David,
Intermediate Wave 5 -
In theory it could be gigantic, but given that the dominant wave was the 3, I guess it's going to be like in the 80s, where the Intermediate 5 after the '87 crash was only good for a marginal new high before recession took hold.
I'm expecting the current intermediate 4 that began in July (SPX) to correct for the 4 1/2 years 200% gain Intermediate 3 rally. That means at least 6 months duration (low in December) and at least 20% (SPX 1140) depth, but probably deeper - My target is around SPX 900.
Intermediate 5, then, will be a giant relief rally on y2k, from Jan to July again, while the economy starts to show weakness, and the Millennium Crash from July 2000 to the summer of 2004 or 2005. Technically the 5 could take much longer, but IMO the economy will start showing its weakness too early for the market to achieve a '29 style blow-off.
It may even be like the giant expanding formation of the late '60s - early '70s, only this time the break would be down from an expanding top.
Shorter term, we have a clear 1 of A from the July high to the August low, and the next two down waves from the August high can be either 3 and 5 of A, or 1 of 3 of A and 1 of 3 of 3 of A. See that the early October rise overlapped the 1, so if indeed we saw the first possibility, then it is a LEADING DIAGONAL, and therefore hardly the A of intermediate 4 but more likely 1 of A.
Therefore any sustained rally over the 13 sma (now 1295) will be a BAD sign for the coming months, and we better pray for the market to continue with the correction down to the 1140 target of the big H&S now, rather then try to limp up and get hammered later.
ATG |
