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Wednesday, November 18, 2009

(X) Wave Expanded Flat

The expanded flat (X) wave works very well on the NASDAQ. Its practically a textbook example. The Wilshire, although not an expanded flat, still forms a very nice flat. The DOW of course does not make a good flat, but its obviously doing something else and its been a leader of late.

Time-wise it fits very nicely. And the flat pattern alternates in form from the first (X) wave back in the summer which was a zigzag (or double ZZ).

This pattern is one reason I am suspecting another Intermediate Zigzag to P2 peak for a triple zigzag total. In the end we can label the whole darn thing something else, but for now, this works and why would we ignore it?

Could it be a final wave 4 of some kind and the rise going on at the moment is a wave 5? The previous sub waves does not support this view too well.

At any rate, if this is an "A" leg of a final 7-12 week Intermediate ZZ, I'm looking for a "B" wave pullback over the next few weeks. Expect at least a 24% pullback (as referenced from 1029 SPX) for starters but I'm thinking closer to 38% may be achieved. Then a low volume holiday (Christmas - New year, etc) rally for a final C wave to P2 peak. Its almost too perfect. (which may be why I am dead wrong LOL)

So going short, perhaps even heavier than usual, at any perceived A wave peak is a very decent play. For if it does turn out to something other than an "A" wave, then there is greater bearish potential short term.

But next week should be a low volume holiday period and the mice will be at the helm of the MM's. So a screwy downward, sideways B wave even makes sense...then on its price low, the dip buyers charge back in early December sometime.

If instead we see heavy impulsing with a 90% down day mixed in there, something else may be going on. The first trick of course is finding the "A" wave peak to begin with...

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