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To: John Madarasz who wrote (67702)	3/2/2003 3:52:39 PM
From: nspolar	Read Replies (1) \| Respond to of 209892

John, I have been watching for this for some time. I expected it well before now. Looks like a bad sign for the bulls, and given the patterns potentially very bad. I have not updated my HUI count since the last one, but I have it as having completed the ABC I had it in, on Friday. The only diffence would be with the last little iv and v. ttrader.com Critical juncture here imo. I sensed some possible failures in progress on Friday, maybe the most important with the USD.

To: John Madarasz who wrote (67702)	3/2/2003 5:45:33 PM
From: mishedlo	Respond to of 209892

From Brian This was mostly a note to myself for the coming week, but it seemed fit to post towards the end. FWIW: EWI on Friday reiterated the count they have had during last week or two, which now includes the Triangle wave 4 that has been floated round here the last few days. This count implies that we have had waves 1-4 so far from December 2, and we are about to get wave 5 down. That whole series would constitute a wave 1 down, which will be followed by a correction that would probably get back up to the mid-800's on the S&P. After that correction, another wave down – wave 3 – would start from the end of the correction. This count would fit well with Max Pain for March, since the correction after the next small wave down would probably be close to peaking in late March. But aside from Max Pain, there are a number of things that make this count very sloppy IMO. I think to distinguish between this count and the others is very important right now. All these counts point to another wave down directly ahead, but I want to know whether this next decline is going to be a short wave 5 before a big correction up, or whether it is the start of wave 3 – which would be the most sweeping part of the decline. The count EWI has is equivalent to the Green count on this chart (including the Purple triangle): tinyurl.com Arguments for the green count: 1) If the Triangle is not invalidated this next week, it would signal that the move down is almost done since triangles usually appear as wave 4. 2) The corrections alternate, with a Flat as wave 2 and a Triangle as wave 4. 3) The rise labeled “wave E” (purple) on the Triangle is exactly 0.618 times wave C; Triangles often have a Fibonacci relationship between parallel waves. 4) If this count is correct and wave 4 ended at 847 on Friday, the implied target for wave 5 down is 781 (based on a Fib. ratio). Since this is right near the July and October lows, it would be an ideal area for a big bounce – since it would probably generate maximum bullishness before the wave 3 decline. 5) It would probably fit with a rally into March Expiration – with targets at 847, 868 & 888 (assuming wave 5 ended at 781), it would fit right into Max Pain. Arguments against the Green count: 1) With the Green labels, this decline does not channel well at all. This is either because this wave 1 down from 955 is forming a Leading Diagonal, OR the current correction is going to head higher next week. If it does head higher, the Triangle will be invalidated. A chart: tinyurl.com 2) Despite being able to count wave 2 and wave 4 as a Flat and a Triangle, they are remarkable similar. A chart: tinyurl.com. To these eyes, they both look like Flats, the current one being much weaker than the former. This supports the whole move down from 955 being a series of 1's and 2's – the Red count on the S&P chart at the top. The Red count fits much better with what Zoran Gayer had in his latest update – which calls for a big move down ahead, without a large rally (http://www.safehaven.com/Editorials/gayer/022303gayer.pdf), although his most recent update has been more cautious, and mentions a possible Head & Shoulders bottom: safehaven.com 3) Wave 3 on the green count is short, and if the end of wave 1 is labeled at 869 (the end of December) instead of around 890, the Naz cannot be counted as 1-2-3-4 down because is rose about its equivalent December low. In that case, the NAZ can only be counted as a series of 1's and 2's (equivalent to the Red or Blue counts) OR as A-B-C down, which would presage a larger rally above the December highs. So, the only way to label the decline from December 2 as a 1-2-3-4 is to have very large corrections and very short impulsive waves. This is not a violation of Elliott, but it may suggest that we are trying to fit a square peg in a round hole here. If we do rally higher next week, as the channel on the S&P implies, the $COMPQ might rally above 1370 – which would invalidate the equivalent to the Green impulsive count on the Naz. This divergence between the S&P and the COMPQ would make the Green count very unlikely. A chart: tinyurl.com. A break above 1370 would leave 2 scenarios: either this whole move down from 955 on the S&P and the Naz was a wave B in a large correction from the October lows (which would imply a rally north of 955 on the SPX), OR the Blue or Red count on the S&P chart at the top is in effect (which would imply that we are about to take the SPX down to the 600's). In other words, it would take out the middle ground – either we rally big or decline big if the Green count is taken out. There are other possible ways to the Green count to play out. For instance, wave 1 and wave 3 are short and almost equivalent in length, which may precede an extended wave 5. That could take us to the 600's without any rally (say, if the war started some bad things took place). As you all have probably figured out by now, there is an EW count for every scenario. Times like these are full of infinite potential paths, but there are some key points here that can give major clues to what is going on. A break of 1370 on the Naz will raise some eyebrows, as would a good rise from the Triangle on the SPX which turned around at 847 on Friday. I'll update the chart list fequently this week, as it seems it may be an important one. Thanks for the Soap Box post Mish, you summarized this mess very well. All the Best, Brian