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« A Quick Scan of Commentary on the GDP Number | Main | The Mother of All Banking Conspiracies »

Sunday, January 31, 2010


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I put together a count from the January 21st high, which I still say was the actual end of the rising pattern, whether it's "the top" or not, and I saw something more bearish than I've seen since the March lows. If this count is right, anyone trying to buy a "wave-5" bottom for a reversal will be sorely disappointed.

Stops are in place, of course, in case it doesn't work.

Ideally, the futures would be flat to down for this scenario. Big down on the futures is possible, but not necessary.


Carl Swenlin:

Bottom Line: We have just witnessed the worst three-day decline since the March 2009 bottom. I think it is the beginning of a more substantial decline, but short-term indicators are so oversold that the next thing we will probably see is a bounce. The most important thing to watch in the medium term is for 20-EMAs to cross down through 50-EMAs. In most cases, this will change buy signals to neutral signals, except where the 50-EMA is below the 200-EMA at the time of the 20/50-EMA crossover. That would be a sell. In the event that the S&P 500 bounces high enough to exceed the January highs, I would have to assume that the presently anticipated correction has run its course.

Mr. Panic

I've been expecting the markets to accelerate to the downside once the Dec. lows support was broken a few days ago but maybe the markets are waiting for Saturday's full moon to ignite the action to the downside following the January 15 solar eclipse top (lunar eclipse occurred at end of Dec. not with this full moon---it usually takes a lunar eclipse after the solar eclipse to start things cascading vertically). Shanghai last August accelerated lower once the first base of support was broken. 1987 right off the top is a similar example but that decline is at least one leg lower so the amplitute isn't equal.
Anyway, we got the mother of all sell signals, a monthly key reversal/close reversal so I expect some follow through at the start of the month just based on that indicator. Too many bears still looking for a bounce here (and trying to play it). A sensitive investor sentiment poll like AAII did not see the bear numbers explode like during similar pullbacks during this "hope" rally.


Over here in OZ, the A-D line has well and truly broken to downside. Still need another 12 points down today to confirm some type of top in. I would prefer 62 points down today to confirm wave B over as well.


One comment about Tony's chart is that the rule of alternation between wave 2 and 4 seams to be violated. I think this is the 5th of the 4th wave down. In any case it doesn't matter. Until we get a retracement we won't know what we are dealing with.

Then again, this is how the rally off the March lows began, with people looking for that dip downward to confirm that never happened.


correction the 5th wave of the 3rd wave down to be followed by a 4th and a 5th to complete the first impulse down off Jan highs.



I have 4515 on All Ords as a possible targetfor a bpounce - this jibe with what you are seeing?


When a corrective rally such as Primary wave 2 (circle) drags on endlessly it eventually exhausts itself and tends to take even bears by surprise when it breaks down. Well now we are in it as volatility takes over.

I had a startling realization on New Year's Eve, as assuredly drunk, I attempted to make friends with a wolflike canine, and it thanked me by biting my whole hand. As I contemplated the significance I realized it was a call to action and the Bear and his animal sprits were getting my attention. I proceeded to arrange funding and was ready to press my bets at the first decline.

What is amazing is the downward pressure without overwhelming sell ratio extremes. Distribution is resuming the steep slope from iii(circle) of 1 of (1) seen on 1/21-22. There was no support for a rally last week as iv(circle) was a flat and 1 of (1) ended at SP1083. A truncated correction through Friday led to the beginning of 3 of (1) on heavy volume, which should drop to the low 900s in the next 10 days, and complete Intermediate wave (1) below 900 by Feb expiration.

Most likely a Monday sell-off through midweek then a climb back to 1075, before falling again on Friday and into the week of 2/8 to 952. A rise to test 1000 and then down to 890 by 2/19.

A meandering wave (2) should cross back above 1000 in early Spring leading to a massive 50% loss through the summer, creating new Cycle lows, as wave 3 of (3) of 3(circle) of c of (a) of IV(circle) wipes out everything in its way.

Just another alternate proposal but I am backing it.

michael eckert

Sorry, EW trends and Charts is not by Bud :(
But thank-you for posting my blog!!!

michael eckert

I did add you as one of my favorite blogs, I really like how you combine a mix of news with your charts!!!

michael eckert

Here is a chart you might find interesting, it is from one of my best friends, who has been doing EW, and Neo-wave for decades!!!


Hi Perigee

I had no specific targets in mind.

A break of 4550 by today confirms wave E of expanding triangle complete. CHECK.

A break of 4500 in the next few days confirms Wave B complete. Need another 36 points down.

I suspect we will bounce from here imminently for 2 weeks or so before another nasty downleg kicks in, maybe as far as 4000ish. But I need 4500 broken to have any confidence in this outcome.




Thanks Taz - I have a turn date for 12 Feb in Copper so maybe a happy coincidence?


Michael - sorry!! Bud is a fan not the author!

Hank Wernicki

NDX Bottom 30m Fractal Pair

Markets should rally today


HUGE multi-point moves to the upside in Coal, Nat-Gas, Copper and Steel stocks this morning!


Long trades triggered this morning and already stopped out for small gain. I didn't take the trade, just posting as an FYI. Would not be surprised if the market gives it all back over the course of the rest of the session.

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