THE BIG PICTURE
This is the chart of the FTSE 100 UK Index
This is the Dow Jones.
This is the SP500
All three of the above charts show the "Bigger Picture" that I am arguing for. It seems remarkable that if you look at all three, the start of the crash shows all three making a "Descending Broadening Wedge" formation (perfectly). I am arguing that this formation, with 5 internal points be counted as a 1 down (red count). The rest as follows is 2 and 3, thus this rally we are seeing is a 4!
I am interested to hear what other Elliot Wave theorists make of this analysis, because I have yet to find someone who has been able to pick up on this pattern in all three markets. This pattern suggests to me that this move down is in fact a 5 wave (red count) big A.
So the expected decline will break the march lows, but perhaps not as far as expected by the permabears, and then we will have another big rally to make the big B, followed by one more fall to make a big C, completing the correction for this bear market. This possibility to me seems increasingly realistic, as it would allow for plenty of downside room for the big C.
RECENT ACTION
This is the recent FTSE activity.
This is the recent Dow Jones.
This is the recent SP500.
Now these three chars also have an interesting pattern, they all look like there is the possibility of an "Ascending Broadening Wedge", marked by a purple count on each chart. This also leave the possibility that the Dow and SP will push up once more towards the 50% retracement level of my argued wave 3 (red count). FTSE on the other hand looks more complete, so perhaps some sort of double top if the other two play out according to the purple count. FTSE has already hit and found trouble at the 50% retracement.
The other possibility that I consider is that the tops are in, and that the green counts will unwind in the early days of next week. There is a case that the red lines of resistance on Dow and SP will not be broken (with Dow there is also a cluster of resistance and the 50% retracement). However, looking at the Friday rallies for Dow and SP, they look particularly strong from a candlestick point of view compared to FTSE, this makes me think that the purple count is still a valid option.
I hope these charts have given you an alternative view that proves interesting. As Roy used to always say, "keep an open mind" so I am trying my best.
Please let me know what you think.
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9 comments:
Quite interesting. and looks very likely. above all, shooting up over 1018 resistance and then crashing again should fool bulls/bears together. and that's the market's favorite.
Your wave 4 overlaps 1 ,not allowed. I have trouble counting it too. The range of 5 would be limited also, as it couldn't be longer than 3. Looking at the big pic, I'd say a zig zag would be the best count. If a=296 and a=c 296+869 gives a projection of 1165.
http://orvinfive.blogspot.com/2009/04/fundamental-error-of-elliot-wave-theory.html
I agree with you on the possibility of the big picture, as 4 of 5 of A, I don't comment on short counts as I find it very difficult to count and have a consistent hedge but the previous post about 4 overlapping 1 is correct. Gabriele (London)
I agree. I've been looking at this for sometime now and have managed to pin down the position of numerous "market experts" on EWT. The amazing thing is that none of them agree. All have pretty similar target ranges for a top for this rally but their respective positions in the super cycle are all different. EWI (Prechter) has us in Primary A.2, EvilSpeculator has us in Primary C.2, Tony Caldaro has us at the end of a Primary B, Affraid-to-trade (who has dropped the graphs very recently) had us in the next cycle over tracking up a new Primary 1.
If you look at Caldero - his downward count from the Oct 07 high is for 3 steps - he seems to think all corrections are 3 waved (not standard to EWT - likely his own interpritation of it - OEW.)
Whether he's right or not I think the count has merit, but I prefer to stick with 5 waves for impulsive, and that being the case the current wave we're in is a Major 4.
The case for either a new bull market or a primary wave 4 retrace can be excluded using the same basic elliott wave rule - namely wave 4 can't stray into wave 1 - otherwise reframe required.
Bull Market?
Looking at the SPX500, from the Mar 09 low the first intermediate wave (assumed wave 1) topped out at SPX956. The current bullish wave count is 3.III.(3) - really bullish!! A large leg down would usher in supposed intermediate wave 4. If the trace then dropped below SPX956 this would demonstrate EWT rule violation (Wave 4 into Wave 1) clearly demonstarting that this cannot be a bull market and is a corrective move (as most suspect), placing us in either a major 3 or 5 or C downwards. In which case we're headed down big time.
Major Wave 4 retrace?
Equally, on the decline from the Oct 07 high, the major wave 1 decline bottomed out at Mar 08 SPX 1257. So if we carry on with the current rally and break to higher than this the case for a major wave 4 retrace is broken (as again Wave 4 will have retraced into wave 1) and likely we are in the next cycle over and this would be a bull market.
The reason for the hugely varying opinion on super cycle position is that it is unclear as to where the Super cycle Primary 3 topped out - 1966 or 2000; and the correct scale to use in comparison to the 1929-32 crash in this current era - and no one has the correct answer.
The closest chart I've seen provides a comparison between the current markets and the Nikkei 1989-present. Here's the link. To me this shows that 2000 was a Super Cycle Primary 5 - which means we've been in a cyclical bear market since 2000 and likely we'll be in one for at least another decade!! Interestingly - using Prechters modern era scaling for the ABC puts us in Primary A.4.......
Best wishes
RangeFinder
http://www.mineweb.co.za/mineweb/view/mineweb/en/page67?oid=88283&sn=Detail
Guys many thanks for all the comments, they truely are much appreciated and help me keep an open mind.
About the wave 1 and 4 overlap (im guessing you are either talking about the big picture descending broadening wedge or the recent activity ascending broadening wedge). I know that inside the wedges there is an overlap, but I thought that like triangle patterns this overlap was allowed for, assuming that the pattern really is a wedge.
http://www.elliottwave.net/educational/basictenets/basics2.htm
Although this article talks about a "diagonal triangle" (compressing wedge) and I am talking of broadening wedges, I assume that similar rules could apply for both.
Whats your take on this?
While not EW, Bulkowski's Pattern site discusses the ascending broadening wedge statistical behavior here: http://thepatternsite.com/abw.html
I hope it is helpful.
Thanks Sameast.
I managed to find an image from Precter's EWI website in the Lessons section, this shows exactly what I am arguing has happened, with a clear overlaping 1 and 4.
http://www.elliottwave.com/tutorial/images/fig1-19.gif
Same pattern
Max - having trouble determining the date of your charts. Maybe you could put it near the top.
My view is that we may have now seen the top. Expect dollar strengthening to confirm.
Seems like a text-book A-B-C to me.
Alan C.
P.S. Any news from John H?
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