This is another idea that I shamelessly stole from Kenny. I just try and add pretty colors. Remember to click on it a couple of times to keep enlarging.
A Converging Fibonnaci Confluence
– January 31, 2009Posted in: Intraday Commentary
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Does breach of 843 invalidate your scenario?
I am denying that we are going to see a strong down move, but I am just wondering if it would reach 600-620 as some are predicting now.
IMO, we are seeing the last seeing the last stages of cyclical bear leg in a secular bear market. We may stabilize after the down move and could begin a cyclical bull leg.
Any thoughts/comments welcome.
Correction – In previous post I meant to say “I am NOT denying that we are going to see a strong move down………………….”
My crystal ball has a feeling that we’re going to see the last leg down in this wave sequence be a big ugly move happen quickly with a day or two of huge drops. It’s time to shake out the weak hands. The ones that have been debating about whether to get out or not as they’ve watched the markets drift down during January. Then the big rally can start up to 1000-1100 on the S&P. The markets love to screw as many folks as possible.
Agreed.
I somewhat agree but along diferent lines. Don’t forget this is just the 3rd wave. we still have 4 & 5 to go which will eat up time. But something tells me we are going to get that “screw-the-traders” fakeout move in the form of a truncated 5th. I mean holy cow, look at the drop from Oct 2007!! Does the bear market really need to prove itself in the final minuettes of the final minute of the final minor wave?!? I mean Come on. If ever there was a scenario SCREAMING for a truncated fifth you have one here.
No. The smart and prudent place to cash out is at the bottom of this third wave. Anyone trying to suck the last bit of juice from the pit beyond the bottom of this third wave is just a greedy pig, fit for a good grinding up IMNSHO!
By “cash out” I meant of course “short of” positions. In case that wasn’t obvious.
Transform, I’d forgotten that you believe we’re still in wave 3 rather than wave 5. You’ve stuck to that thinking and it’ll be VERY interesting to see if you went against the general consensus and end up being correct.
Yes, but I wasn’t referring to that. I agree with Dan and the general consenus on the relative count. However, if you drive a stake in the ground, my count comes out one degree lower, e.g., they have an intermediate wave where I have a minor wave, they have a minor where I have a minute, etc. But the overall shape, pattern, and even the targets work out more or less the same.
I disagree. The market is now “configured” for a dramatic fall.
The VIX is telling. Here we are at low 800′s and the fear is nowhere where it was when the market first visited this area back in October. People lost fear, i.e.-compalcency reigns along with a great bunch of bullishness.
The indicators are all reset so-to-speak. Its readyu for a fall that no one really thionk scan/will happen even though EW theory point the way.
Good thing there are many competeing versions of EW theory huh.
And good thing Prechter has no credibility.
Its perfect and thats why it will happen.
Don’t count on a truncated fith. The charts don’t support that.
I do think the 3rd down will be dramatic, and I’m short for that. But I’m not going to take a chance trying to squeeze the last few pennies out of the last last minute wave. I mean why do that? We’ve gone from 1509 to what ever the end target will be. Say 700. Say 650. Crikey, isn’t that enough!!! Aren’t the bear coffers full enough by that point? It just seems greedy to me to keep playing right to very end.
A 50 point move from 700 to 650 is a large percentage, a 7-8% move.
A triple leveraged FAZ (or FAS) will expand some 22%.
If it is at $200, that is a $44 move higher to $244. If you try buying FAS before that 7-8% move, you’ll see it go quite red. So it matters in not trying to buy to early.
I want to count down to the last tick. I was able to do that in Oct 11th lows, I watched the last 5 wave intradays tick down and bought. I also did that on the Nov 24th lows just before OPEX closed out.
It is possible.
These are the greatest moves and the greatest profit and loss opportunities. Thats why we do this!
OK. You made some good points. One last thing to consider and then I’ll let it rest. Most long term accounts have a 3 day cycling period before the money can be reinvested. Some finesse might be required there, even if one could count all the ticks down. There’s a balancing act when it comes to catching the move up versus down. Unless, that is, you think it will be a slow move up. Then it’s fairly clear to stay short for the entire down move.
Look, perhaps, at the Russell 2000 yearly chart- looks like we are in the start of the 5th wave down.
Dan, Kenny admits to stealing the fib confluence idea from someone else, who likely stole it from someone else. So your plagiarism is at least twice removed. Hope that makes you feel less shameless.
Nice charts but a catalyst is needed to break down hard because without it, the fall will be met with buyers. There has to be no buyers. Look for China and Japan to stop buying Treasuries and that will be the first signal.
Do you really think that are not already selling them…a little at a time?
The very chart implies buyers are waning. When we reach the apex and teh market can no longer go up, its going to go down…a lot.
is this the catalyst we needed President Barack Obama’s financial rescue plan will be pushed back a week to the second week of February!!!
http://uk.reuters.com/article/ousiv/idUKTRE51001120090201
Excellent debates/viewpoints. This going to be fun to watch (in a demented way). I got out in Aug of ’07 when the Dow was at 13,322. I was about 6% too early. Now I’m waiting to get back in and if I can do it within 6% of the bottom I’ll be thrilled. Someone please be sure to let me know when that day arrives.
So many variables out there with the gov’t trying to pull multiple rabbits out of its hat. All of us here know it’s no use, but the masses want to be saved and want to believe all of this can be stopped. Have to ignore all of that and let the charts talk to us.
And the statement about complacency is so right…. “We dropped 40% last year, that was the worst of it, just have to wait for things to move back up now.” The poor fools…
Timing 6% of the bottom will be difficult. 740, 680, 640, 620 and 590 are pretty far apart and these are the numbers thrown out there by the ‘experts’. (I’m going with 640 long…at least in the IRA.) And option calls with mostly Dow components in the trading account. I’d love to know others Trading Plans…?!
Great charts Daneric. Glad to have you on board. I bought June SPY 75 puts when we hit 925 and will add if 790 breaks. I will begin phasing in OTM Calls in an “all-in” fashion once 720 is hit. However, I will do my best to avoid recency theory.
“* Recency bias is to think that the market will do today what it did yesterday.
* Recency bias is to think that a stock hates you because it has gone against you every time you picked it up.
* Recency bias is to get faked out yesterday and expect the same today.
* Recency bias is to double your portfolio in a month and expecting the same to happen this month.” -evilspeculator
I noticed that my macro views have led to stock avoidance syndrome. Companies I have followed, both long and short term, have doubled and tripled in price while I touted a depression. I suppose not all stocks bottom at the same time and this next wave will provide ample opportunity to profit.. OTM Calls on high beta stocks might be a good program to follow.
Anyway you can create a chart of the 2002-03 bottom vs today.
Sorry, can you create a chart of the 2002-03 SPX vs today. Astrocycle(public charts@ stockcharts.com)did a side by side on page 4.I’d love to see better chart.