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Tuesday, May 5, 2009

How Long Will P2 take?

I recently posted a speculative chart based on a triple zig zag and a market retrace to a .382 Fibonacci in time and a 50% retrace in price. This puts the market roughly at 1100 come January 5th 2010. Do I really think that it could climb so high and take that long? Basically that would make 2009 a very profitable year for the bulls.

So what makes sense?

Well let me answer it this way: I don't think a 2.5 month rally is sufficient either. A simple ABC zig zag for an entire P2 that tops out less than a 38% correction does not make sense.

This C wave is going to end around 950 maybe above within a few weeks I think and hit the 200 DMA. Will that be it? Will that be all of P2? I presume not which is why I have labeled my waves a one degree less than EWI and Kenny. Yes I am speculating but its a calculated speculation.

I think social mood needs more time. I think the bear market needs to be largely "forgotten". The only way this can truly occur is rally over time. From a stock buying standpoint, will investors and institutional buying really completely bail so quickly when social mood is on the upswing? When improvements in the economy are just seeming to bud? Would a 960 peak in only 2.5 months be enough to create a downward vacuum selling force that breaks all support zones from here on down to 666 in whats supposed to be the worst bear wave of all, P3?

Does that make sense? Sure I definitely think we may/will get our 38% correction from the C wave peak, but at some point one of these recent support zones will hold as soon as the selling subsides. And wouldn't that be heralded as the much needed market correction the media heads have been talking about? The market would get real bullish then yes?

I think P2 has a long way to go. And I expect at least a DOUBLE zig zag correction at the intermediate wave level which would be counted like (W) (X) (Y). A triple zig zag would be (W) (X) (Y) (X) (Z). And the ironic part is that a triple zig zag may even look like a huge 5 wave move overall as I have drawn on the chart.

Wouldn't that be just like the market to confuse the chartists at the very peak of P2?

Call me crazy, but the masses MISS and yearn for the "asset mania" to return that we have abandoned for 17 months. And then some day it will peak again. And again we will face the reality of living in a Ponzi nightmare. Yes US national debt at all levels will ensure a nasty P3 finally comes. But the Ponzi can surely go on for many more months as long as world social mood is in an upswing correction. When we peak, they will change their minds.

And our national nightmare will continue.
If there is a P3 and I do believe in EWI's overall count, then wave 3's are usually always the strongest. Don't doubt that. If P1 chopped off 55% of the market, expect P3 to chop off 60% of the market yet again.... So if we top at 1000, your looking at 400 SPX for a wave 3 bottom....

I look at it from a momentum standpoint too. If the market achieves 950 in the next few weeks, is that a high enough springboard to dive from? Is there enough kinetic energy built up for such a devastating P3 when you just got done with institutional buying in big volume since early March?

I do however think that 950SPX will create enough energy to blast through some of these recent upper crust support layers so the market can experience an overall 38% correction. But more than that, I think P2's social mood will kick back in for another corrective zig zag up. At the least.

So my chart on a 50% P2 correction I speculated on shows a triple zig zag. I expect at least 2 zig zags. I would not be surprised about a third.


  1. monthly 20 ema is 1079,bears markets are usually below this ema

  2. Blessings from above unto your spirit

    Are you able to conjure a scenario and pontificated here for us where [P3] commences after OCTOBER 2010 and only after that date?
    If you can, you will have a winning strategy and hold the secret code. Otherwise, He who rules is doomed to one term and only one term… That coupled with the fact that the later part of His reign will be a living nightmare. The wolves will be salivating at the chance of having [P3] take shape during the first ten months (Jan to Oct of 2010).

    Your friendly loyal student silently sitting in the back and fervently thinking you way off target on this current projection.

  3. I really don't hold any conviction ona third zig zag and 1044 would be mega-resistance.

    So a 38% correction is my first thoughts, My chart shows the extra zig zag because that was the purpose of my post was to posit a 50% chart correction scenario.

  4. nice thoughts

    But let the market show us the path, I think P2 is over after this C-Wave, but maybe not, we can estimate it by the following downer (X - Wave for you, begin of Primary 3 for me), this will give us the needful information.

  5. Anonymous said...
    monthly 20 ema is 1079,bears markets are usually below this ema

    EMA20 I don`t see that.

  6. carlos, get the sht out of your mouth, thanks, you are in america.

  7. Ok, now I'm starting to think you are reading my posts. See my comments on K's site from earlier today. We gotta quit stealing each others stuff. If we do we must assign credit. LOL

    Obviously I agree with everything you have said. I just said it in about two sentences. Very nice DE.

  8. eat some sht shank, and your playin with other peoples money???? lol, fools.

  9. Unless we get a black swan are correct regarding P2.........besided abbie joseph cohen said we are up this year heheheheh

  10. Carlos, my guess is your English is much better than most us can write in a second language.

  11. Wowtalkabouthardtoreadwhyevenbotherwithspacespunctuationoranythingkeepupthegoodworkbuttryusingshortparagraphsandseperatingthemwithblanklines

  12. Changewave has declared the following ...

    "The bottom is in and a new cyclical bull market is in the process of being born!"

    Great words Daneric - the above proves that the bulls are lining up ... until P3

  13. Nice work, but its all a waste because you will change your mind tomorrow or the next day and totally nullify all of your work. You have a different forward looking chart every other day. A really good EWT chartist creates their view of charts based on EWT and may make a tweak once a month maybe to alter the over all view. But you are going back and forth and changing all your forward looking charts on a daily basis.

    I suggest you take a month off because you are surely going to be on the wrong side of the trade since you are now way over analyzing to the point your right brain has disconnected from your left brain.

  14. Daneric,

    Thank you for re-posting this chart and adding even more analysis and reasoning. Whatever people's differing opinions, your view helps all of us consider and think through possible scenarios.

    How do you plan to trade P3? All of the inverse ETFs are based on swaps whose counter-parties are the very banks (and brokers) which will be in danger of collapsing during P3. We could have a fortune (on paper) in FAZ, SRS, or SDS -- but no one left able to pay us.

    Are you going to bail from ETFs at some point in P3 and switch to shorting indexes, futures, and individual stocks? Thanks for your ideas.

  15. Very interesting to see that basically all of you ride down the megabear ally.

    You should all think about the 2000-2009 being a forth wave.

  16. anon
    if 2000-2009 is wave four, the was 91-99 the third? which was up? if that is the case, the wave 5 will be up from 2010 to 2018? say dow 20K?
    Dan what is the grand supercycle we are in?

  17. Oh yeah thanks I had the line break turned off.

    I turned it back on.

    Shanky no I didn't read your post we just think alike I think.

    And anon I take your criticism of changing counts somewaht to heart.

    My problem is I track microsquiggles and yes they change.

    But I have a good idea where P2 is heading and I could just do this once a week but my blog would be boring huh?

    Also I like to throw out every idea in chartform that comes to my mind. It doesn't mean I treat each one equally, I certainly don't. I try and convey that but it often gets lost.

    I suppose I should be more like EWI and update only a few times a week. Its something I consider.

    How P2 plays out is a day to day thing.

    yes I tend to throw out too many random thoughts at times (but that doesn;t mean my brain ranks stuff randomly - bopth halves afre still connected) and that confuses people. Your irght in that sense. I will have to cut that out a bit.

    The sideways April was a very difficult pattern and constantly sending different signals from day to day. Even EWI was wrong a lot.

    Now that that period is over and the pattern possibilities become more clearer, it will get less frenetic

  18. DE - I was just kidding around. Not sure if that got lost in the translation. We do think alike IMO. Please keep throwing out all your thoughts. Don't limit anything. When you are thinking out loud is when you do some of your best stuff IMO. One of the things I like best is that you present all the options (or all the ones that make the most sense). It is the diversity of your posts that keep the more intelligent readers on their toes.

    I would consider dumping the ability for Anon posts if I were you. they seem to be the only crappy posts you get.

    Thanks for all you do.

  19. switching to Disqus may help more.
    regardless, thanks for your efforts.

  20. Are we still looking at 940ish before a meaningful, tradeable correction?

  21. I'm looking to go short and go away.


  23. linus,

    I would consider the -87 low to be the base of wave three and -82 as the starting point.

    8 years will be to long time for the fifth, a faster kind of blow off high would fit the money supply/inflation picture much better.

    Personally I am looking for a crash/bearmarket low sometimes around 2016 - 2018 instead.

    But I am not that much into EWT either so...

  24. Congrats Dan!

    BKX today hit the target zone you've set in the "Banking Index Triangle" post.

  25. Anon - I would hope that any investor would want their planner trying to get a handle on what's going on. Following K and Dan and Cobra I figured I have outperformed a vast majority of the planners out there. I know my client base is growing rapidly. Just trying to do my part. Not sure where all the anger is coming from.

  26. It could be possible that this move down from 1576 to 666 was Primary A. Primary B is underway which will take us to 1000+ and then Primary C will take us at or below 666. It doesn't have to unfold in 5 Primary waves correct? Because wasn't the top of 1576 end of Primary wave 5? Which should be followed by an ABC.

  27. The mega-picture stuff of yours is incredibly helpful in keeping me from getting too twitchy on the day-to-day movements.

    The material you and Kenny post is far and away better than anything I've paid a subscription to get.

    I'm going to send you a dinner, dan. Enjoy.

  28. linis & anon - re 2000-2009 being Big 4 (maybe flat) - for the really lateral thinkers the last 5th wave extension started in 1996/97 in the Dow somewhere in the 6000-6500 level (S&P around 65-750 level)- basic EWT rule of 5th wave extensions is that they double retrace (A down to where extension started then B up to near or above wher 5th finished then C down to where the extension started - this could be the scenario with the C wave finishing at 6469

  29. Thanks for all your hard work. Will you care to update the chart on QID? QID has some positive divergence on macd daily. Thanks again,