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Wave Signals Update
By Mike Drakulich 1-14-99
A BIG HEADS UP!!
STOCK MARKET
In reflecting on the markets action since the July top, a few things
strike me as very important. One is the incredibly short duration of the
correction or bear market, especially given the length and duration of the
advance we SHOULD have been correcting. That leads to the possibility that
the correction or bear is still going on. But Mike you ask, how can we be
in a bear Market with many averages making new highs. Easily, under the
Ewave Theory a "B" wave of a corrective rally can go to new highs, then the
ensuing "C" wave decline takes out the previous low(Oct.) in a "crash type"
decline. In our case the recent rally to new highs from the Oct. lows in
the Dow and S&P and NYSE is the "B" wave, and the potential "C" wave
decline to below the Oct. lows has possibly begun.
This frankly makes sense to me and answers some important questions.
It will then make the bear market or correction at least 6-8 months long,
which makes much more sense, and we will likely get some of the "classic"
bottoming signals that were frankly absent at the Oct. bottom. And the
Ewave patterns in Indices like the Trannies, Value line, and Russell, will
come into "agreement" with the S&P and Dow. And, maybe most importantly, it
will surprise and slam the vast majority who have been buying with both
fists, and they will be the ones panicking at the bottom.
This is of course only a possibility, PLEASE realize that, trying to
predict something of this magnitude is always tough. But it fits
beautifully with the big picture Ewave pattern, and given the recent
horrible technicals and decade low put/call ratios, it makes sense as well.
I am not "married" to this scenario, but I believe it has enough chance of
occurring that I needed to bring it to your attention. And so far the way
the market is declining off the highs, it is becoming a very real
possibility. Again, don't read this and go crazy, I always will take a
methodical approach to my positions, and analyze the market to see if it
possibly conforms to this scenario. I am also looking for a bounce to get
short the Futures. Keep this scenario in the back of your mind as the
market trades over the next several days.
And IF this scenario is correct, then I would expect the Bonds to go
to new all time highs. |
