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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: skinowski who wrote (71701)	4/20/2003 2:37:03 PM
From: mishedlo	Read Replies (2) \| Respond to of 209892

From Brian I worked on a chart this morning addressing the possible Triangle on the S&P. But despite all the different long-term counts out there, they all agree on the potential of a move down below 770 this year. The different long term counts would have different implications for the end of that move down, whether it ended near 720, 650 or 570, and what happened afterwards. Both charts are now on the chart list. Preferred count of the Bear: tinyurl.com Alternate Counts for the Bear tinyurl.com There has been a lot of discussion recently about the pattern of the S&P since last July, and the fact that it taken the form of a Triangle. From a non-EW perspective, this certainly seems the case. From the July low there have been 5 waves which are labeled A-B-C-D-E (orange) in the above chart, and it looks about ready to complete wave E and move down, continuing the trend from 2002. The $SOX (page 4) is showing a similar pattern, which is tighter than the S&P. From an EW perspective this Triangle would change the long-term count of this Bear Market, IF it were validated. Under the type of EW I follow, Triangles almost always occur in a Wave 4 or Wave B position. In these circumstances, that would make this Triangle either a Wave 4 as in the Purple count or a Wave B as in the Green count. Upon completion of the Triangle, the Green count would call for a decline similar to that which occurred from the March 2000 high to the July 2002 low, which was about 50%. This would ultimately take the S&P to the 350-450 range without a rally above the 5-year H&S neckline. The Purple count would call for a wave 5 decline after the Triangle completes, completing as less than a 35% decline from the end of Wave E. After that Wave 5, a substantial correction would unfold which would likely take the S&P above the 5-year H&S neckline. Those are the macro scenarios presented by this Triangle, but having said all that there are reasons why this is probably not a Triangle as defined in Elliott Wave by R. N. Elliott which is why the preferred count has the S&P in the middle of a Wave 3. The internal counts of the waves of the Triangle do not agree with a Triangle count. The decline from August 2002 to October 2002 traced out a clear 5 waves with alternating corrections, and the decline from December 2002 to March 2003 also traced out 5 waves with alternating corrections. The December-March 5 wave decline also fit into a nice Fibonacci relationship characteristic of 5 wave declines (show on the 6-month Daily chart below). In EW the waves in Triangle all trace out in 3's, so the fact that waves B and D traced out in 5 waves would argue against the Triangle being a valid EW triangle. stockcharts.com But all this stuff only really matters if you follow Elliott Wave. If you are just looking at trendines and such, the the result will likely be the same as any regular symmetrical Triangle. All the Best, Brian