This morning's action appeared to be an impulsive move down followed by an upward correction this afternoon on diminishing volume. If so, we should see an increase in selling activity by Monday afternoon.
Elliot Wave International is calling Thursday's top wave W with an expectation that wave X and wave Y will follow to complete the rally. I am not sure if that is the correct labelling as I still am of the opinion that the May high was wave W or A and the current decline is wave c of B or X. Either way, a correction is likely underway which more than likely should see a decline down below the May lows and possibly the Jan/Feb highs in the Qs.
Unfortunately, it is too early to tell what form this correction may take. If it is wave c of a flat, then it will be impulsive. If not, we could see any number of corrective forms.
The key is to be patient and let the market inform us as to what it wants to do by the price action and the breadth.
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4 comments:
I wonder how much of a pullback we can achieve in this month of June since: 1) It's the end of the 2nd Q & a lot of money managers have underperformed; 2) We had a WEEKLY non-confirmation of the NH's the week before last combined with 3) a Bradley turn date on June 3 that led to hardly any pullback.
Because i've always believed that mkts are 45% physics; 45% psychology; & 20% macro economics (yeah, i realize that's > 100% LOL), i'm fearful of the inertia that has been with us since at least the beginning of May in two different trading ranges.
I hope that i'm wrong about the inertia being with us thru June because neither bear nor bull swing traders are having a good time.
For some gallows/black humor here is someone that i suspect is a 'young' permabear:
http://evilspeculator.com/?p=8309
http://evilspeculator.com/?p=8297
I believe that this inertia, which has been short term in nature, is (still) directly or indirectly related to the hyper volatility of Oct/Nov 08 - relative flatness follows long bars.
Regards,
dave
Btw, Craig, the past two months have been easier to take because of your articulate, well-written blog. Thank you.
Dave,
This blog has also helped weather the storm and maintain my equilibrium as it has forced me to be as objective as possible. I certainly appreciate the feedback and the complement.
I agree that the fund managers are going to do everything possible to keep this market up in order to pullout a positive ytd return, but I am not sure they can do it. While selling pressure is not increasing, buying pressure is falling like a rock.
Ultimately it is all pyschological, I think. Even so-called rational human decisions have to be accepted emotionally before they are acted upon. One could argue that human psychology is a purely natural phenomenon and therefore predictable by an outside observer. Therefore, it is all physics. How's that for going round in circles.
As crazy as it sounds to most people, I have come to believe that few people actually make truly original, unique and rational decisions. This includes the policy makers and government interventionists. So, while we may not understand the "physics" behind it, the market is a natural phenomenon, and as such, we should relate to it in that way, much as a surfer relates to the waves on the oceans.
BTW, I don't put much stock in Bradley's formula. If you want a clear understanding of the market cycles in relation to planetary movement, see Bradley Cowan's work at www.cycle-trader.com.
All The Best,
Craig
I am not a big fan of Arch Crawford-type stuff either, but the 2009 Bradley Turn Dates of
January 20-21
Feburary 8-9
were right on the money. And since other conditions were ripe for a sell-off or at least a pull-back in early June i was willing to give it some credence as another ingredient in the paella.
Regards,
dave
As per your June 11 "Fib RT targets are 35.68, 35.21 & 34.73"
Shouldn't we be using 25.63 March 9 low - 37.23 June 11 high which gives us Fib RT #'s: 32.80 (38.2%); 31.43 (50%) ??
Regards,
dave
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