does represent itself in numerical charts..... And Elliot waves Can Fail.
3 comments:
Eric,
Thanks for the education! I see your point about Elliot being a self-fulfilling prophecy if other analysts are all thinking the same thing.
Today seemed like a no-brainer: going down into the close and finishing weak on the week. Monday could be very problematic for longs.
Fibronacci # is 1.618, so will the drop from high at end of wave four be 1.6 X 8pts, thus be about 13? Is this how we get 126 as near-term bottom?
Thanks again for the insight.
Sure Roughly.... on your 126 fibonacci...
My models show 126-115..
Next week some kind of deal for Ambac and MBIA.....
at 126 that is a good time to start getting defensive.. I may soon look to free up some cash so I can do a little day trading.. but let most of it ride till 126.. Maybe pull a quarter of my positions at that point then wait it out till it feels right..
I also suspect that, maybe the financials will make a higher low this time.... Maybe.... it may depend on the bond insurers.
The Valid part of Elliot wave theory has to do with the bell shaped pattern of people piling into a trade.. or into anything.
The Third wave represents when "The largest percentage of people are Piling into a trade at the same time".. That wave ends.. some of the Early adopters will pull out of the trade..
Making the 4th wave...
Then some final people Pile in in the 5th wave...
then they run out and everyone in the trade is in....
Then it starts to pull back.
Besides the "Self Fulfilling Prophecy" That is the legitimate representation in it.. and the charts just represent that migration of the Herd...
When you hear about people who are buying the top and selling the bottom... it's because they are so cautious.. they wait till everyone is in and they think it's safe...
but like a herd of Gazelle going across the river... it's the first ones and the last ones that get eaten.
This is also why when the Baby Boomers bought into the market in the NASDAQ bubble, they got burned so badly.. So many of them dumped their retirement in.. and when the last ones did(Wave 5)..... The guillotine came down.. and so did the NASDAQ.
and you will never see them come back into the market again(for the most part).. and in my opinion that is when the maximum number of Americans would ever get involved in the stock market.. Which is how we now are in a Secular Bear Market since 2000, starting at that time.... if you inflation adjust it.
You can also see... That assuming the Thursday Rally is going to Fail... we will see the "Hurd" jumping back into short positions... This will go on until we hit a maximum density of Bears.
It's all Chart-Astrology.... Think I can Wiki Pedia copyright that?
Oh... then you can also look at the news items affecting the Herd behavior... Good news may turn a small percentage of bears into Bulls... But Like a Large Boat or Truck.. the market can't turn on a Dime... So, when we get the bad jobs numbers, it takes a day or so for that to have an effect. Since it reduced the number of BULLS and increase the number of Bears...
Then the market could turn on Monday.
And Maybe the Monoline insurance rescue will turn the market when it happens... It feels like that is what we are waiting for.
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