Thanks for putting it all together, C. Your last chart happens to be similar to the one by the EWI. They are admittedly bearish, but they never break the "rules". Why would they, after all, they wrote the book... -g. The difference is that they expect another down-up sequence before the rally tops out, somewhere under 10.6K on the DOW.
To paraphrase the great American philosopher - Dirty Harry - A man has to know his limitations -- as well as the limitations of his method. The fact that there are so many legitimate EW interpretations at the current juncture means that we shouldn't place too much faith into any of them.
The only formation where I can hang my hat on at this time is the five-wave impulsive decline in the DOW off the February 19 high. I recognize that this five-waver a) has limited predictive value, since the entire game is probabilistic, and b) - it can be a "C" of a correction, and, actually, turn out to have been a good buying point, as it has been so far.
What's left to play? I like the abovementioned 10600 on the DOW. In order to get there, the index would have to make a new recovery high, as well as to retrace more than 78.6% of the preceding decline (off the 2/19 top).
Ergo, with a meaningful stop a 150 points away, I think that the best risk/reward for a(n agnostic) trader at this time is to be short. If this stance is wrong, one can take the small lump, and go look for other plays. |
