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#1 LarryT

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Posted 03 April 2009 - 06:56 AM

Major difference between a bottom and a low during a recession cycle. My partner that does market breadth analysis and the presidential cycle analysis recently did an analysis of recession cycle bottoms and false lows. Based on his analysis of 22 recession cycles the Dow must advance 31.82% to bottom a recession cycle. Once an advance has achieved a 25.8% odds are very high a bottom will occur as that is the median advance for a bottom. Any advance less than 25.8% is a false bottom or simply just a low and lower lows will be seen. The situation for now for a low risk investor is to wait until at least SP-500 closes above 25.8% and that has not happened yet. Then as the test of the bottom retrace occurs start scaling in at 50% retrace to near 62% retrace. Time cycle wise we are in a 36 and 72 year cycle bottom situation. The previous 36 year cycle retraced about 80%. From the 666 low a 25.8% advance targets 838 daily close and a 31.82% advance targets 878. 878-838 media is at 857 so until the SP-500 has closed above 838 odds are not with you. Close above 857 odds increase and close above 878 you have a bottom. Using 852 as the median and a 50% retrace a low risk investor would start buying long positions at 760 add at a 62% retrace at 737. That gets a low risk investor long 10 to 15% off a recession bottom. Traders are a different story, posted here several times to expect a mid 600s low and when my breadth model achieves -150 we have a tradable low and when it hits +50 a profit taking high. Based on the wave pattern today odds look very high the SP-500 will close above 857 so odds will increase the recession cycle has bottomed. If that happens then price wise 760 to 730s is the low risk entry zone if my breadth model is near -100 at that window in price. Looking at the 1974 bottom the low was 60.96. A 25.8% advance was 76.69 highest daily high was 77.41. The test of the bottom low retraced almost 80%. Buying at 50% 69.21 to 62% retrace 67.25 with an 80% stop was the low risk setup. Same setup is now in play. 1974.gif
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#2 rkd80

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Posted 03 April 2009 - 07:41 AM

Some good LT stuff there, if this IS the bottom - then I feel bad for all those people who just recently emptied out the 401k and shunned the market. Its a real shame. In terms of ST, according to what you are saying - seems like 850-860 comes first then the retrace down into the mid 700s?
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#3 humble1

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Posted 03 April 2009 - 08:00 AM

yeah, what about all the folks who were reading the repeated posts about spx 500 or spx 300 and are short or out. what should they do? are they supposed to sit tight and hope/plan for a 50% retrace?

#4 LarryT

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Posted 03 April 2009 - 08:03 AM

Some good LT stuff there, if this IS the bottom - then I feel bad for all those people who just recently emptied out the 401k and shunned the market. Its a real shame.

In terms of ST, according to what you are saying - seems like 850-860 comes first then the retrace down into the mid 700s?


That is correct, as of todays wave pattern that is the best odds.
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#5 Woody

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Posted 03 April 2009 - 09:43 AM

Some good LT stuff there, if this IS the bottom - then I feel bad for all those people who just recently emptied out the 401k and shunned the market. Its a real shame.

In terms of ST, according to what you are saying - seems like 850-860 comes first then the retrace down into the mid 700s?


That is correct, as of todays wave pattern that is the best odds.



Larry, appreciate your work..........what happens if we hit Chief's target of 917 with a blip at 870?

CW

#6 timer

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Posted 03 April 2009 - 10:13 AM

Thanks for that useful info, Larry. I tried laying those levels out on an SPX chart. Using the Oct 2007 high of 1576 and the March 2009 low of 666, I can't get your 838 and 878 levels using the percentages of 25.8 & 31.82. What do you think I'm doing wrong? Thanks.

#7 LarryT

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Posted 03 April 2009 - 10:24 AM

Thanks for that useful info, Larry. I tried laying those levels out on an SPX chart. Using the Oct 2007 high of 1576 and the March 2009 low of 666, I can't get your 838 and 878 levels using the percentages of 25.8 & 31.82. What do you think I'm doing wrong? Thanks.


666 advanced 25.8% not 25.8% of the down wave. 666 x .258 = 171.83 + 666 = 837.8
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#8 LarryT

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Posted 03 April 2009 - 10:27 AM

Some good LT stuff there, if this IS the bottom - then I feel bad for all those people who just recently emptied out the 401k and shunned the market. Its a real shame.

In terms of ST, according to what you are saying - seems like 850-860 comes first then the retrace down into the mid 700s?


That is correct, as of todays wave pattern that is the best odds.



Larry, appreciate your work..........what happens if we hit Chief's target of 917 with a blip at 870?

CW


I believe Da Chief allows for a drop to 760 so we are in basic agreement. We could top ths wave in the 860s, drop to 760-740 then up toward 938-998 no problem.
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#9 Spectacular Bid

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Posted 03 April 2009 - 10:40 AM

Larry T Thank you for sharing your work. Your tables showing the 1st quarter and March low between 665 to 671 was absolutely fantastic. Would it be right to say the breadth study has dcreased the odds of seeing the yearly down cycle low of 473 and further price apreciation above 857 would decrease those odds further, while a close above 878 cancels it altogether??

#10 timer

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Posted 03 April 2009 - 10:47 AM

666 advanced 25.8% not 25.8% of the down wave. 666 x .258 = 171.83 + 666 = 837.8 [/quote] Now I get it. Thanks, Larry.