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Tuesday, June 2, 2009

Banking Index Update

Someone mentioned that my banking index leading diagonal should be 5-3-5-3-5 and not 3-3-3-3-3. My EWP book says the "jury is out" on a strict definition and maybe there is one by now and I didn't get the word. Regardless I relabeled it as a 5-3-5-3-5 and it probably works best this way.

Its kind of like a hybrid between impulses and corrective zig zags which is I suppose what a leading diagonal is all about. Its an actionary/impulsive wave moving with the market's ultimate larger trend (down) although it didn't really want to but it couldn't help it. Banks have led this bear market since before the Oct 2007 top was in why would it change now?

If tomorrow corrects the SPX backwards toward the 920's, I will be looking at this $BKX chart looking for a new low on some kind of falling wedge pattern which is a ultimately a bullish reversal pattern. Then on any SPX rebound higher, financials are due to join the rally and help the SPX get over 950. A deep-ish (leading diagonals can retrace deeply) retrace back upwards would be a perfect fit with my 988 top.

So this chart pattern could fit a new low with a market pullback to 925 tomorrow (B wave low) and then a rebound on a C wave market thrust higher would correspond to this banking index retracing a Minor wave 2 back up.

This chart is one reason I am looking at a P2 top very soon. Its also one reason I am looking for another SPX push because the banks will be due to rally a bit after it finishes its leading diagonal.
Well at least it makes sense at the moment, lets see if it all pans out.


  1. I forgot that $BKX topped out ahead of the general market in Feb 2007 (on a Martin Armstrong Pi Cycle date). Makes sense that it could be leading the way down again. McClellan oscillator only made it to +105 on this upthrust yesterday and actually dropped slightly today which according to McOsc. experts should lead to a >1% move in the markets within 2 days. I don't know if those market has enough strength to rally into some killer cycles starting next week. From a numerology perspective, it could seem fitting that a top could be made on 06-03-09, the exact inverse of the bottom made on 03-06-09 with market possibly tagging $SPX 963,966,or 969 as a high.
    There is a tremendous amount of bullishness as Kenny has pointed out. Dan Sullivan, Hulbert's #1 timer for the past 3 decades just issued a buy signal. A Gann specialist has been e-mailing me the last few weeks that we have started a new bull market and even bloggers who have been previously looking for sell set-ups are now positioning for a move upward. If we are following the Panic of 1907 model then a low should be made by late August or September. (9-9-09?)

  2. Dan

    I have been watching a similar triangle in XLF. However the triangle would have tops on your BKX chart connecting the top at 43.75 with the top at 40.08 and top at 37.38. In this scenario we have already broken out and are backtesting the triangle. Once confirmed as support we go up.


  3. kenney, caldero says you and plilipe can kiss his teabags, you guys are rookies and and he says you guys like tea, so drink up fellas.