Posted 16 August 2009 - 10:59 AM
In my opinion the 1937-42 market is nothing like the current market position, looking at the big picture from an Elliot Wave [Theory] perspective. The 1932 low kicked of the start of a new super cycle bull market after the 29-32 super cycle degree bear market. 37-42 was an ABC correction of the 32-37 wv 1 rally (wv B was a triangle from 38-41 between the A and C impulse waves down). The 37-42 ABC lows held well above the 1932 low.
The 2007-09 move down was a very clear 5 wv pattern in my opinion (just as the the initial leg down in 29 was 5 waves). According to E-Wave Theory, there will be another 5 wvs down to new lows after the current correction has run its course (as it did after the 29-30 correction ran its course). I think the probabilities are very high that this will occur, so our March 2009 low was not the equivalent of the 1932 low as is more like the 11/13/29 low.
The difficulty is determining when the upward correction is complete because there are so many forms corrective patterns can take (zig-zag, double or triple zig-zag, flat, irregular flat, triangle, etc. - 13 types documented under the theory). We are either in a wv 2 or wv B correction of the 5 wv decline from 2007 top, either label implies the same thing: after the corrective pattern is complete, there should be a move to significantly lower lows than the Mar 2009 low. If the current correction turns out to be a flat or a wv B triangle, it could very easily chop sideways until April 2010. If current correction is a simple zig-zag, we will likely be making significant new lows later this year. The next impulse wave down will likely be an extended wave similar to 1930-32 wave, but will likely run longer. The bear market that started in 2007 is likely correcting the entire 5 wave advance from the 1932 lows, so it should take years. A 4-yr cycle low is due in 3rd or 4th quarter of 2010 which should bring prices substantially lower than current levels. I'm accumulating some Dec 2010 puts on this rally for a core short position. This strategy worked well for me in Oct-Dec 2007 period when I accumulated long-term puts for core short. Don't know if it will work this time, but I think the probabilities are there.
Kimston
