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Wednesday, December 16, 2009

Nikkei, Wilshire and the Bernanke Moment

Nikkei traced an expanding Leading diagonal off its top. That called for a deep wave (2) retrace. It complied. Remember how I said the Nikkei would be likely tracing its wave (2) high when our markets topped?

It would be nice if the Wilshire punctured the top of its Bollinger Band one last time in a spasm of overthrow to finish this sucker off.

On the longer term, this chart supposes a triple intermediate zizag. It works nicely and makes sense for a P2 wave. The optimum time for P2 (.618 of P1 in time) is actually the beginning/middle of January 2010. By then of course bears will be hating life and ready to be committed if it lasts that long. But things rarely work perfectly. We are within a month's time of that mark and the Wilshire5000 made a new high today. Final high? There is room and the count supports higher highs.

But it doesn't have to be of course. I am glad the Wilshire made a new high as it can now be said to have fulfilled a valid count. That means that anything past this is extra gravy on the top which is ok by me. Afterall, I dreamed up an SPX chart back in May to 1121 scenario by January and its acting like a magnet to the final destination.

That chart has kept me sane all this time. I can be patient.

As soon as I saw that Uncle Benny B was elected Time's "Man of the Year" I immediately felt a sense of relief and probably thought what every other waver thought: Here is the ultimate contrarian indicator. Mish and EWI beat me to the punch though in mentioning it:

Something as monumental as this means that we are likely within a week or 2 or 3 of a final market high for this bear rally. That was my first thought and actually less than a week may be it. Maybe just days.

I said the Nikkei would be tracing a wave (2) likely when the DOW (or market) finally topped. Look at the Nikkei now. Playing out like a banjo.

Look at the Wilshire chart. It traces beautiful wave patterns. The counter-trend rally has been sharp and severe. Nary a 38% retrace in the entire thing.

There cannot be more than three Intermediate zigzags. That is an EW rule so-to-speak.

I am bearish as ever. The higher we go to a more perfect triple zigzag structure and time target, the more confidence I have in the count.
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