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Wednesday, December 30, 2009

Once in a Blue Moon

ADDED a Nasdaq 15 minute chart:

I must be restless and bored as here is yet another variation on the squiggles using the aggregate Wilshire 5000 index.  This supposes that the B wave ended where I show the SPX B wave ended (see my update post below).  It does not matter really, it all suggests the same thing: Minute wave [v] to new highs.

We are seeking "C".

As Kenny pointed out this morning and I have shown on my hourly charts throughout the last 5 months, the RSI on the hourly usually peaks on either (iii) of [iii] or [iii] itself. Looking at all the hourly charts (again see my SPX hourly) I think you can agree that the RSI has peaked for wave [iii].  A subsequent wave [v] typically, nay almost always to a "T", betrays itself to be a "top" or wave [v] because the resulting negative divergence shows the upside momentum waning and a correction or consolidation in order.

And since we suppose this is the final Intermediate zigzag of P2, the top of C should mark, in theory, the top of P2.

I broke the Wilshire down using base, acceleration, and deceleration channeling technique. It works nicely if today was a wave [iv] low. I still see a triangle on today's intraday squiiggles and I have shown this to be a final triangle in a "double three" sideways formation for wave [iv].   It all makes somewhat sense.

So if this is the correct reading, where will we find wave [v] peak?

I cannot pretend to know that answer. Since this structure I show is not tied to any inherent ED patterns or limitations by EW rule, it is free to run as high as it must.  Since wave [iii] is not the shortest, therefore the final Minute [v] has freedom of movement to do what it will do come January 4th.  And that is how it should be I think.

Now mind you, if stocks took a big dump right here and now starting tomorrow that would be fine with me, as I have a valid count that I showed last night.

But since there is no impulse pattern down, and indeed the market has remained net sideways, I must assume this is merely a Minute [iv] structure of some sort.

As I said, i have no insight into how 2010 opening trades will play out.  They could just as likely juice the futures and it spasms open higher and breaks every stop on the book until every short is washed out of the system for all I know.  After all, I don't suppose every fund manager will have his finger on the sell button right out of the gate.....but he or she just might.

We shall see. Either way my excitement grows!

I look at this next rise as a supreme opportunity to short sell a market at such expensive prices that only come along every once in a blue moon (of which there is one occurring New Year Eve!)

Its only fitting.

When polled in late February, most people stated they would salivate over the chance to short stocks at such lofty prices again if given the opportunity in only 10 months time.  (You would have in fact been laughing if you knew 1130 would be dabbled in again - but  here we are). So now that time has probably finally come and, not ironically, the amount of committed bears is the lowest it has been since 1987.  

Baffled, bloody and worn out with short losses, I don't blame you. But I will go leveraged short ( I already have shorts on QLD) which I do not do because the initial drop may go very very far down indeed.

Just 5 more little waves of Minuette degree at most....

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