Well folks, good to be back! And I am glad I wasn’t around the last 2 weeks or so, for Smartp has been off by -25ES points and the 7/23 CIT was like antlers on a donkey So right now the model is under price duress – something that happens at important turns. Normally when the CIT is off like this, the next CIT seizes the trend and that happens to be 8/6/09. Will cover Smartp in a separate post but at times like these I fall back upon my original forte of EWT.
So let us start with the last time the model was under price duress (basically strong trend where timing misbehaves). That was during the first week of March 2009, when Smartp was off by 4TD’s and roughly -25 points and I had initiated the longs based on a 3/2/09 Super buy signal. So while in a draw down, I came up with this EWT stance:
Kind of in a similar situation currently, so time to step back and look at the longer term picture building on what I published earlier in March 2009 – FWIW.
Preferred Scenario – BULLISH
– GSC4 bottomed on 3/6/09 – http://www.timeandcycles.com/articles/?p=63
– We are completing the Wave 1 up impulse from 3/6/09
Alternate Scenario – BEARISH yet Bullish
– GSC4 may be complete price wise but has a long way to go time wise
– A corrective impulse (c of B) from 3/6/09 is completing
– As far as the presumed irregular flat goes in SPX, it can also be considered bullish inter-market divergence as NDX didn’t make new lows on 11/21/08.
– And I may be the only fool who validates wave counts on RSI!
My conjectured EWT outcome is the same in both the cases = BULLISH after a looming correction, of which Smartp indicates a neutral August(down then up), a bearish September and a bearish October into 3rd week, then recovery into year end. 2009 is SU (stuck up) in my view. We can come back and revisit the stance should the decline be deeper than anticipated.
Given global market inter-linkage – the first cue that markets were headed to the 2008 market failure point (September 29th 2008) came from Indian BSE with a +20% rise in 2 days in May 2009 to reach 9/29/08 levels, and based on that I alluded towards US markets doing the same on T&C Yahoo Groups –http://us.mg2.mail.yahoo.com/dc/launch? … 80lvmfe1jm. Well, NDX did it in July to the hilt – exact September 29th, 2008. But, this was the ascending wedge break that caused the crash as well, and hence is a major resistance at the first approach, a 38.2% retrace of the first leg up would put NDX at 1420 or so (~870 once again for SPX). So we may dance around a bit, a little more but in the end risk/reward profile is better to the downside now.
If the proposed count plays out per anticipation, we are looking at 1105+ by year end and further gains into April 27th, 2010.
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