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Wednesday, April 15, 2009

Cycles for Primary 2


EDIT: I realize 34 is an even number and if the first count up is 1, you cannot end on 34. But it was just an estimate anyways. I like 39 though which seems if you look at my 2008 chart, 39 cycles occurred in about 5 1/2 months. But like I said, we'll get to 13 first and then maybe 21 and we'll see exactly where this market is at that time before I can boldly predict 39 cycles for sure.
In December I was posting on expected MACD cycles for each corrective wave and even the impulse bear waves. What I came up with was that you could count approximately 13 cycles on the hourly MACD between orthodox price tops and bottoms per each minor/intermediate wave. Of course counting the cycles is a bit subjective but overall it gives you a "feel" for how the current corrective is unfolding.

What do I consider a cycle? Well, every up down move of significance. Perhaps you can say every significant crossover of the hourly MACD but this would be too exacting maybe for my purposes. Its somewhat subjective but works well enough when trying to get a feel for things.

I posted this chart on 2 Jan to explain my thinking. The problem in January was that Intermediate wave (4) turned out to be a triangle and the 13th cycle on the hourly MACD marked the top of the E wave which was not the price peak but was the *orthodox* peak.

I have a lot of permabears who read my site (afterall I am a permabear too I think) and often email thinking that this market will roll over at any time and take out the 666 low. Since I follow EWI and agree in that social mood requires a longer corrective period than what has played out so far from 666, I try and explain that although one can never rule anything out completely, the odds are strongly in favor of more corrective waves upward.

But back to the cyles. Intermediate waves 2 and 4 of Primary wave 1 arguably took 13 cycles to complete. Even some Minor waves took this long. So if this is a Primary wave 2, one can reasonably argue that it should at least last 13 cycles. And since this is not likely to be a triangle pattern, the 13th cycle very well may be the peak price of this rally. One must also consider that a Primary wave 2 should take about 1/3 the time of a Primary wave 1, a Fibonnaci relationship in time. This is why I argue that Primary 2 has a chance of lasting into the fall since it took 18 months for Primary 1 to play out, one can expect 6 months for P2.

Taking the logical argument even further, you can easily see that more than 13 cycles on the hourly MACD will occur in 6 months. And a Primary wave 2 woudl be expected to take longer than the 13 cycle Minor and Intermediate waves of P1. So I have my eye on the next Fibonnaci sequence numbers, at the least, 21 cycles or if 6 months plays out, 34 cycles. I cannot see it going past 34 cycles but this is just ponderings for now.

So what cycle would the SPX be in now since the March low of 666? Well I think around 7. Yup thats all. So if 13 cycles were to play out, you can say this P2 rally is only half over. But like I said, I expect a higher cycle number at least 21. Through summer 2009 would be 34.

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