Bobby,
To clearly understand why this primary 1 up stalled at 1132, one must simply look at the bottoming pattern that was formed in the correction to get the target for the next big wave higher. If you look at the correction last fall, you will see that the 10/28 low, when connected with the early Jan '98 low, makes a clear Ascending Triangle Bottom formation. The interim highs were the flat side of the Triangle, all bumping into the 980's area before pulling back again. Pattern projection theory on most triangles calls for you to measure the length of the base of the triangle, which you marked in your post, and add that length to the breakout point. (Just as you did).
Now in this corrective primary wave 2's case, it has not formed an ascending triangle, so you can't use that methodology to predict the move. This bottom is a near exact replica of the July '96 bottom, a nice, deep, double bottom. That double bottom in July '96 bottomed first at 606, then rallied up to 644 before falling back for the second bottom. The projection of that pattern called for roughly 815. Notice how that just happened to be the top of that impulse wave higher, which culminated in March of '97. A 9 month run to complete that 3rd primary wave, and it moved the markets higher by a whopping 33%.
In this double bottom's case, it reached a low of about 1078 for the first bottom, then rallied up to 1126 before falling back for the second bottom. Keep in mind that the Elliott Wave degree of correction for both bottoms (current one and '96) is identical, and the "second" bottoms were both minor degree corrections coming on the heels of a Primary 2 wave correction. The current double bottoms target will be sealed when 1126 is taken out next week, and yields the 1340 target I mentioned earlier. From its 1080 beginning, it will yield a 24%, not quite the 33% of the primary 3 from 7/96 to 3/97, but point wise it is even greater.
That's my scoop for now.. Good luck with your trading,
David |
