Good luck with the thread.
I fall into the Murphy school - I never go looking for it, if I see it I use it. I am a very, very basic EWT user. I only look for 5 and 3 wave patterns, and do not concern myself with zigs, zags, or flats or anything else. If there is a nice ratio between waves then all the better.
In the NDX, I am working off a premise of a 5 wave decline from Mar2000.
1 - Mar-May
2 - May to Sep2000 (Denial, disbelief and rejection of initial price action)
3 - Sep2000 - Jan2001 (Fundamentals confirm price action)
4 - Jan2001 - Feb2001 (Hope against price action)
5 - Feb2001 to now (?) (General and widespread acceptance of price action)
%Ratio of 3 (4200/2100) is close to %Ratio of 5(2700/1350)
10 year trendline and pre-LTCM high indicate good support in NDX 1350 - 1500 region. (Yeh, I know its 10% wide, but that is just 1 good day in the Nasquack market)
I feel we have ended the decline (for now). And expect some sort of A-B-C rally, or a wide (%) trading range.
i)The A-Merry-Traders are now selling on the rallies.
Disbelief of any rally's permanance by the Original PermaBulls and KnifeCatchers.
Having bought the entire decline from Sep2000, and even from Feb2001, at the first sign of a rally they want out.
ii)People are starting to ask me how you can short stocks.
Everyone is itching to sell this rally. It is obviously a no-brainer to sell.
iii) 30Yr and 10Yr yields seem to have bottomed and are on the melt-up.
I am not sure what has happened to credit spreads
This is a tricky one, as these rise then I would guess that bankruptcies and bad-loans will rise, but it makes stocks 'appear' cheaper to the asset allocators out there. LU, MOT, et al are effectively in trouble - it is not new news.
(This was not meant to happen with the Al G's magical printing press - the return of inflation?)
iv) Stocks rising on bad news.
LU, MOT.
My take is that the professional shorts are now exiting at these levels as the risk-return is no longer favourable. They will be back if the market gets ahead of itself. Everyone knows the market is a dog. I even reckon the bottom calling has reduced.
However, from the industry groups that I follow a lot are all now o/bought in daily charts. A lot of stocks are at resistance as well.
I am awaiting a pullback to buy, and provided we do not breach recent lows then I feel it is safe to have a sneaky dip in these waters.
Assuming my count what is a reasonable target using EWT?
On the long-term I am with Prechter. SPX-950
When that goes, and it will, then goodnight market.
(20 Year Trendline joining 81Low and 94Low)
- macavity |
