AChartist has spoken about a 4 week rally to start sometime soon. I "SEE" what he sees from a cycle point of view. The reason stems from the larger cycles like the Hurst 9 month cycle period. I have illustrated where this cycle visually appears relative to price. A nominal 9 month cycle is shown below with no regard to actual length (and actual lows are marked with arrows). So working off the June 2006 low, we visually see distinct lows arriving in March 2007, Jan/ March 2008, and Nov. 2008. The bear trend has distorted the cycle lengths and extended them in time. But one can say with confidence that this particular cycle period should avg. between 9 and 11 months, and closer to 10 - 11 months during this bear market.
So if you accept that this cycle is still working, then we have not see much of a reaction out of this last 9 month cycle time-wise. What I mean is that we are still in the second monthly candle off the Nov. low. Nor have we seen much of a retracement (ie. < 38% of the May - Nov. 2008 decline).
Given the extent of the decline, one would think this was an 18 month low that was put in Nov., that conclusion only coming from the extent of the price destruction.
So the question is: Wouldn't you expect more of a reaction out of such a low? I guess the short answer is that if we cannot rally here shortly and extend this bear rally, we will certainly plumb to massive new lows at the next 9 and 18 month cycle lows due later in 2009 and 2010.
Personally I am looking for more reaction from this 9 month cycle low. However, Elliott wavers are seeing this as a 5th wave decline (off the wave set from the June 2008 high) and it may well be, but if it is not ...
cheers,
john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain
