Jef,
If indeed wave 5 of 1 of A concluded on Friday 3a.m.'s globex low, then we would now be in wave 2 of A. And currently we would be in wave a of 2 of A. Wave a is a 5 wave move, which is what we've been experiencing (almost straight up!!). After these 5 waves end, which is what I've been trying to time for a turn, we'll have b of 2 of A, which will be a down wave. That of course will be followed by c of 2 of A, another 5 wave upwave, and that will conclude 2 of A. From there, the real bear will arrive, as we begin wave 3 of A, a powerful downwave.
Comparing where we are to '66, we are in March of '67 now (running through the %moves much quicker than then!!), on a retracement up which could run as much as 100% of the entire 7/20-9/11 move. See link below for comparison. The low in Oct. '66 relates with ours on 9/1.
decisionpoint.com
Notice how in '29, the market rallied from Nov.'29 til April '30, before it started the giant wave down. We may be within that same classification rally, which proved to take the market back up on a 50% retracement, as seen in this link:
decisionpoint.com
The high for the SPX was 1191 on 7/20, and the end # to use for the 9/11 low would be 955, which would correlate the SPX cash to where the futures were at 3am on 9/11. Thus, you have a 236 pt. move to retrace. So far, we've retraced 92 pts., so we could still see a move up to the 1073 area to give us a 50% retracement. Then you would have to expect the market has a greater chance of fizzling. However, '67's retracement was more like 75%, before the next wave of selling hit.
So to answer your question on how long we can expect this wave 2 rally to last, that's extremely difficult to peg at this point, but alot of the cycle work I've seen tends to point to at least this a of 2 of A rally washing out by 9/21. We just have to try to count the waves from here, and decipher by feel when the 5 waves of "a" have concluded, a formidable task. The key will be to spot the trend ending pattern, which is what I'll be working on.
Right now, I see a megaphone has developed in today's action, and if we were to get a downside break tomorrow (<1030SPX), it would provide a run to the 1015 area. A break above 1047 would signal an upside break, with a run into the 1060's to follow. Generally this pattern has bearish fulfillment, but in this market, anything is possible!
Regards,
David |
