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Wednesday, June 3, 2009

The Alternate Counts

I wouldn't be doing any readers justice if I didn't point out some of the other alternate counts. The top alternate is that today was a 5 wave move down and that is the front half of a 5-3-5 zig zag to my B wave low. My chart would show the basic form. That move would enable the lower 920-923 gap to close and backtest 914 breakout support. Its very a valid potential and maybe I should have had it as my top count.

However, the problem with this is that the NASDAQ had overlapping waves (i) and (iv) so it doesn't count well unless you consider it a leading diagonal of some kind but it doesn't really look like one.

But we'll see. Corrective waves can be a bitch to predict. I like 923 as a B wave low. I can also live with a 914 B wave low. Anything under that supports the notion of 949 as a significant top for a while.

Whic of course brings us to our second alternate is that the big triangle breakout only had ONE 5 wave move up left in it as a part of a C wave post-triangle move (which would alter the whole count from bottom slightly).

That would imply that the 5 wave move up is over and the near term peak is in and a decent decline is on the way. Maybe even P2 top. There is strong evidence that a whole bunch of markets are going to correct at once as I said in a previous post.

So to review: Overall I am satisfied with my reasoning that another 5 wave move to P2 peak should occur after a Minor B wave plays out. My primary count has the B wave ending today at 923.85 as I showed in my daily update. My top alternate count is this chart I just posted in that the B wave ends at about 914 SPX and backtests that support successfully.

The very bearish alternate count has P2 topping at 949 and the market is starting to trace out bearish 5 wave impulse moves down.


  1. Dan, you should be right this time!

  2. This may be too perfect but I'm open to the possibility that the blue A on this chart was the end of wave 1 of a wave five diagonal triangle. IF we rally tomorrow and wedge higher this count would make sense. One other thing, oil and gold, big components of the reflation trade are also at a cross roads.

  3. Daneric,

    Great call yesterday that today S&P would pull back to 924-926 area. Well done, bro!

  4. Dan, your charts are superb.

    I think we have seen the top but we may stay rangebound for while to give P2 some more time, not so much price. The big chart sure looks good enough for a clean P2. If the all-the-same market sells the reflation trade coupled with a geopolitical event then P3 is on.

    Disclosure: Long SPY put LEAPS and adding
    Short Silver, short steel stocks, short gold as hedge to physical holdings

    JP Bomber

  5. Dan , great post thanks i now understand why you went with the first post as your primary. Thanks once again dont mind the odd smart arse that turns up on the site, as much as they like to grumble they also like to know what you think :o)

  6. Fundamentally, I think P2 could be very long. It must burn the stimulus package and meet Feds injection targets. Only then they will find that consumer is still dead.

    So, a nice correction to 840, 800 or even 780 could be still part of P2 and then ride to 1000-1100. That's where it will top, probably quite a while from now.

    Strictly fundamentally, not TA.


  7. I think we will see 1000 before we see 800 at this point. We just broke the 930 resistance in an unquestionable strong impulse and I would say it will hit the high 900 area/1000 before going thru a strong correction. I don't think there has ever been a wave this strong and this long without a 38% correction, so we are in uncharted territory.

  8. yes, i am sorry to inform you that Primary 3 has begun... of course, when nobody expected it...

  9. Hope none is looking at the A/D lines

  10. "yes, i am sorry to inform you that Primary 3 has begun... of course, when nobody expected it.."

    I hope you´re right. It really didn´t require mastermind to see 38.2% will park temporary as last minutes market hours with spx, oil, gold, eurodollar all did it together as that 920. But there´s no way up anymore from here with eurodollar.

    With minium it really need more downside corrective.

  11. Dan,
    you ever considered the fact that we could be still in Primary 1 Intermediate 4 ?
    If this is P2 and P3 is right around the corner then this whole bear market would be over next year or 2011. Realistic? I don't think so.


  12. B Wave should peak right at 942 if that is the correct count. If it's a 5 Wave it will end around 958 (34+924) give or take a few points. If it was me I would be taking profits soon as either Primary 2 is nearing a peak or A of P2 is no matter how you look at it.

  13. If it's a 5 Wave...Wave 1 was from 924 to 936...Wave 2 from 936 to 929...Wave 3 should peak around 948 and then the final 5th Wave is reached on Friday in the upper 950's. Next week a more significant sell off begins.

  14. Dan you are a ficking genius.

  15. I unloaded all longs from my 401K account and get ready to go shorts.
    I like to act earlier(like Buffet and Kass) then others

  16. Indexes are overbought. Watch out Tomorrow!

  17. Useful post from trading point of view this is. I got know important updates on market here. Following financial advisory services like trading tips helps in earning good returns from market.