Thursday, March 26, 2009

We are nearing the final stages of this 1st bull leg

Well, my preference for scenario #1 worked out; however, price was anything but powerful. Momentum is struggling to stay afloat and rest assured that once it falls the bears will push hard for a resumption of the overall trend. The move should be powerful enough to give the bulls some worry and some bears thoughts of new lows. However, the odds of a new low this soon is not high. Instead, primary wave 2 will likely try the patience of both bulls and bears as rallies die and are reborn on both sides.

As seen in the hourly chart, the bulls have not been able to push price above the median line. If they can get enough strength up, they might have a chance for another short covering rally to the top of the channel. My belief in their ability to do this is losing quickly. As far as price structure is concerned we have met all the requirements from an EW perspective for this wave. Now it is just a matter of when.

As for tomorrow, if we don't get out of the small price channel soon (shown on the 5/15 min charts), then we will likely break down. If we can break out and stay out, then we will have a chance at the top channel before end of month.


  1. Rich,

    I was wondering if you can recommend some EW material,besides the obvious Frost and Prechter book?

    Thanks again and awesome blog. I really appreciate the analysis.


    Here try this for some "lite" reading. What an interesting day Friday was. My Velocity/Momentum indicators have diverged from my MCTC oscillator, and have finally agreed with the EW wave count...but could be negated due to low volume. Cramer is leading the sheep to a slaughter! If we gap up Monday with no volume, my MCTC will invert and be bearish and we will be on our way to 7100 on the DOW and possibly 750 ish on SPX = watch the volume for a clue.

  3. Jacob, the reality is that after Prechter's book I focused on implementing a trading plan using EW as a method to look for entry points, exit points, etc, so I never read any other EW books. But maybe I should, so if you find one you like let me know.

    Kidflare - interesting site. Someone went to a lot of trouble putting those rules together and there's a lot of good stuff there. So what is your MCTC oscillator?