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Wednesday, April 15, 2009

If Its an Ending Diagonal

Then it would make more sense for the move up to be labeled something like I have above. I know I throw a lot of counts out there and I don't mean to confuse the situation but, hey its an EW blog so what else can I do? You have to adjust as the waves go along I suppose. But mainly I like to spark ideas and record them.

But again, here is the main point: This is a Primary wave 2 rally correcting the ENTIRE market move from 1576 to 666. So even a mere 38% corrective move would equate to 1013. I only suppose one thing will happen: the 200 DMA will be hit. Its still falling of course which means this is a bear market no matter what anyone says. And it currently resides at 987. Its under 1000. By the time it gets hit perhaps it will be 920-960 or so. Haven't really thought about it.

Its that simple for me. I am long in my 401K and untouched (thank god its not a daytrading type account or I would have churned it to death LOL) until the 200DMA is hit. And then we'll see. Also check out my cycles post. I am sure this rally will have 13 cycles on the hourly MACD. I am betting it will be much more than 13 though. But we'll start with 13 and we may be in only cycle 7 or starting 8.

So those few things help me to keep my eye on the ball. There is still a lot of doubt about this rally it seems which means it has a ways to run I suppose. This P2 will top only when the majority of the public is convinced that 666 was the *bottom* for sure. Thats the way it works. This is a major wave taking form not some Minor or Intermediate type. It will be easier to gauge social reaction to this rally more than others.

I don't suppose a major downward correction will occur until, again, the majority of people are convinced it won't happen. And that would include me. I am only human too.

I just received a prominent newsletter produced by Citibank's finest TA folks who are calling for a top in this rally very shortly and a move on down below 666. I think they are wrong of course. And hence the rally will continue. But why? Lack of sellers. It takes a while to ramp up fear to the levels seen this past 8 months. A 28 day rally is not enough of a correction for an entire 18 month Primary wave 1 bear move!

Every support/resistance zone gets shorted and although there are small victories, bears keep getting squeezed beyond their belief. Sooner or later they will turn bullish and then we can finally correct some. I suppose a blowoff top to 876 or so will be very bullish. But wave-wise it would be a valid wave spot for a corrective to occur. How deep? Maybe it only closes the 810 gap and holds 796.

But again I ramble. The market will do what it needs to do. But I'll keep counting nonetheless. Sooner or later the waves will take some more maturity and the structure becomes clearer. The fact that many TA types are struggling is also a clue that this structure is still very "young" in scope. Which means it has much more to go both in time and price.
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