dmp, thanks for the URL. So what do you think of that MU downgrade -- couldn't be anticipated by TA? <g>
Latest from Benismon (from RWS- Community Boards)
The NDX wavecount looks as follows:
Recall that the trough in OCT98 marked the start of Primary 5 towards culmination of Cycle III this year.
Wave I 1064..2150
Wave II 2150..2020 (1865) Flat
Wave III 2020..4816
Wave IV 4816..2897 Sharp
Wave V 2897..
Wave (1) 2897..4089
Wave (2) 4089..3341 Sharp
Wave (3) 3341..4700T
Wave (4) 4700..4300T Flat
Wave (5) 4300..5300T
Now, since the trough at 3341 in early August, there was some doubt as to whether the rally represented the start of Wave (3) or only a B-wave before part C of (2). The arguments in favour of the latter include the non-impulsive structure in early August and weak intra-day momentum. The form improved somewhat after the secondary trough at 3521 on August 11th, but until the 4089 peak was pierced, the B-wave scenario remained somewhat of a drag on building the confidence to increase long positions.
In my view, the top at 4147 now represents the end of wave (iii) of 3 of (3). The implication is that we will see a brief correction to 3980 followed by a surge to reach the main overhead resistance line around 4200-4250 (to finish wave 3). Touching that line will entice the bulls to cover and bears to go short, resulting in another retracement back down to 3980 for wave 4. The double bottom will then provide the strength to retest and finally breakthrough the upper resistance, with built-up energy pushing the market straight to 4700 to complete Wave (3). Since the earlier Wave (2) correction was sharp, Wave (4) is likely to be rather flat, and most likely fulfill the expectation of coming back to test the old ceiling as a new floor around 4300. This will set the stage then for the final Wave (5) of V upsurge to new highs around 5300.
Timing is always more difficult to judge, but I suspect that late September and just after the election are two key periods to watch for the main inflection points.
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I am delighted by the accuracy of the first stage call for the drop back to 3980, but if it is any consolation for everyone who didn't get a chance to see that call on Sunday or Monday, I didn't capture any trading benefit from it myself, as my attention has been focused on website development issues.
May I add several thoughts after Tuesday's action:
First, momentum oscillators are confirming a likely bottom around 3980 -- the 60-min MACD-histogram is forming a trough and 30-min and smaller have already produced significant bullish divergence against the morning and afternoon price lows.
Second, the retreat has arrived at the main uptrend line for Wave (3) since early August, so at least a bounce could be expected here.
Third, if we are in wave (iv) of 3 of (3), the nature of the bounce will clarify whether wave (v) up to 4200-4250 is beginning or whether it is only part b of (iv). I am always wary of pronouncng the early end to a sharp correction, especially with NDX which tends to have a lot of triangles before breakouts.
Fourth, and this may be the most important point, the COMPX peak last week did not match NDX in exceeding the 17JUL top. This is similar to what happened on 24MAR and led to the famous sell-off. In this sense, a breach of the August NDX trendline could still render all the upswing since 3341 as simply a large B-wave within Wave (2), thus re-invoking the main alternative to the view that Wave (3) already started in early August. In this case, the downside objectives at 3600/3400 will be reinstated.
Note, however, that the Daily and Weekly charts on NDX are not showing any bearish divergences with momentum oscillators. Indeed, the Weekly MACD-line has upcrossed from a low double-bottom base, so my preference would be for the wavecount outlined above -- wave (v) of 3 up to 4200-4250 ... then wave 4 down to a double bottom at 3980 ... and an extended wave 5 of (3) up to the main 4700 target during September.
From an intra-day perspective, one could say that the 4000-4200 area will be the main range this week, and buying at the bottom and selling at the top could still provide three one-way trips (not including the first drop) before eventual upside breakout, and at least the boundaries provide good protective stop levels if an alternative wavecount prevails.
Please note that this information is provided for educational purposes only, and is not a recommendation to trade any securities or derivatives.
Best regards,
David
polarpacific@primus.com.au |
