I2,
>>Is it possible that your labeling of Supercycle waves is off by two?<<
The reason i believe 29-42 may have been a large scale supercycle wave 2 is that prices around the world on equities nearly returned to 0. I'm sure in many cases, they did <g>. EWT says that a wave 2 may retrace up to 100% of wave 1, and it also says subsequent waves (i.e. wave 4) must not violate the ending point of wave 1. Thus, with equity prices hitting the ground during this timeframe, one can make a strong case for it being a grandscale wave 2, larger than any wave 2 preceding it, or seen since.
If the motive of your question is to find an EW rationale for the continuation of the longterm (16 year) bull market beyond the next few months or 1200 SPX area, then i would say EW would not rule that possibility out.
We need to key in on the Cycle wave rally that began from the 12/94 lows to properly adress this scenario. Generally, when wave 3 of a rally is greater than wave 1, wave 5 is the same length as wave 1. However, there are cases where wave 3 is larger than 1, and wave 5 is the same ratio to 3 as 3 was to 1, making 5 the largest wave in the upwaves. If that were to occur in this case we would have the following scenario:
Wave 1 - 12/94 - 5/96 - 239 SPX pts.
Wave 3 - 7/96 - 7/98 - 585 SPX pts.
Wave 5 - 10/9/98- Now - 2.448 X 585 = 1432 SPX pts. + 953.09 Beg.
pt. for Wave 5 = 2385 SPX Wave 5 Max Target.
(Roughly 20,800 on the Dow)
Using the same ratio philosophy would allow wave 5 2.66 years to complete. Is this scenario possible or rational? Is it wise to ask that question of anything in the equity market? Of course not, so the scenario has to stand as something to keep in mind, because absolutely anything is possible in this or any other market that has ever existed.
However, you can be aware of certain levels breaking that would make this scenario more likely. If you add Wave 1 (239 SPX pts.) to the beginning of Wave 5 (953.09 on 10/9/98), you will have a target of 1192 SPX. This number should pose a problem for the market in the nearterm time frame no matter what scenario prevails for the long haul. If this level is ever broken decisively, eyebrows would need to begin to rise about how high this market will go.
Thanks for bringing this issue out in the open by your question, as it is one that should not be neglected by those of a bearish bent. This market could be just one big YAHOO!! in disguise... right? ;o)
Regards,
David |
