Obama Hope Rally Appears ON

We have been waiting for the great 50% bounce that we saw after the 1929 crash.  The runup from Nov21 to Jan6 was on time as in 1929-1930, but failed to sustain.  Now we have had the best 10 day rally since 1938.  Maybe we were watching the wrong crash (1929 instead of 1937)?  In any event, the STU is more confirmed in their view that the great wave [2] rally is on, and should crest Dow10K (on a 50% rally).  Today we ran above the upper trendline of the whole wave [1] down since Oct07, indicating a strong trend change is underway.  In the short term, we may see a pullback to the top of that trendline at SP766 (Dow7258), before a really storng wave 3 of [2] drives us towards unexpected heights. 

Tongue firmly in cheek, I call it the Obama Hope Rally, or maybe should have renamed it the Tom Terrific Finally Has A Plan Rally; but it should be called the Technical Bounce That Always Happens Rally.  The wave 2 that followed 1929 went 50%, and wave 2's usually go 50% to as much as 62% back.  (It is those pesky wave 4s that meander and fool you, usually at best a 38% retrace.) 

Interesting is Neely today.  He called this rally so far better than Prechter, who thought it had no business above SP780.  Indeed Neely has called this market much better for weeks.  Yet he also thought this rally would fade above SP800, with an outside level of SP850.  Today's move was much stronger than his contacting triangle count would have expected.  Hence he is standing aside to see how this develops. 

Comments

[Virginia Jim]

Ned, fully agree about symmetry. That wave 1 is too big for the size of 3 and 5...doesn't have 'the look' as EWP puts it. I'm in the camp of wave 4 ending exactly today (McHugh's Phi change in trend date is today) which is Armstrong's 392 days or 1.075 years (see "It's Just Time" page 25) from the day that the wave 4 triangle ended in QQQQs. And wave 1 down from October 11, 2008 ended on March 17, 2008. If you add to March 17, 2008 392 days you get April 16, 2009 which is Armstrong's PEI change in trend date (again, "It's Just Time" page 26). I've got a wave count in QQQQs, tons of time and price symmetry and an EW count that gets me to 4/16/09 +- 1 days as the wave 5 low. QQQQs 22.44 on 4/16/2009, very improbable. As improbable as it appears, that's my story and I'm sticking to it. At least, until April 17.

[DG]

Jim,

That count has some things I'd call questionable:

1. The black ii retraces more of the black i than the pink ii retraces of the pink ii. Black ii also retraces more than 61.8% of black i.

2. The black v and the black i don't seem to have any of the typical i-v relationship in time or price (I didn't measure it exactly, so if there's a price relationship, OK, but since i=v is the most common one, they at least violate that)

3. We've already retraced wave e of the expanding triangle in essentially the same amount of time it took to form, which is not how retraces of expanding triangles should work. The retrace should either fail to retrace all of wave e or it should take longer than it took wave e to form.

[Tartan]

DG: I am currently reading Neely's book and have recently signed up for his S&P trading service. I am a reasonable Elliott Wave analyst, and am trying to learn NeoWave - it's a bit of a struggle at the moment.

One of the issues that I have with Neely's trading service is that he does not go into much depth as to how he has arrived at his wave count.

I would be interested in your wave count. Where do you think we are? Will we still top out at 850 as Neely has been saying (although he recently retracted this comment)?

[Forkoholic Serge]

This is cool! Not your typical Head & Shoulders
On the "shoulders" of Mercury and the "head" of Venus?
http://forkoholic.com/images/spxVenusHss.jpg

[DG]

Tartan,

Yes, he kind of assumes that you've either decided to just trust that he's following the rules he's laid out in his writings or that you know those rules as well as he does and don't need further explanation.

Right now, my count off the bottom is double zigzag (with a running flat for an x-wave), x-wave, and now in a triangle (in the c wave of it, which has already met it's minimum size requirement) that should end the move. Going up a degree, I don't know if we're in an A wave of that final correction or still in the x-wave (making a b wave of a flat). So, yeah, I can see us topping out about where he was looking because this triangle has already gone about as far as it needs to go. From not to much higher, we would then correct, either in the B wave of a possible triangle or the c wave of a flat to end the x-wave.

Of course, the next updates to the count could be something more fundamental, but I know that Neely likes to keep his changes to a minimum when a count has been working.

[Virginia Jim]

Let's reconcile EW with two very important, in my opinion, change in trend dates.

First, As I previously mentioned, McHugh has March 26 (yesterday) as a Phi change in trend date. Whatever anyone's opinion regarding McHugh, his Phi dates have been excellent. And yesterday was 1.075 years or 392 days from the beginnining of wave 5 in the first wave of this bear from October 2007. 1.075 years is Martin Armstrongs subdivision of his 8.6 year cycle (see "Its Just Time" page 26 October 2008 available online). So, we have a change in trend yesterday. High or low yesterday? I'd say it was a high. The wave 2 enthusiasts would say a correction will occur but won't break the upper channel trendline of the previously completed wave (about 780 just eyeballing it).

Second, April 16, 2009 is Armstrong's major change in trend (not an 8.6 year cycle but a 1.075 year subdivision). Will it be a high or low? I recall Armstrong, in his October 2008 essay, speculated it would be a "reactionary high" but I cannot find the quote. Regardless, the March 26 high with a major CIT speculated as forthcoming begs the question of whether wave 5 is only just beginning. That's my amateur, and extreme minority view.

Jim

[PL]

The trouble with spending too much time and effort looking for a change in trend (CIT) is that although by definition a CIT could be a high or a low, it could also be a change to a sideways move or an acceleration in a move in the same direction.

Not sure you could really argue that sort of information is overly helpful to trading.

PL

[Mamma Boom Boom]

Jim,

I'm trying to keep my view simple. I 'assume' we are in a multi-month rally (my indicators tell me that). But, I have yet to trully identify a (1), unles it is still unfolding, obviously. IMO, there is no (2), as you said.

In the back of my mind, I want to be certain that this leg is not an (A). That's the present dilemma. 'Time' will make that perfectly clear. But time can steal your money, right?

Ned

[Upstart]

Serge, that is pretty cool.

[Upstart]

Yesterday's high made the March rally just a few more DOW points than the March,'08 to May,'08 rally, or only 40 points less than the rally from January to May,'08.