good series of post captures and a quick glance would make on think "what the h*ll is he thinking?".
Ever since the July 23rd low, I have been constantly monitoring indicators for a sign of bullishness. I never got them despite the size of the rally in terms of points and I still don't. Was I wrong about tops? yes. I think that is pretty clear. During the Aug 7/8 period, we saw stochastics move back up to tag overbought after turning up from a higher low. The move was about 0.618 the length of the initial move off the July 23rd low which made it a nice fib ratio. It was also the high point of the 1st wave of the C wave in hindsight. If you went short the DOW lost about 450 points off that top, so the call wasn't necessarily wrong, but looking back, it wasn't THE top we were looking for.
The Aug 13/14 period was the high of the 3 of C and again after turning back up from a higher point, stochastics made a tag into overbought for a 3rd time. Ideally, sure it's a good place to go short except it too was not THE top we were looking for. What I thought might be waves c-d-e of a triangle, only turned out to be waves 1-3 of C. The 19th area looked like the top of a small 5th wave wedge in the triangle but it was part of the corrective 4 of C instead.
In each of these cases, I had enough to say that there's a good chance for a top and that the 8900-9000 level was not going to be breached.
So now we have final resolution of the pattern and that is an A-B-C off the low with the C in progress and the C being a 5 wave ending diagonal. I don't have a neutral stance anymore, but if we move above 9400 I will certainly have to re-think what I am seeing. However, despite my missing the exact top area, there are a number of key elements that have not changed throughout the rally and that is what has maintained my stance that this is another bear rally and I did have a good set of reasons to suspect a top in each case. What we continue to do though, is add to that basket of indicators to confirm what I think. You'll also note that as we got closer to the end here, the rallies are getting smaller and smaller.
Playing the market will never be a 100% winning game and the above clearly outlines the pitfalls that lie before anyone. The evidence still weights that this is a bear rally but it also becomes obvious how patterns can morph from what looks like one corrective shape to another and extend into larger patterns. Given the info at each time point above, there was nothing wrong with each proposed top, especially when you don't have the next week ahead chart to go by. Only after things unfolded did it become necessary to change the scenario. Considering that we are almost 1600 points off the July 23rd low, we are also only 250 points above my original top pick on Aug 6/7th as the DOW top was marked at that point near 8800. My margin of error so far is only about 15% right now (250/1600) and if you think about it, there are 1300 points below the Aug 6/7 top and only 250 points above. Despite being wrong, it doesn't look like I missed much on the upside anyway.
I'm not afraid to stick my neck out and make a call. I look at the charts and the data and I will throw out what I see. Will I be wrong at times? You can count on it, but I will also adapt my outlook on what I see, so what I posted 2 weeks ago may not apply anymore. 10 days ago, I thought moving above 9000 wasn't going to happen, but my line at 9400 still stands and no doubt I hate that I got the 9000 comment wrong.
However, I remain confident...we will not see 9400. |
