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To: Perspective who wrote (98454)	4/30/2001 4:37:44 PM
From: pater tenebrarum	Respond to of 436258

i'm using the Dow and the SnP (SnP being a good composite of old and new eco). i'm considering using the Wilshire total market index in the future...that should improve accuracy. anyway, the next important date after May 2 is May 15, coincides with the FOMC. i've come across the leading diagonal theory somewhere else as well...it deserves to be considered, definitely. here are the comments by Christian Leon, from velociraptor research (don't try to laugh about the conclusion, which is it could go up or down...the point i think is that whatever direction it takes, the move will be big): <<Leading diagonals are rare though they do occur. I have been observing this pattern and it indeed does look like it is unfolding as a diagonal off the Mar 22 bottom. There is a dilemna though..... Leading diagonals occur as wave 1 of an impulse or wave A of a zigzag and tend to have a 5-3-5-3-5 structure. Leading diagonals are also characterized by having overlap of wave 1 and wave 4 as they often have more of a sideways triangular structure. Using the DOW as an example, that means that the wave 1 top is near 10,000. Wave 4 off the 10,700 highs could be done and in that case the bottom is no where near 10,000 having only reached about 10,375. There is definitely no sidways triangular pattern here. This alone eliminates it as a leading diagonal and part of a new bullish count. One other note....IF it happens to be an extended form of a leading diagonal and the start of a new bull as wave 1, which I suppose may be possible, then we are going to be in for one hell of a ride UP as wave 3 alone could easily take us UP about 3000 points. DOW 15,000 here we come. From a fundamental and liquidity aspect I just cannot even fathom this happening, though. The pattern is also present in the S&P. The other scenario, is that the pattern off the lows is a very sharp wave 2 zigzag. Zigzags occur most often in the 2nd wave position and can retrace almost 100% of wave 1. Though they can occur as wave 4, it cannot be a wave 4 because it has already gone higher than the lows before we started down this last time from 11,034. If wave 1of 3 down started at the 11,034 highs and finished at 9100, then we are correcting this. The problem..diagonals typically occur as leading or ending. I have already discussed leading above. Ending diagonals typically occur in wave 5 of an impulse or wave C of a corrective structure and unfold as a 3-3-3-3-3 pattern. This is clearly unfolding as a 5-3-5-3-5 pattern so this definitely is not an ending pattern. The one fudge factor I CAN allow is that zigzags by their nature, can possible take the shape of a diagonal so it can still easily be a wave 2 structure. The way I see it, there are only 2 possible scenarios here.... 1) Very Bullish. We are in an extended leading diagonal here and in wave 1 of a new supercharged bull run. If so, we are in wave 5 now and it should run out of steam soon as the 5th wave in a leading digonal tends to be by far the weakest, often making a double top or a marginal new high with the top of wave 3. The caveat is that once it corrects, most likely about 38% of the rise from the 9100 lows to about 10,000 or so, then it's off "to da moon" as Don Wolanchuk says. 2) Very Bearish. We are in the process of completing the 5th wave of wave C in a wave 2 A-B-C. Given that Wave 1 of 3 down plummeted the DOW about 1800 points, then wave 3 of 3 down, which is oftethe most extended during a bear marke, can go 1.618 times the length of wave 1...about 2900 points. From around 10,900 on the DOW gives us a target of 8000. Either way, I see us as being at a point in the market where we are about to do a major move. The problem is...will it be up...or down?>>