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Thursday, July 23, 2009

How High?

The Ichimoku charts show no resistance in periods less than the Weekly Chart.
The top of the Weekly Kumo is at a little less than 1100 SPX.

Using Fibonacci ratios from 870 to 940 for waves 1,2 & 3 a peak of about 990 can be expected if a 1.62% ratio is used.

Using Wave A from 666 to 956, 38% brings us to 1067 and 62% tops at 1135.

While it has been hard to imagine the market would come even this far, there is no arguing that the Bulls have been able to push on in the face of bearish technical indicators, and all good common sense.

Abiding to EW rules, it is possible that we may see the nose bleed heights over 1000, and given the past ability of the Bulls to keep going, they very well do it again like they did in 2007. All we can do is watch the waves and wait for key levels to be met and broken. I'll feel comfortable when we close below 876.

Here's a twist in the count that I believe needs serious consideration.

It seems to me that we may have been right about the missing fifth wave back in March. What I currently label wave 5 of Primary A may be Minor Wave B, and this entire rally from March may very well be Minor C.

Here is a chart depicting that count.

This chart is making a lot more sense to me. It appears to have good proportion. Minor B has two waves and there is no need for creative labeling to see five waves.

If this is the case we may be a lot closer to a peak than we would otherwise because fourth waves generally terminate within the range of the previous fourth wave of one lower degree.

So to sum it up, I'm looking for a pull back on wave 4 to about 960 - 966 and then a peak of 990 before the Bears can regain control.

Analysis presented on this blog has only informational and educational purpose and does not represent a proposal for buying or selling currency contracts.


  1. your b wave at the 3/9 low is unique. i have not seen it anywhere else. i tried to fit it in to my cycles and one is wrong unless the final wave 5 is a failure that doesnot make a new low.
    over the years i have encountered enough terminal waves that were only 3 waves when there should have been 5 that i think it should be a rule.

  2. I don't quite understand what you are saying. It sounds like you agree that the fifth wave at the March low is missing, but you think that is common. Did I understand correctly?

    If we fall through 666 I think this scenario should be heavily weighed as we should be prepared for P2.

    At that point most Elliotticians will say we are in P3 and not be expecting P2.

  3. yes, i think that a missing 5th wave is common at the end of significant moves, mostly up moves. sometimes after the fact you can count it as a 5th wave failure, but there are many times that it is just missing. never seen this as an elliott wave rule or even mentioned by ewi. in ewi's early days precther would just say there was not enough resolution in hourly charts.
    also think there is a better than a 50% chance that the 3/9 low was the end of the bear market based on my cycle work which doesnot show a lower low for most major indexes. some major stocks like ibm should hit new lows.


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