With today's gap up and strength the rest of the day on the Treasury's latest bout of wasteful tax dollar spending, one thing is clear: Primary wave 1 is over. That means that we likely have 2-4 months of choppy bullish action. Bears shouldn't completely fret, as the low will have to be tested before long. Nothing goes straight down and nothing goes straight up. However, there is still some possible upside on the target, and with today's action acting as the engine, we should be able to get there tomorrow.
As for my Primary Wave 2 target, I'm looking for a minimum target at the 38.2% retracement, which is the 940 SPX area. There is already heavy resistance there, but if we get there too fast, then we will likely go higher in a double zigzag fashion.
As for my target on the retracement of this first A wave...I would venture a guess that the SPX 740 area will hold on a closing basis.
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Good morning Rich...Kid Flare here in Wilm, NC. Do you happen to see any correlation on the current weekly charts of the SPX with the bottoming pattern that developed in late 2002 and early 2003? If there is, we may hit the January highs and then retest the lows? Just a thought.
ReplyDeleteKidflare, that is an interesting point. I noticed that the bottom in 2002-2003 looked similar. Would that mean that we have a multimonth run up to 1100, and then tank again?
ReplyDeleteI'm looking at the hourly charts since the low, and the move up appears spent. We should now go and test the trendline break (~spx 740), which should hold. Then we should have a wave C up that should finish this intermediate wave A. From there we likely move down in a choppy fashion over several weeks (but 740 should not be tested). Then we will likely move up in our final intermediate wave C to at least the 1014 area. If we come down in an A-B-C pattern, then that will likely be an X wave, and we could shoot higher. Personally I think 1014 is likely the top of this rally, and the we will break the March lows.
ReplyDeleteSaleen899..go look at the year 1996 for another year on the SPX with a simliar pattern. However, in either case, I don't think one should invest or trade based on past patterns and there were totally different socio-economic conditions present then than now. Doing Elliott Wave and/or Fib #'s works great "after the fact" it seems lately. You have to trade with what the market is telling you day by day...and geez that is more and more difficult as not much is making any sense. What I like about Rich's blog, is that he will "adjust" wave counts etc as a day unfolds, while many EW techs won't.
ReplyDeleteRich...in reading your post above..could you draw your prediction/analysis on a chart for us to see..I am confused at the "trend line break" at 740...Thanks again
ReplyDeleteSaleen899..kidflare again; I've got another pattern for you to look at. If have the ability to bring up 2 screens...do this: Bring up the Daily chart of the SPX from Dec 17, 2007 to May 27, 2008.
ReplyDeleteNow bring up the Daily on the SPX from Nov 2008 to present...do you see it?
The March 17th, 2008 low would be our recent low on March 9, 2009. Last year it ran up to the 200 day SMA...and if it does the same this year, we will be in the neighborhood of 1014; just a Rich mentioned above. Possibility or just Voodoo????
After looking at the longer term trendline I redrew it and have shown it on today's post.
ReplyDeleteThanks!
Kidflare...The Nov 07-June 08 chart compares well to now. Might be a good model for what this rally will look like. Nice catch.
ReplyDelete