2 replies to this topic

[PorkLoin]

Bear market from the 2000 highs still in effect? Yes, and I see nothing on the charts to the contrary. A three-wave correction from the 2002 lows may well be complete, and we've got impulsive action to the downside. It was a long C wave up from March 2003 in terms of time, to be sure, evidence that the entire decline of 2000 to 2002 was being corrected.

From this year's highs, the Dow Industrials and the S&P look good for putting in five waves down. The weaker Nasdaq looks sloppy, in my opinion, and we need some more market action for this index to get synchronized with the others. The Dow has a very clean impulse count coming down from last month, and I'd expect an upwards or sideways correction fairly soon. If we get that, it'd be a very low-risk sell, regardless of the longer-term considerations.

The Dow may look a little too good, and if the Naz is doing a series of waves 1 and 2 down, prior to getting hammered, the DJIA and S&P may end up falling hard too, negating the "five down, expect correction" way I'm seeing things now.

On the very long-term, I see these high market levels and high stock valuations as a gift of a selling point. The last year has been frustrating to us upwards-correction-complete counters, but the message of the charts has not changed, in my opinion.

Doug

[Porter]

Bear market from the 2000 highs still in effect? Yes, and I see nothing on the charts to the contrary. A three-wave correction from the 2002 lows may well be complete, and we've got impulsive action to the downside. It was a long C wave up from March 2003 in terms of time, to be sure, evidence that the entire decline of 2000 to 2002 was being corrected.

I have a different long term count (Doesn't every EW analyst ).

Wave I October 2002 to December 2002
Wave II December 2002 to March 2003
Wave III March 2003 ongoing

Within Wave III there are the following subwaves:

Wave 1 March 2003 to June 2003
Wave 2 June 2003 to August 2003
Wave 3 August 2003 to March 2004
Wave 4 March 2004

Wave 4 appears to be a simple ABC.

This is a bullish count.
IMO it is justified by the Quarterly trend in all indices being up.
Fundamentals of rising earnings and low interest rates also indicate a bullish count works best.

Finally, the SPX had less than a 6% correction on a closing basis.
Nevertheless, bearish sentiment got quite high as measured by lowrisk.com 60% plus bulls two weeks in a row, Hulbert Market Letter writers having less than 1% equity exposure, high Put/Call ratios, and high VIX.

IMO a bear count is forced.
A bull count works quite well.
Note that Wave 4 in the SPX was a 38% correction of Wave 3.
That is a textbook example.

Porter

[PorkLoin]

Hi Porter, Yes -- three waves up from the 2002 low, and I see your bullish count. If we make a new high on the year here, my bearish count is out the window, at least as far as bear-market-correction-being-over. Since the move up of the last year or 17 months is at the least a reaction to the move down from the 2000 high, a quarterly uptrend doesn't surprise me, be it a bull deal or a bear deal. For now I'm mainly looking at the DJIA. Clean and clearcut, IMO. I don't expect new highs since last month, and if we get them I'm wrong. If we go up and make a lower high, then I'd look for at least another leg down similar to the one starting six weeks ago. If *that* comes, then we'll try to determine whether the whole move down from the Feb. 2004 high is impulse or correction. Best, Doug