PM buggerers....

The obvious problem with this count is that the internal wave structure is not ideal for an Ending Diagonal although stranger things have happened. A break above the lower TL currently in the 200 area and back into the wedge would no doubt be a bullish development. In any event, it merits a close watch at this juncture.

cs

hi cybersaavy,

It would be very important to understand whether it is an ending diagonal we have here. Judging from the fast decline, it fits the pattern, but the decline would have to continue at some point down to at least the origin of wave 2 or B. This ED took 5 months or so to develop. It would be marking a termination of a larger pattern given the length of time taken. If so, the bull may not resume for some time at least until the next 4.5 year cycle low. I quote Prechter from a Martin Goldberg article:

“An ending diagonal is a special type of wave that occurs primarily in the fifth wave position at times when the preceding move has gone “too far too fast”, as Elliott put it….In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement…”

“Ending diagonals take a wedge shape within two converging lines. Each subwave, including waves 1, 3 and 5 subdivides into a “three,” which is otherwise a corrective wave phenomenon, producing an overall count of 3-3-3-3-3….”

“…the fifth wave of a diagonal triangle often ends in a “throw-over,” i.e., a brief break of the trendline connecting the end points of waves one and three…”

“Fifth wave extensions, truncated fifths and diagonal triangles all imply the same thing: dramatic reversal ahead…”
(Emphasis added)



My cycle work late last year suggested that this 7 year bull was approaching an important top. Confirmation of an ED would seal the deal. Then we look for a 8-9 year cycle low to buy. From an Elliott perspective, the internal stucture of this ED does not look right. Time to stand back and watch.

cheers,

john

Edited by SilentOne, 30 March 2008 - 01:22 PM.

If you look at GLD as a proxy, I think it is a buy with a stop, and not a sell. I do think this chart is in an ED, and in a 4th wave. The good part of this is if you add a position, your stop here is obvious (I'd use a tight one, maybe 90+), and the risk reward is good (Target 97).http://stockcharts.com/c-sc/sc?s=GLD&p=D&yr=1&mn=2&dy=0&i=p98036098971&a=134683082&r=6885.png

Actually that stop might be too close, maybe 89 after you see how it opens GD