Ok, let's take a look at the market...
I still remember March when I said a big rally was coming, somewhere around 50-70% in 5 months and of course nobody or almost nobody would think such thing.... 5 months after and look where we are now !
Now that we're at 1000 pts, now people want to start buying... when they should be selling. Markets work in paradoxal ways, and deceives the largest number of intervenients.
Reminder: http://jogarembolsa.blogspot.com/2009/03/s-almost-bottoming.html
So the charts I have now are, some to situate us in the very big picture and what lies ahead of us... take lines just as an ilustration of a text book structure, but it should look similar more or less...
Now, this same picture we can have 2 basic patterns of standard TA, the M figure and double top, both of which have targets around the same area on the boxes I drew in the chart...
Also take into consideration, according to EW rules the end of C should be in the price area of the previous 4th wave and as you can see C ends above... that is the case because well I'm being conservative, but textbook should end between 200 pts and 375 points, but let's just take the graph scenario, which itself is already a hell of a decline:
Now last but not least, including today's price action...
And a mid term picture...
I would also like to point you out to this... After NEWSWEEK with the cover in bold letters saying "RECESSION IS OVER" now we have this http://slopeofhope.typepad.com/.a/6a00e00989822288330120a55b7db6970c-popup
Also, IMF came to public stating the recession is indeed over... What else can a contrarian want?
I rest my case your honor
hi sal,
ReplyDeletegood to have you back...hope you had a nice vaca...one follow-up - what did you mean by posting the economist cover? are you saying asia will be heading down? or just certain economies? thanks
also,
ReplyDeletehow can a "regular guy" make money in these circumstances? S&P is going down; you are not a fan of gold/silver....what can someone do if they are not used to forex or options or futures?
stay in cash? go long in India? thanks
Hey Nirav... i think China is still in a Bear, but what I meant with the covers is a contrarian view.
ReplyDeletemedia is always one of the last groups to join in a trend... usually when a news or event about the markets get big coverage on public media you can be certain top is very near...
Its like the story of, when the taxi driver is buying stocks you should get out... something like that.
I'm apologist of Silver and Gold, i'm a precious metals bug, i think one should always have some for safety, but I think there will be a better opportunity with lower prices...
Hmmm regular guys... the only thing i can think of is ETF's on the downside, but not the leveraged ones...those always lose on a mid term long term basis theyy are not suitable for holding... apart from that i cannot think of anything else
sounds good Sal...thanks for the feedback...
ReplyDelete(ps - i will assume from now on that when you say Asia; you are not including India???)...thanks
-N-
Hi sal
ReplyDeleteTwo questions:
-How low do you see the S&P going and over what time period?
Considering the huge double top (2000-2007) and the extreme credit bubble, I view a 90% correction as likely. So very similar to the 1930s. The low back then happened 2.7 years after the initial OCT 29 carsh....so considering the last was in Oct 2007, the low this time could be reached by next summer? What do you think?
-I am new to Prechter's elliot waves and other theories? Which books would you recommend I read?
Thx
alexander
Hey Alexander... Well I would see a 80-90% as likely as well, but on these graphs I'm being conservative...
ReplyDeleteThe double top and M figures have targets around 375-400 points on S&P.
Elliott Waves say we should correct until the price area of previous 4th wave... so anywhere between those 2 blue lines...
I doubt it will be next summer... The initial down wave from 1929 was very fast, in which afterward we had a rally for about 5 months (the same as now) for a 50% rally as well. Once it topped in 1930 it took 3+ years to reach a low...
I think as well, it will take around 2-3 more years to reach a final low on S&P.
Well, books I recommend Elliott Wave Principle from AJ Frost and Robert Prechter... regarding EW is all you need
Sal
ReplyDeleteWell, we rallied 50% from the November 1929 low....and we basically set new lows one years after the 1929 low....we set an ultimate low in July 1932, so basically a little more than 2.5 years after the 29 low.
So, considering that the 2007 top is "1929 on steroids" (Prechter used that in a speech and I agree), I see 200 on the S&P as a possibility in summer/fall 2010
Frankly, except for tech 2000, I have never seen such a disconnect between the real economy and the market.
If I may ask, What kind of trader/investor are you?
Have you read Prechter's book on socioconimcs? And "conquer the crash"
Time projections regarding EW don't say that... It's too little of a time to achieve the low...
ReplyDeleteIf you ask me if at the time I believe we'll be below the lows of March, I'll say yes probably we will by the fall 2010 already be below 666 in my opinion.
Prechter himself also sees the ultimate low around 2013 and going as long as 2016.
Glenn Neely, which is another EW analyst and a very good one at that that uses a different approach on EW (more statistics, raw data and plotting) also sees a 6+ year bear market.
I see myself as a swing trader with some traits of position trading (trend following). I try to get the most of big swings. I used to trade stocks but currently I only trade futures and currencies... I'm aware of Prechter's work on socionomics I even subscribe to the EW Theorist his monthly newsletter, he does provide a lot of isight...
I've read from him Conquer the crash, Elliott Wave Principle....and am looking to read other works from him regarding socionomics and At the crest of tidal wave
You might be right...
ReplyDeleteBut, and this is subjective, because of the huge disconnect between the market and the real economy, I believe those sub-400 lows could be reached sooner....
If the market could fall apart so quickly in 1929-32, why not now?
we just have to see
Because, what we're seeing now is a bear market of higher degree than 1932 and you cannot just make direct comparisons... you have to take into consideration each wave.
ReplyDeleteWave 1 from 2007 high until March took 17 months more or less... Wave 2 should correct somewhat during 6-8 months.
We know with Fibonacci relationships that Wave 3 is most often the biggest. Usually 1.61 times the price and time of Wave 1.
So let's assume we top September, Wave 3 alone should last around 17 * 1.61 = 24-25 months more or less.
So we're talking 2 years just for Wave 3. Wave 4 and 5 usually take 0.61 of the previous waves so 0.61 of 42 months is another 2 years. Which projects the bottom to a Fibonacci year of 2013... of course this is just assumptions and nothing is certain
Sal
ReplyDeleteAt the top in OCT 2007, did you then expect to see 666 by March 2009?
alexander
Alexander,
ReplyDeleteIn 2007 I didn't know a thing about TA or any thing else...i was a fundamental analysis investor
I had bought 5 stocks in 2003-2004 with some pocket money and that was it. I started becoming familiar with TA March 2008, and started to base my investments on TA and EW around Summer 2008. So I can't tell you what would i think in 2007. But if you search this blog for January 2009 or during the rise from October, I said most likely the mid term bottom would be around the 600's... after which we would have a big burst huge mother effin rally...
S&P pushing 1030 range...bulls are still running wild...interesting times...Q3 and Q4 2009 are going to be nuts!!!
ReplyDelete-N-
Sal,
ReplyDeletetold the folks at goodvibes lounge/chat yesteday and today that you are back on your blog....fyi
-N-
Sal
ReplyDeleteDo you have a subscription to the Prechter reports (There seem to be 3 reports one can subcribe to)?
If so, do you find them valuable?
Yes I do Alexander. One can be more than satisfied with The Theorist only, but I find it very valuable the information on the monthly Global Market Perspective with all markets, social trends, fundamental and statistical data etc... that's the service I have.
ReplyDeleteI could send you a few examples of what the service is about from a couple months ago if you want, so you know what this is about....
Best
Sal
Sal
ReplyDeleteSo basically you get those 3 reports:
The Elliott Wave Financial Forecast (monthly)
Financial Forecast Short Term Update (M, W, F)
Bob Prechter's Elliott Wave Theorist (monthly)
yup that's it.
ReplyDeleteSal
ReplyDeleteThanks for sending me some examples...
My e-mail: muyllea@yahoo.com
Hi Sal
ReplyDeleteI just took a test subscription on the elliott wave...
I just that Bob Prechter's Elliott Wave Theorist (monthly) only goes back to May in the Archives.
Is it possible for you to send me some reports before that May?
Thanks
Alexander
E-mail: muyllea@yahoo.com