Initiation move for the start of the C wave or the beginning of the end?
It's plain to see that the immediate bearish case has been trampled under a stampede of short covering H&S pattern lovers. But is it relevant to the larger picture? It might very well be.
As I mentioned in my last entry, this could be the beginning of a blistering run up. Today only cemented that as a real possibility. In fact, I believe it is now a probability.
The last three days, when taken together, felt an awful lot like the move out of the March low, an initiation move if you will. But a move to where should be the question tonight.
1015 should be the minimum target, if 956 is broken. That's roughly the 38.2% retracement level of the entire bear market. 1123 and then 1230 would be next in line according to Mr. Fibonacci. There are some looking at 1060 as a level. I assume they're using the November's low of 741 to get their 38.2% retracement calculation.
That is a possibility. The November low could be the end of the first leg down, the "A" wave, of a larger bear decline. The three wave correction could be the January 09 high (a), followed by a truncated (b) wave at the March lows followed by a powerful three wave "c" up to some retracement level. If that were the case we would now be entering, or be in the third (or c wave of the c wave) off of the March lows.
The retracement levels then would be 1060, 1159 and 1257. There's no guarantee of course they'd be reached, especially with a weak, truncated "b" wave into the March lows. That, to me, could indicate a weaker retracement than usual.
Something that could back that up is the current potential pattern that is now forming...a megaphone pattern. Look at the Dow and the S&P on a daily (or a weekly). Put a line plot on and see what jumps off the page. It's something I noticed today.
A megaphone pattern is, of course, an ending pattern. The last move up is explosive and brings euphoria and bullishness. It sucks everyone in and then collapses. It's possible that's what this is. If so, it could top and roll over before any Fib numbers are reached, since the pattern trend line is lower than the retracement levels.
So that's something to be aware of tonight.
However, I'd be a buyer of weakness here and pay close attention to the 956 level and the top trend line of the megaphone pattern. It's fast approaching 980. This is going to get very dicey.
As I mentioned in my last entry, this could be the beginning of a blistering run up. Today only cemented that as a real possibility. In fact, I believe it is now a probability.
The last three days, when taken together, felt an awful lot like the move out of the March low, an initiation move if you will. But a move to where should be the question tonight.
1015 should be the minimum target, if 956 is broken. That's roughly the 38.2% retracement level of the entire bear market. 1123 and then 1230 would be next in line according to Mr. Fibonacci. There are some looking at 1060 as a level. I assume they're using the November's low of 741 to get their 38.2% retracement calculation.
That is a possibility. The November low could be the end of the first leg down, the "A" wave, of a larger bear decline. The three wave correction could be the January 09 high (a), followed by a truncated (b) wave at the March lows followed by a powerful three wave "c" up to some retracement level. If that were the case we would now be entering, or be in the third (or c wave of the c wave) off of the March lows.
The retracement levels then would be 1060, 1159 and 1257. There's no guarantee of course they'd be reached, especially with a weak, truncated "b" wave into the March lows. That, to me, could indicate a weaker retracement than usual.
Something that could back that up is the current potential pattern that is now forming...a megaphone pattern. Look at the Dow and the S&P on a daily (or a weekly). Put a line plot on and see what jumps off the page. It's something I noticed today.
A megaphone pattern is, of course, an ending pattern. The last move up is explosive and brings euphoria and bullishness. It sucks everyone in and then collapses. It's possible that's what this is. If so, it could top and roll over before any Fib numbers are reached, since the pattern trend line is lower than the retracement levels.
So that's something to be aware of tonight.
However, I'd be a buyer of weakness here and pay close attention to the 956 level and the top trend line of the megaphone pattern. It's fast approaching 980. This is going to get very dicey.
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