I said I would post if I thought I had something useful to make sense of what I've seen going on - something that ties together the war rally, the lack of durable-looking bottoms, sentiment, and most importantly, a count that explains the relative underperformance of non-tech. I can't claim that the counts are unique, but the melding of them may be.
What I believe is occuring is that tech, having endured a longer and deeper bear, is in the middle of a longer correction. Tech completed a "thought" labelled "A" in the days following 9/11/01, had a correction of that (labelled "B"), and then embarked upon the "C" to complete the crash off the bubble highs.
ttrader.com
I think we have been correcting the first wave of that "C", wave 1, in three waves. We are now entering wave "v" of "c" of "2" of that big "C" down.
ttrader.com
The implications, if correct, are serious. This high would produce one of the best shorting opportunities of the bear, as the "3" of "C" would be imminent. Being the third wave of the third wave, there should be no mistaking this turn. (I apologize for switching from Nasdaq to SOX, but the short-term count is the same.)
Looking at non-tech, the count is muddier. It, too completed a "thought" following 9/11/01 and went into a correction of that in synch with tech. The difference in non-tech is that the ensuing wave appears to have been the same degree as the prior wave, where it was probably not in tech.
ttrader.com
The relative underperformance of non-tech produced what looks like five waves down off the 12/2002 high labelled "B", whereas tech did not make a fifth wave down.
ttrader.com
Here's where it gets exciting. This may indicate that non-tech turned down into the next subwave down, labelled "1", while tech remained only in "b". The implication would be that one would expect tech to make a marginal new high on the war rally "c" to wrap up wave "2" of "C", while non-tech should only lodge three waves up and fall short of the December 2002 highs in its own "2" of "C". Both tech and non-tech would be wrapping up wave 2's of slightly different degree - but both would be on the verge of launching the third wave of the third wave. Recognition would be at hand.
Again, if this count is valid, it should be unmistakeable. SPX would have the impetus to finish the measured move off the enormous head and shoulders break, and Nasdaq would come closer to undoing all the gains from 1995 - my preliminary bear target.
BC |
