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Realtraders,
As many of you know, I have been posting both short and long-term
analysis of the S&P 500 using Symmetry Wave for some time. Well, here is
another and it is directed toward our long-term view of the markets. I
hope you find it interesting
Before I get into the specifics, I thought I would say at this juncture,
"that my current interpretations are NOW indicating that a decline in the
magnitude of 20.5% from the all-time highs is now underway". With that
said, if you are still interested in what I have to say, please read on.
I have attached several charts of the S&P 500 Cash Index. I will begin
explaining the specifics using a daily graph of this Cash index dating back
to 1993 (see chart sysp116a). For those not familiar with symmetry wave,
please go the URL links at the bottom of this post for more information.
Anyhow, here are the numbers.
Wave A high occurred on 2/4/94 at 483 and Wave B low occurred on 4/8/94
at 436. This decline measured 9.9%. When we factor in the leeway of 20%
(rule), we get a zone of 1.98% around the mean of 9.9 or a target zone of
future declines of 7.92 - 11.88%. Thus, from the Wave B low, we would look
for future declines of 9.9% as a symmetrical support zone and a buy signal
will be issued based on this relatively large scale wave structure.
Now move to the Wave C high on 5/23/96 at 681 and the Wave D low on
7/16/96 at 606. This decline measures 11.01% and MATCHES the original zone
of Wave A-B. Thus a buy signal was issued.
From that Wave D low, the market again makes a new high and tops (Wave
E) on 2/19/97 at 818. The subsequent drop ends on 4/14/97 at 734 (Wave F).
This decline measures 10.26% and AGAIN MATCHES the original Wave A-B and
another buy signal is issued BUT caution had to be taken due to the fact
that the this 10% wave structure was, at that point, becoming overextended.
Anyhow, as we have seen in the past, overextensions can still provide
excellent opportunities to still trade the market (in this case from the
long side) but there is a greater risk associated with such actions.
Following the Wave F low, the market again rallies, higher than Wave E,
and proceeds to Point G, the current all-time high. This high occurred on
10/8/97 at 983. When the market began to correct shortly thereafter, we
again looked for a symmetrical match of the original Wave A-B decline of
10%, which symmetrically would have given us another buy signal, but in an
extremely overextended wave structure.
Anyhow, when the market finally finished its pullback on 10/28/97, it
reached a low of 855. If we calculate the percent decline from the 983
high, we get a magnitude drop of 13.02% and IS GREATER THAN THE ORIGINAL
WAVE A - B DECLINE EVEN WHEN WE INCLUDE THE LEEWAY. Thus, this is a clear
sign that the 10% wave structure which began in 1994 has ended or failed!
What does this mean? It means one of two things. 1. Either this 13.02%
decline is now the beginning of a NEW wave structure or 2, portends that a
larger decline is in the making. Thus we would expect a decline in the
magnitude of the next larger wave structure. Of which, dates back to the
1990 decline of 20.5% in the S&P Cash market.
To briefly discuss the former, for this decline to become a NEW wave
structure, we would need to rally higher than the 983 level which was the
all-time. At present, we are getting close, but I don't think it is going
to happen. Thus, it is in our best interest to talk about scenario #2.
The second attached chart (sysp116b) is a weekly graph of the S&P Cash
going back to 1986. The wave of interest to us, at this time, is
identified on the chart as Wave I - II. This wave took place, on a weekly
basis, with a high on 7/20/90 at 370 and low during the week of 10/12/90 at
294. This decline measures 20.54% +/- 4.1% leeway and gives us a target
zone for a symmetrical support bottom after a 16.4 - 24.6% decline. Based
on the current high of 983, this translates into a target zone of 821 - 741
on the S&P, with an exact symmetrical match at the 781 level.
To add confluence to this support zone, I have included several Fibonacci
retracement zones based on the 1994 and 1996 lows which seem to confirm
additional supports in our target zone.
Finally, I have included a simply but very useful plot of the weekly
stochastic oscillator. As you can see, we clearly have an overbought
divergent SELL signal which is making a new low based on its most recent
past decline. Obviously, this picture is clearly giving us a warning sign
of declining prices ahead.
Personally, I am awaiting to initiate new short positions possibly
tomorrow (11/7/97) but I have already begun selling, in quantity, a large
amount of my current long stock positions.
Lastly, I have attach a 15 minute chart of the December S&P Futures
contract and just wanted to point out the descending trendline of the
recent highs (and lower highs). Note the convergence around the 965 level.
Thus if we should get another move up in the next few days, look for this
area to provide significant resistance.
Ideally, I would LIKE for tomorrows employment data to come in AS
EXPECTED so that this way the market will attempt to rally to the above
mentioned resistance level and we could all go SHORT. If tomorrows data
suggests a tight jobs market and rising wages, the bond and stock market
will most probably open substantially lower and not allow for a real good
entry on our short position. But then again, if my analysis suggests a 20%
decline, then missing a hundred Dow points or so on the open is no real a
big deal.
Questions, comments and concerns are always welcome.
Hope you found it interesting,
John Boggio
PS Since the 10/28/97 low, we have formed a small internal wave structure
which measures approximately 3900 basis points. Thus if the market begins
to decline from our current internal high of 94150, look for symmetrical
support 3900 basis points later, +/-780. However, I do not know if we are
going to hold because I believe we may be in a downtrend. Thanks again.
Attachment Converted: "c:\eudora\attach\sysp116c.gif"
Attachment Converted: "c:\eudora\attach\sysp116b.gif"
Attachment Converted: "c:\eudora\attach\sysp116a.gif"
For recent commentary and more informations regarding SymWave, please go to:
Commentary: http://www.realtraders.com/boggio/disc7_toc.htm
Info regarding SymWave: http://www.realtraders.com/boggio/boggiobio.htm
Thank you.From ???@??? Thu Nov 06 18:24:24 1997
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Date: Fri, 07 Nov 1997 09:27:47
Reply-To: Visavis@xxxxxxx
Sender: owner-realtraders@xxxxxxxxxxxxxx
From: Visavis <Visavis@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Soros' methodology
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Hello RT's:
CNNfn news had mentioned last week that George Soros lost approximately $2
billion in last Black Monday crash.
Looks like George Soros & his associates methodology use are bad when
things like Blah Mondays crash happens because it had happened before
already with them last October 1987 crash.
Citing from the book of "New Money Masters" by John Train on Chapter 4 page
67 that: "Within 1987 there is another horrible down drift aside from 1981,
with the Quantum fund off $840 million or -28%, in a matter of days,
although it ended the year up +14 percent."
This -28% down drift as I observed in this a matter of days trading were
the almost the same percentage more or less of the percentage wise of the
1987 crash.
Looks like George Soros is long most on these instances.
Any new comment?
.___________________________.
Best Regards!
Visavis
Visavis@xxxxxxx
.___________________________.
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