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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: patron_anejo_por_favor who wrote (196443)4/15/2009 7:37:55 PM
From: ajtj99Read Replies (3) of 306849
 
SPX daily - The ending diagonal read seems even more probable now with the late day move up. This could basically be telling us the move up out of the November and March lows is over with.

The reason is if we look at the November and March lows, they work best as an A-B-C corrective move up from the 741 November lows (741 to 944 SPX as the "A", 944 to 666 SPX as the "B", and 666 to 875 SPX as a "C").

The orthodox target for an ending diagonal is the origin of the pattern, and this one originated from 780 SPX. Let's assume the SPX makes a slightly higher high at the 875 level. The drop to 780 is a 95 point drop.

This is important, as it should be part of a new impulsive move down. If we drop to 780 SPX, we should re-trace 61.8% of the drop in a 2-up. Voila, that's 839 SPX, the October low and an important inflectioin point.

From there we'd ideally make a 1.618 extension for the wave 3 drop, taking us to 685 SPX. A wave 4 up to 741 would bring us to a wave 5 drop to test or slightly exceed the 666 SPX March lows.

There is another possibility we could re-trace nearly all of an initial drop from 875 SPX to 780 SPX. That would allow the market makers to distribute shares before flushing things down. That would also get the weekly charts a little more ready for a drop.

If this is an ending diagonal on the indices, it's a game changer.

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