Recs
November 01, 2009 – Comments (10) | RELATED TICKERS: FRA , CT , ALS
From my blog EW Trends and Charts.
(I posted in the comment section to make sure the charts were loaded correctly)
"The structures Elliott described also meet the common definition of a fractal (self-similar patterns appearing at every degree of trend). Elliott wave practitioners say that just as naturally-occurring fractals often expand and grow more complex over time, the model shows that collective human psychology develops in natural patterns, via buying and selling decisions reflected in market prices"
This is the big picture, the SPX all the way back to the end of 2008, from the start of the sell-off and one of the largest corrective waves in history. There is an eerie similarity that has developed between wave 2(blue 2) of P1(green 1) down, and wave P2(green 2) up. The over-all structure between the waves, both have a-b-c counts, and both are showing a bearish rising wedge that are almost identical. Even the preceding waves 3 and 4 are almost identical. But to make it a fractal, it must make a copy of itself in a smaller degree. And this is where the spooky part comes in (hey its Halloween). Did you notice the counts of them?, both are wave 2 up, and one degree apart in the larger picture, the perfect definition of a fractal!!
So lets take a look at what happened after the end of wave 2 up in the first fractal. It had a full five wave impulse pattern that retraced almost 32.8%, that just happens to be an almost a perfect and very common retracement level, finishing the first wave down before a correction started for the 2nd wave. It also was a very strong wave with very little retracement for the minor 2nd and 4th waves. A very swift and violent wave kicking off the start of wave 3 down, and we all know what happened next!! So if you believe in fractals, that things repeat can themselves, then we could apply some of the knowledge we gleaned from the preceding fractal. Most notable, the size of the first wave down comes to mind (hehe, now you know where I am going with this). If we apply the same level of retracement as we had in the previous fractal, which was 38.2%, then we could estimate where the first wave down would most likely end, before we started the 2nd wave up. That level works out to around 935-950 at 38.2% retracement from 666. But then you say how would that be possible?
What if we really did have a 2nd 1-2 built into this wave this week, instead of a 3-4 as I mentioned in my post yesterday, Friday updates. We could then theoretically achieve that level of 38.2% retracement to 935-950 in the first wave down, before we have any significant rally to relieve the oversold conditions.
From a technical analyst point of view, we are already in very oversold conditions now, and the TA does not support such a large sell-off without first some sort of correction to relieve those conditions. There are times that conditions can stay overbought/sold, longer then most people can remain solvent, but the odds don't favor this.
Monday's price action will be very telling if this whole scenario is possible, either we finish off the micro 5th wave, ending the first wave down from the top, and start a powerful 2nd wave up that will scare most shorts in to covering and setting a bull trap as all the dip buyers jump in, or we have a small correction up for the 2nd wave of iii of 3 down, then one of the most powerful sell-offs we have seen so far this year, iii of 3 down with a target of 935-950!!
Now can you guess what my Halloween costume was?, hehe!!
Hey Col! Again my man, between this and the Hindenberg post, these are possibly the best two blog posts I have *ever* read. Fantastic work!!. Thank you so much for the time, effort and insight!!
Nice work, we'll see next week!
Alstry should be all over this one.
Good Luck and May Your Dow Never Jones
Binve, Thanks, your the best, Bro!!
Rasbold, I think Alstry is getting slow in his old age, it took him 45 minutes to post about CiT, after ever news media had it splashed across the screen ;)
The charts make me dizzy. Maybe its the lead paint in my trailer. So you have it all figured out. You are gambling. I am tpt. trailer park trash and still beating your caps score. Man what did you guys get from this. If you squint your eyes, tilt your head I am kinda cute 2. Take it from me toss your chart out the window unless you want 2 be my neighbor.
bullnada, Glad you are proud of your CAPS score, I do not have the time it takes to play the game in CAPS nor really care what my score is. FWIW, back when I had the time I was ranked 99.65, in the top 200.
Lets compare a little, you have a total of 86 picks, and an Accuracy 75.29%, not bad :)
I have been correct 69.33% of the time, but on 1736 different picks, and I have not been played the game at all in the last two months, and barely any this whole year.
If your CAPS score is that important to you, good luck getting out of that trailer.
Just kidding bro I truly am not very smart. I have in all honesty lost 750,000 in the market in two years. I am not a great stock trader. Idle hands are the devils work. I am great with land speculation.i Just dont think anyone knows what is going on at this point. Maybe the charts tell you something. My score is a joke. i LEARN EVERYDAY ON CAPS. Thanks for your posts. I wouldnt be here if I couldnt learn from you. Thanks you fool. It is scary that I can be rated 2000 out of 69000 though.
When I was an undergrad at UCLA I was fairly good at math. Your blog was fun to read and had some very interesting repeative grafts that may be due to a natural (biological) cause but you might want to consider another possiblity. You may have unmasked a computer code or algorithm that maybe used by program traders like GS. I don't mean this to sound like a conspiracy theory, just that program trading exists with big money firms that might be loud enough to be noted in a repeative market pattern.
It reminds me of the scene from The Hunt for Red October when Jonesie figures out that the whale noises that he had been hearing were actually the engines for Red October submarine.
I read a similar EW analysis elsewhere.
Hey Biotech, do you happen to have a link to it?
I would love to read it :)
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