Tuesday, May 19, 2009

Big Collapse based on what facts?; May 19, 2009

The title of this post is a question someone posted to this blog. It's an excellent question and I'm glad it was asked. My primary reason for suggesting a big collapse is coming is what EWP tells us. A five wave move, an impulse move, tells us which way the trend at one larger degree is. As you can see from my daily S&P futures chart posted on the right side of this blog, the decline from October 2007 was in a clear 5 waves. With 5 waves down, it means it is most likely either a large wave A of a correction, which means a wave C will take the market beneath the 2009 low before bottoming; or it's a large wave 1 of a 5 wave move and a ferociously devastating wave 3 will break beneath the 2009 low. So either way, according to EWP the market will make a new low in either a large wave C or 3, and both waves are very strong and ferocious in their nature. So according to EWP, a big collapse is coming.

I'm not much of a fundamental guy, but the fundamentals support this as well. More details on this can be obtained at www.elliottwave.com and Bob Prechter. But comes down to credit deflation. The past 30+ years had this economy and the stock market rise on credit, which is fake money. Now credit is drying up and and disappearing so all those values of credit inflated housing and commodities are now being destroyed. This deflationary spiral will not stop while housing continues to crumble and unemployment rises. There's much more to discuss on this issue and I am not an expert on the matter. I just focus on the technicals mainly. But if you'd like more info on it, please visit www.elliottwave.com. They are a great organization with valuable insight and seem to really care about helping the "little guy" out.


Anonymous said...

Thanks. Your blog is very interesting and I appreciate the time you put in to express your thoughts.

Todd S said...

Thank you! I appreciate that.