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Wednesday, May 13, 2009

The More Bearish Alternative Count


Last night I said the alternate count was that the market had formed a wave [i] at Tuesday's low and the late Tuesday rally yesterday was a wave [ii] peak. Today I adjusted from that alternate count because today's squiggles support something else ahead of that more bearish count. I also perhaps am fixated on those 200DMA's of the SPX and assume support will bring in buyers. But in any regard, I am willing to allow for upside surprise (theme of P2) for now until the key 865-880 support span gets seriously tested. I want to see how that interacts first. In fact I will be a long buyer for a short term trade at 875 and set stops. Who wouldn't? At least a bounce back to 898 mighty be very profitable...
However I was surprised to see EWI did indeed call yesterday a Minute wave [i] low and wave [ii] rally in their update tonight. That implies any bounce will be capped at, say 900 max, and then a very bearish "third of a third" will just smash right through all that hard-won breakout support.
It could happen of course which is why I list this bearish scenario alternate count. It doesn't yet "feel" right that the market is producing such large impulsing down patterns already and that the hard-won support will just get taken out after only a weak bounce up.

18 comments:

  1. this is what i was looking for in the other post. great work prof!

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  2. I understand your concern/question that this would mean the bulls have pulled up camp quickly and given up... but it would also trap an awful lot of latecomers to the rally. The retail sheeple started piling on near the end and they'll hold on thinking this is just a normal pullback... but if this goes down little by little and doesn't give them a chance to get out they'll feel like I did as I kept nibbling at FAZ. :-)

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  3. Daneric, check out the following indicator: $BPNYA. What does that tell you? There are too many bulls wandering the street right now. We need another bear scare to spark another rip off your face rally.

    Yes, I agree with EWI count. This is what I have been suspecting for a while. 2 month rally, 2 month pullback, and another 2 month rip off your face rally.

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  4. Dan, I know you don't care for Bob McHugh but I think he's right when he says today that this pullback is healthy and will pave the way to a higher rally.

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  5. Hi Dan, From looking at the charts I see 879-882 as a sup if that hold we may slice through 200DMA. I'm also looking at the weekly chart show 750-775 as a sup and the monthly show 555 also possible.
    I will take profit from FAZ if 775 hold and move it to FAS.

    TD.

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  6. Correction: I will take profit from FAZ if 875 hold and move it to FAS.

    TD.

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  7. This comment has been removed by the author.

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  8. Anon I largely agree with that. That is why i am calling for merely an X wave of some kind which appears to have started playing out.

    After the X wave, I fully expect the market to get higher than it has in another zig zag higher perhaps to over 1000 SPX

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  9. I quite agree with this scenario. I like where you have pink (i) located as well, as opposed to the EWI version. This agrees much better with my intraday wavecount. With (1) summation turning, (2) with a very forceful MCO reading, (3) % > 50-day MA turning < its 10-day MA, (4) BP turning down from very high ratings, (5) Sentiment readings maxed out... the list of indicators goes on and on. I think we are on safari and the correction will be substantial - so I support this perspective. 5-3-5. Cheers.

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  10. hi Daneric!

    i usualy read your blog every day but is the fist time i post here, you do a awsome job in here keep it up.

    I just want to know if you can condiser the 666-930 as a wave 4 (double zig-zag), that way we could be starting a 5 down to new lows.

    That can fit in your more bearish count.

    rgds

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  11. Onorio no I don;t consider this a wave 4

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  12. dan
    why do you not consider this to be 4 and 5 to begin in the latter half of the year.

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  13. Hi Daneric,

    TPC had an interesting post a couple of weeks ago that is still worth reviewing:

    http://pragcap.com/analyzing-the-government-rally

    So: if the govt.-and-bank-induced rally from 666 to 930 was based on lies and manipulations that have been exhausted, what do the banks and govt. have left to "levitate" this rally to 1000 or 1100?

    Might P2 be over?

    I know it's only been 9 weeks since P2 began, but it rose 263 points, fulfilled minimal structural requirements, and bullish sentiment hit 85%. At present, I just don't see any more "tricks" big enough to lift the S&P another 100-200 points. Do you?

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  14. Bullish sentiment hit 85% on only 1 poll. EWI points out other polls that indiacte still too much bearishness (likely) for P3 to be starting.

    I am sticking to basic guidelines taht a wave 2 retraces deeper than what has been so far. So I am looking for 38% or above 1000

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  15. That would be an awfully long wave 4 and it just doesn't fit. P1's channel has been broken out of on many indicators to include RSI.

    Besides I believe this is indeed a cycle wave C down from Oct 2007 peak. And that means a big 5 wave move. We are in wave 2 of that big 5 wave move. If you suggest that 4 lasts longer, than the entire 5 wave move of cycle wave C would take a very long time indeed.

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  16. Thanks for your reply, Dan.

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  17. IM right there with you. They will jerk this up 2 the upper trend channel then down we go.. Friday could be bad.

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