Naz e-wave thoughts:
I'm finally getting a count on the Naz that I like. You may have already put forth this idea, although I doubt I would have missed it if you did. <g>
The down off the end of Feb. saw the 3 subdivide into five waves of its own. So, I count 1-2-12345-4-5. The 2 and 4 of the 3 are the two islands. That would place us in a wave four of the same order as the wave two that occupied January. That would also mean wave five down should start by the end of the month, and take us to new over the May-June timeframe. Another short-covering rally would greet summer. Whether it is of higher order or not would depend on whether this wave three is subdividing, which would not be unusual given the severity of the bear.
This jibes with my gut feel that this is a correction of higher order magnitude than the past, on par with the 4-8 week corrections in the 1930-2 bear. If I follow that to its conclusion, however, I would then expect this Naz correction to take another 10-15 days, and have one more push up. The push need not make new highs on COMPX, and could unfold like the October 2000 rally. I like that because of the similar short-covering launch off the lows right before earnings season.
My present strategy is as follows: just increased short-side exposure in anticipation of a significant correction to the past week. However, I plan to set up long-side hedges again as the market retraces 50% of this rally, expecting a second push up next week. If that rally materializes, I will begin fading it on the way up, and go nuclear short the moment it shows signs of cracking, as another eight-week downleg will be underway. If this morning's high is taken out during any of these moves, I will step aside and reassess.
Other implications: this down here should not take us to new lows, so I'm not jumping in with both feet. There will likely be a lower risk re-entry point for most shorts next week as the highs are re-tested and fail. And this down wave is a correction inside the context of the up wave started last week, so it should unfold in three waves visible on the dailies.
I'm not as in touch with the fine details of e-wave as you; is this scenario possible given the present setup? How would it count out? Again, I'd refer to October 2000 as my preferred structure.
BC |
