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Friday's break of 3191 (June ND contract) appears to have confirmed the
view that an incomplete 5 wave structure is unfolding in the NASDAQ and
that there is reasonable probability that the decline will eventually
reach the 2457 projection, if not nominally lower. The NASDAQ models are
in such deep do do that I would expect to see another attempt at a
rally; however any such attempt should not be trusted as a bottom. When
the models get into such deeply bearish territory while taking out
consecutive pivot lows (in breadth), it takes a rally followed by a
decline to higher pivot lows before a good bottom is in place - this is
what kept us from buying the March and April "bottoms" in the NASDAQ.
Even then, one must examine the structure of the completed correction
for signs of an exhausted impulse. I would reiterate that the w.3
advance was over 24 months and that it will require both price and time
to complete any correction. "Correction" assumes that NASDAQ has not
entered a multi-year bear market - a case for which we have ample
precedence but no evidence. Along with the NASDAQ, the small cap index
(June RL - Russell 2000 contract) also appears to be finished as the
long and carefully constructed Cup and Handle bottom has been terminally
violated.
Turning to the SP daily (June), Friday put us into either a w.c or a w.3
with the violation of the 100% expansion at 1403 putting the odds
strongly into the w.3 camp which provides a likely 162% expansion
projection of 1315. This appears to fit with the corrective pattern
unfolding on the weekly where 23Jul to 22Oct99 appears to be a 3 wave
decline (W.A typically 3 or 5 waves) and 22Oct to 24Mar00 which appears
to be a 3 wave rally (w.B typically 3 waves) which would lead into a w.C
decline (typically 5 waves). The initial confirmation of this was the
decline below 1382 which was the 100% expansion of w.A. If this is a
w.C, price is likely to (eventually) decline to 1263 before new highs
are seen. In summary, the SP price action since Jul99 appears to be
corrective and it appears that the correction has more to run in time
than in price - the 1263 projection lies just above the Oct99 low at
1242. The S&P TB/EY ratio closed the week at 1.3, down from 1.6 but
still far above the levels at which all prior major declines have taken
place so we must be alert for the probability that the corrective
structure could turn into a bear market. A break of the Oct99 weekly low
at 1242 would be a strong clue that the structure is turning impulsive
and has significantly more downside.
It is interesting to note how the price pattern continues to provide a
roadmap. Following the 24Mar high on the daily following a very strong
rally, the structure suggested significant new highs in SP. The deep
retracement on 04Apr told us that we were unlikely to see anything
better than a double top - a strong clue to take money off the table.
The failure of the subsequent rally at the 72% retracement was the first
confirmation that the rally had failed. The worsening situation was
confirmed by deterioration in the NYSE breadth models which subsequently
joined the NASDAQ model in sell territory.
Earl
----- Original Message -----
From: "Earl Adamy" <eadamy@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, April 13, 2000 7:59 AM
Subject: [RT] Re: Nasdaq
> A view of the ND100 (June) suggests the decline is not complete.
General
> guideline for w.4 correction is minimum ABC and a w.4 is generally
> complex in both time in price. Let's look at the weight of the
evidence:
>
> a) Guideline for w.A is a 3 or 5 wave decline - not clearly visible
> b) Guideline for w.B is 3 wave rally - not clearly visible
> c) Guideline for w.C is a clear 5 wave decline - not clearly visible.
>
> Even if we move to a 60 minute chart we may see a w.A, w.B is not at
all
> clear, and w.C is clearly incomplete. Further, if we consider time
> relationships ala Robert Miner, w.4 is most often 100%+ of w.3 which
was
> over 24 months - this leaves a lot of weeks left to go. The pattern
will
> be revealed to us as the market dictates, however the current weight
of
> evidence favors the view that w.C is not complete and that the current
> ABC is probably an initial leg of a larger corrective pattern. Should
> price reach below 3191, there will be justification for the view that
> the pattern is not an ABC but rather an incomplete 5 wave pattern
which
> will define the initial w.A.
>
> In the final analysis, EW gives us a tentative roadmap on which we
pick
> and choose our trades. The road map is always subject to revision as
the
> market unfolds and the alert analyst will continuously adapt to fresh
> information. Thus the EW should not be viewed as a forecast but rather
> as the best available roadmap to which probabilities can be attached
to
> provide a trading edge.
>
> Earl
>
> ----- Original Message -----
> From: <ROSOW@xxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Cc: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Thursday, April 13, 2000 6:53 AM
> Subject: [RT] Re: Nasdaq
>
>
> > In a message dated 04/13/2000 3:43:35 AM Eastern Daylight Time,
> > joe6964@xxxxxxxx writes:
> >
> > > For the Nasdaq Comp. I have a support of 3438-3432 and a CIT for
~
> 4/14-4/
> > > 17,
> > > 4/19, 4/24
> > >
> > > TradeWell,
> > > Joe Frabosilio
> > Hi Joe,
> > My #'s and dates are matching yours - Lenny
>
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