Friday, January 16, 2009

Large Strong Rally Phase Underway; Jan. 16, 2009


The market rallied too much since my previous post for the count to remain valid. It's clear the decline was impulsive, but the exact labeling was uncertain. So I relabeled the decline to show 5 waves down complete already. This is probably a wave 1 at some degree. Which means that a strong fierce wave 2 should occur now. This lines up perfectly with Obama coming into office Tuesday, and the Obama euphoria carrying over to the stock market and causing a rally. But 943 in the S&P cash should not be broken or even tested. My projection in the coming weeks is shown in the 1hr chart above. I see a 1-2 week rally occurring to just under 900 in the S&P. I took off some of short positions yesterday and today once I saw the selling pressure alleviate. So I will add those positions back on as this market rallies higher in the coming days/weeks. Ultimately, 943 should not be broken, and the market will give way to a large wave 3 down. That will be the prime opportunity to make big easy money fast!

I'll try to identify a top when it comes, but I'm shorting this coming rally anyway.

7 comments:

Michael K. said...

Hey Todd,
The stochastic is about to crossover below the 20 point line, it happen around Oct. 27 and Nov. 21, which cause over 163 points gain. So if you take 817+163=980.

Here is a chart from http://www.bigtrendtrader.com/
http://3.bp.blogspot.com/_yUqf2DpL7z4/SW_Rmt-X4VI/AAAAAAAAAic/jLFQqRFKlH0/s1600-h/stock_chart_01-15-09.png

Your thought?

Michael K. said...

Thanks for the update, I think I will enter full short once the ES move close to 890. Enjoy the holiday and I will be looking forward to your post in the coming days/weeks

Michael K. said...

Also, Between mid-Sep 2008, I saw a 130 pts or 11.45% gain from 1135 to 1265, which the stochastic cross over, went up to a little and fell down.

So 817 X 1.1145 = 911

911 remind me of 9/11/01, you know what happen on 9/11/01, the market close for the whole week starting on 9/11/01, which the market keap dropping until it ended Primary wave {3} of Cycle wave a on 9/21/09, and 9/11/01 was on a Tuesday, which is when Obama gets into office. INTERESTING

Michael K. said...

Hey Todd,
What you think of this? Not bad for a beginner huh. I been learning a lot from you and the EWBT website.

http://i270.photobucket.com/albums/jj112/kimmichaelp/Mike.jpg

Todd S said...

I do like to look at past performance and setups as a reflection of future moves, but getting too exact can get you in trouble. The idea is to look forward mostly. The idea of the crossover resulting in a bullish move is the general thesis of this setup, but getting too specific on how big the move will be can get us in trouble. Each move has it's own set of individual circumstances and context we have to evaluate too. So I think your analysis does call for a bounce, but how big? We should look at other forward looking indications.

Todd S said...

Michael, nice number work on your third comment. I never underestimate the power of cycles and crowd psychology's effect on the markets. Thanks for sharing.

Todd S said...

And Michael, nice triangle work. But recheck your internal count from 1-5. Waves inside triangles must unfold in 3 waves, and only in ending diagonals can a 5 wave move overlap each other.

But your triangle is still sound, and quite possible. I think it's a wave 2 rally coming and you think it's a wave E. Both will result in the same move; which is a sharp rally and then quick reversal and big sharp thrust to new lows!

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