OK, back in the saddle today after my day off.
Looks to me like we are just short of 5 waves off the bottom. I make us in about wave 4 of 5. So, Elliott is telling to to short the next new high. However, if we finish the count with a new marginal high, then we have to start thinking that the coming retracement is either the 'b' of a zigzag or, the very bullish interpretation, a 2.
The NASDAQ Composite has retraced well over 50% of the decline from July 2. I'll be looking for it to kiss the 62% level at around 2087.
As has been discussed here, yesterday's rally saw the return of the mad cows, with lotsa naive bulls partying like it was 1999. Scanning the boards just made me laugh and shake my head. However, I am not willing to throw caution to the wind at this point, thinking we'll see a quick trip to new lows. Nope, we may well have put in the low now for a number of weeks.
This move off the May 22 high has been choppy and overlapping. It has more the look of a move in 3's rather than a clean impulsive down. We have had 3 down moves and 2 up moves -- it's quite possible that we have completed our big B wave and are starting our C rally.
Each of the 3 down moves had only one decent rally in it, lasting a day or so. Here are the 3 declines in the NASDAQ Composite:
High Low Net %'age
May 22 -- May 30 2237.54 2077.98 159.56 7.1%
Jun 8 -- Jun 19 2264.23 1973.70 290.53 12.8%
Jul 2 -- Jul 11 2081.05 1934.67 146.38 7.0%
Two things stand out for me, the middle decline (a putative 3) was the most severe and the first and last declines are equal (1 and 5). Both of these things are strong hints that it is likely a 5 wave decline, even though the internal structure is ragged.
The argument against a multi-week rally is sentiment (that and the ever-present danger of credit bubble implosion). This is a powerful argument and it is difficult to see how we could rally in the face of bullish sentiment.
So, be nimble and don't bet the farm either way.
Cheers |
