Tuesday, October 6, 2009

An expanding triangle?

With the bullish move yesterday came a relook of the charts. What jumped out at me are the increasingly volatile corrections that keep being bought like there is no more tomorrow. Please take a look at exhibit A:

Notice how each selloff has been more intense than the previous one? These waves have been overlapping and consist of three waves. It appears that one more move higher is in the cards. There are a number of wave relationships that intersect in the 1075-1085 area, so it will be interesting to see what happens at that level.

Should price break below 1020, then a much more bearish count will have to be considered with a likely primary wave 2 top already in place.


  1. What do you think the odds are that Prechter is completely wrong about wave 3 creating new lows? I purchased a FF and Theorist from late 2002 before the start of the bull market and was saying basically the same thing about "imminent" declines on the horizon and was completely wrong...any thoughts

  2. Fortitude

    Well, we have a clear 5 wave move down off of the 2007 top with significant economic difficulties, historic gross margins, high p/e ratios, and (so far) a clear corrective pattern off of the low. Even if this is the beginning of a new bull market, the low will need to be tested as they always have been in history when the market put in a v shaped bottom, so there is still much more reward coming to the bears once the tide changes on the bulls (and it will).