These days we are trying to find a short term top or end for subwave 4, and eventually the bottom of subwave 5 (which should be the bottom of this move lower). S&P has been giving us a lot of fake outs in the charts, but the Dow Jones has obeyed the charts so well. I think we should be focusing on the Dow Jones in order to determine the true bottom. If you look at the picture i posted below, i show you that the descending channel that i called for the S&P is obeyed much more stricly by the Dow Jones. I believe the next hit of support on this channel should be the ultimate bottom. In light blue I drew what I believe will be the projection of the market. Let me know what you think.
Focusing on the S&P? Take a look at the Dow!
– March 11, 2009Posted in: Intraday Commentary, Stock and ETF Models
Define ultimate bottom? For a run to end of year or the end of this bear market?
I find it difficult to accept the bottom is already here relative to the state of the world economy, let alone the US economy. Peolple are still trying to figure out what caused the Great Depression, I can’t believe those in Washington have any idea as to what specifically is causing this one, let alone devise a way to fix it this early on.
Technically, your chart looks fine, although I see a bounce off the TL to some retracement only and then down again.
I don’t think it’s that far fetched at all. The market won’t bottom when people start seeing light at the end of the tunnel , it will do it before.
That end point of around 6100-6000 also puts it very nicely at around a 58-60% drop from the DOW highs. Which is a traditional ending point for bear markets if memory serves.
How long this all takes to play out or if or not the market decides to run up to the top line first has yet to be determined. I also favor the idea of a run up to the top trend line and breaking it as that would fall more in line with the 1937 comparison chart I’ve been watching.
Do not underestimate the reinstatment of the uptick rule’s phyc impact on the market. Once it does break that top trend line we can call a real bottom.
The If we are going to go down even more then the economy would truly have to fall to pieces. Honestly I don’t feel this is happening. Many parts of it are functioning just fine. Sure the housing market is taking a big haircut and there is a big tado about a lot of jobs being lost in major population centers. But in many places life continues just like normal so far.
If we are to be in for a break of that bottom channel and another big leg down , we need a catalyst. Something major needs to happen like China and the U.S. shooting each other.
http://www.cnbc.com/id/29629997
here is a man with brains. a man who has made monster returns for his investors for many years. have a listen.
the market has went up for 35 years. it will not correct in 1. the problem here is that this correction should be close to over since it began in the year 2000. however the government got in the way with messy policies. so here we begin to correct the market late.. and we will end it late. give us a good 3 more years at least of lower highs and lower lows.
you honestly believe an uptick rule will make companies profitable and therefore bid up thier share prices? for real you feel this way? word to the wise hoping the uptick rule will save the market…everytime i short a stock it is on the uptick.
the Canadian market is down 50% with the uptick rule in place.
Remember, markets can bottom long before, sometime years before, suffering ends with the general population.
I wont to go ahead and reply, and let you know that when i said the ultimate bottom, i meant the bottom that would give us a sustained rally. That rally for now, I believe would be only 6-9 months long. Once that is over, we will potentially see more selling, and new lows. But till then, I believe this next hit on the dow support will be the exact timing of the “true” and last bottom for about 9 months.
Hope this makes it clearer,
Idan Koren
important note about the market bottom. this may take years to bottom as the pain and suffering excels and peopler are forced to cash investments just to survive. this is why some of my puts are out to Jan 2010. we have been in a bear market since when? 2000 right?
we are now 9 years later in a bear market. most bear markets complete in about 1/3 of the time frame of the bull market. the macro bull market began in 1974 – 35 years ago
so the bear market that began in 2000 should end around 2012 and maybe longer the way the government keeps sticking it’s nose in the way. think about it.. since this began in 2000 how much government policy has prolonged the pain and dealt the market a false sense of security.. a giant bubble. id say we find the bottom sometime in 2012. SP @ 250
hopefully the suffering ends early in 2013
the Nikkei hit a high for 45,000 and now trades at 7,000 .. SP 250 is not out of the question.
http://finance.yahoo.com/echarts?s=%5EDJI#chart2:symbol=^dji;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
big question.
why do we have to bounce big off of the bottom? what makes a short term market bottom so exciting that prices must suddenly rise to the moon in a buying frenzy? can’t the market just fall to a new bottom and lull itself to sleep there. we see that in individual stocks.
The reason we have a big bounce is that there are many people sitting on piles of cash right now waiting for a sign it is over to invest. That money builds momentum up the same way people piling on the short bus create big falls.
I would caution you not to get to dogmatic in your view that the market simply must collapse into everything being worth almost nothing stock wise. We had a bubble in housing and credit it’s true. That doesn’t automaticly mean that everything is now worth 1/100th of what it was a year ago.
You need massive deflation for that , a collapse of the system as a whole. Your betting on doomsday , that nothing works it all falls apart and there is no hope for anyone. Maybe your right in the end , but if thats the case the last worry on anyone’s mind is going to be if or not they swing traded iv of 4 of 5 of 9 of 10 correctly.
Ya, Richard, I heard that there is enough money on the sidelines waiting to buy the hole S&P right now!
Remember that they re-tooled the S&P 500 to be equal weighted and made adjustments quarterly. When they re-create the DOW and S&P 500 in the near future the new components and weightings could be a factor.
Hi Idan, I really agree, and actually have the exact same scenario set up on my charts, using the Dow rather than the SPX. However, with the latest moves to the upside with the breadth thats beginning to show, I fear this wave up could violate the 2 wave. Which then could possibly signify that this wave is but a 3rd wave extension, with the actual fifth wave to come later. As you certainly do know all the EW rules, could this be an alternate possibility???? All of this I state is conjecture, and am in hopes that am wrong and there will be very soon, the final fifth wave. But then again in the “overall count” I am in the camp that this is wave C in the supercycle, with the 2003 low as wave A, the top in 2007 as B “a third wave extension, now in wave C. With the supercycle wave 5 to begin. I just must take this stance along with many others because I do not believe our world is doomed to failure. The EW for technology is in a grand supercycle advance where technology will advance ten fold over the next decade. Am quite surprised that people such as McHugh and Prechter do not state that publicly. With those kind of advancements in tech, how on earth could that lead us to zero??? That certainly doesnt bode well for the doom and gloom theories. Mankind will continue to advance, and unlikely to return to the stone age, because if your overall count is correct, then equities go to zero and mankind is relegated to eating dogs and rats. I know however I will not change your mind, but gives you all something to think about. Would however like to hear your thoughts on the chance this is an extension rather than the 5th wave set up back to the Dow channel line, according to EW rules????
Hi Guys,
First post here. Idan i’ve been watching your youtube video for quite some time now. Great work, keep it up
As for the charts,
looks like consolidation will stoped at the 38% line.
Just got some faz and put positions @ Dow 7170.
Let’s see where it takes us