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Friday, April 17, 2009

The Hyper-Bullish Wave 3 Scenario

First, let me say I think this chart is crap and I think it ain't going to happen. I went short in my trading account (still long in my crappy 401K) so I must not believe it. However I cannot figure out a decent alternate count other than the market goes up if this is not an ending diagonal.

This would definately be an "upside surprise". One thing this move would do is capture the public's attention which, so far, has likely remain uninterested in this 6-week win streak rally. Afterall, the market was much higher only in January. However 6 straight up weeks may garner some attention this weekend.

But maybe this is a C wave and it doesn't go to 1000...say only to where C = A at 936. Regardless, the upside potential is above 900 if this is the true count or a larger ABC structure. We have come to the point in the structure where there would be a spot where there wouldn't be "overlap" in the waves for a bit like we have been seeing in the past few weeks.

That spot would mark the "point of recognition". You have heard me use that term on the bear side of things when the bulls have that "deer-in-the-headlights" look and realize that all is going to hell and some gap down occurs that gets the ball rolling. Well, this would be the spot to the upside where that occurs. And if you think about it, its right at key 875 resistance, right at the previous Intermediate wave (4) triangle apex and right at key bearish trendlines. For if that breaks, you're looking at a run at least to 900-920 for starters I think.

Monday/Tuesday will be a game-changer either way. Straight up TA favors the shortside. But Primary wave 2 is all about upside surprise. 887 is another deal-breaker for the bears. Just like 804 was.

I don't favor this at all. The short and medium term waves don't seem to support it. The TA doesn't favor it. However remember the path of least resistance is still to the upside. 875 breaks (and holds) and the door is wide open to higher marks. That would be a "point of recognition" spot indeed.

So if 887 breaks to the upside, count on a move 936 which is the lip of the previous island top gap. That would be at least an ABC move from 666 where C = A.

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