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8/17/2009 - Sorry for the lack of updates..oops, that's how I began the last comment nearly a month ago. I've been busy and keeping up with the updates for bonds takes up most of my time. That said, it's about time to take another look at things, especially given the hard break from Friday's close. If you look back at the previous update from 7/20, I mentioned in it that 'a trusted source of cyclic information' had timing for early August and for now, how could I not be thinking of that right now. And if he weren't enough, none other than Robert Prechter is now suggesting that the bear market rally that began in March, has now entered into some objectives and may be nearing completion. Normally, as much as I am glad to credit Prechter with having taught me most of what I learned about Elliott, I've never used his calls to trade and have seen him make his share of projections that never came to pass. Having said that, however, it is only fair to point out that after being short for much of the decline late last year and early this, he did recommend covering shorts very close to the March bottom and now, for the first time that I know of, is talking about a failure and one that can produce new lows of the bear market. Joe Granville once said something like 'if someone couldn't find the bottom, how or why would you expect him to spot the top'. Well in this case, Prechter did find the bottom and why wouldn't we think he might find the top. One thing that I have been watching recently is the area that has stopped the rally so far. Basis the Dow and the SPX, the rallies have retraced 38% of the entire bear markets and while the exact % retracement may be off, the retracements in both indices are more than 38 but less than 39% so as far as I am concerned, they are direct hits. And I can tell you that in all my days of playing with this sort of analysis, I don't recall ever having seen the Dow and the SPX, hit such perfect retracement targets of large moves at the same time. If we were to keep going down from here, these charts should be put in every book that tries to teach using Fibonacci retracement targets for trading. Bottom line is that there is evidence that cycles are turning down and from wonderful targets for a bear market to re-commence even if they are targets that few could have seen coming back in March. There has been plenty of good news regarding the economy of late or at least, news that is better than what has been expected. That said, there remain plenty of areas of concern and having an open mind to the ultimate path from here seems to be in order. For now, I am of the opinion that the current highs are at levels just too compelling to ignore. Show me an obvious corrective pattern to the decline and I can be friendly but from here and for now, I say be careful and expect further downside this week as we test the intestinal fortitude of the bulls, given just a little bearish technical news to deal with. I'll try to keep more current with these comments but for now, with a little help from my cycle guru, let's expect to see the equities continue to weaken through much of this week and make a determination of what is happening once we have completed some sort of wave pattern, either impulsive or corrective. One thing that seems likely is that absent a recovery back into Friday's range, we have more work to do on the downside.

7/20/2009 - Sorry for the lack of updates here but the truth is that stocks are not my major focus and I haven't had all that much to say. From current levels, the most glaring thing to me is that the decline off the June top is a clear 3 wave move and thus, those June highs at 956 SPX should not hold. That said, as we rapidly approach them, the 2 best counts seem to be that we are impulsing up to a new high, otherwise we would likely be in a B-wave rally of a flat correction that should stop very close to the previous highs. I would prefer the former as the rally from just under 870 looks impulsive. There is some timing for mid-week and from trusted sources of cyclic information, in early August. I have no real timing of my own that intrigues me so for now, I will leave that to others and just say that I would prefer to see a failure from a new high if I were to try and get short. I'll be out of town for the last half of this week but will try to post an update when I can find something intelligent to say.

6/23/2009 - 11:30 am -I am watching a chart that is really intriguing so why not post it here? This is an hourly chart of the SPX and shows the clear 5-wave decline off the top, followed by a clearly corrective rally that stopped just a point shy of the 4th wave of a lessor degree before we tanked yesterday and made new lows. The bullish count would have us in the C-wave of an ABC zigzag from the top while the bearish count would place us in the 3rd wave of the first impulse wave off the top. The low so far today is 888.86 while the 23.6% minor Fib. retracement of the entire rally is at 887.92. This second impulse down, perhaps a C-wave or perhaps a 3rd, will equal the first at 874.64 and what is so cool about this chart is that we are walking right down the center line of an Andrew's Pitchfork drawn off the top and if you project it to the close today, the value will be 874. As the Church Lady used to say, Isn't that special?

6/22/2009 - 1:30 pm - Finally, a wave picture has come clear. Well, sort of. We do appear to have a 5-wave decline from the highs followed by a corrective rally and now a secondary decline is under way. Not having a clear opinion of what the rally out of the March low is, I'm not very committed to a label for the decline just yet, but a few things are clear. For one, wave equality would give us a target for a second impulse down at about 875, just a few points below the May swing low so there is great support there. If it doesn't hold, or if it does but we only correct up and impulse again, then things could begin to look bearish, very quickly. The rally from the March low has retracement targets at 845, 811 and 777 using Fibonacci but I've never really liked using Fib. retracement targets for anything other than an impulse wave which it is not, so I am not too sold on using them in this situation. Rather, I would prefer to let an entire 5-wave decline develop and see how we rally out of the next low. Given 2, 5-wave declines, followed by anything other than an impulse wave up and things will appear to me to be very bearish. I'll update as soon as anything further comes clear..

6/15/2009 - 12:00 noon - Having refrained from making any guesses for the past several weeks as to the correct wave count in stocks since that's is about all they would be - guesses, I thought maybe I would share some thoughts I had regarding what we have done and what it might mean. For starters, in my previous post, I listed targets for the Dow, the Nasdaq and the SPX and at the highs on Thursday, none came into play. Several were very close but none were perfect hits and that makes them very difficult to deal with. Looking at the big picture for a moment, the decline from either January or November is, and always will be, a probable 3. That makes is difficult to count it as the completion of anything terminal and only goes to muddy the water given how far we rallied from there. There is one way, however, to force a count that would label it a 5 (forcing counts is a very bad idea) and that is by using the 2-day correction that commenced from a low on 2/23 as our very abbreviated 4th wave. Doing so allows us to count the decline from January as the 5th wave of a bigger decline that likely began in May of '08 if not at the absolute top in 10/07. Some Elliotticians are suggesting that we are in a 4th wave correction from the top but R.N. Elliott said that all bull markets in stocks were 5's and all bears were 3's so if we are in a 4th wave, that would suggest that the next new low would only be the A-wave of a much bigger zigzag correction that would last years. On the other hand, if we assume that we are in a 4th wave, then we are also assuming that we have already bottomed in a 3-wave move and in that case, why can't what they are calling a 4th wave, in fact be the beginning of the next bull market? Well, that would require it to be a 5-wave rally and it is pretty difficult to count it as such leaving us stuck without a good 5-wave move down to what could otherwise be a bottom, but also without a very good 5-wave up move. That seems to leave 2 counts as the most likely when applying wave theory. The first is the aforementioned A-wave of a much bigger bear market ABC correction whereby the A-wave is not yet complete but timing would suggest that the 4th wave is or at least is very close to complete. The alternative to that would be that we may have completed the A-wave down of a large flat correction or of a triangle, since in either of those 2 scenarios, the decline from the top would be a 3, and the rally from the low would be a 3, either one eliminating the need for a 5-wave move in either direction and from anywhere. If all of that is confusing to you, then join the club. I just cannot come up with any count that I have any confidence in and until I do, I will try to deal with some short-term swings and let the bigger patterns reveal themselves when they are ready to do so.

At the moment we are struggling to fill a gap left from 6/1 and if it doesn't hold, which based on the advance/decline line I would have to say it probably won't, then there is little visible support until we reach the May lows near 875. 38% of the rally comes in at 845 with further support near 840, while 50% of the entire rally is retraced at 811. If the rally out of March is not an impulse however, then those retracement targets are not really that important although the 875 and 840 levels are. And if we are headed back to a new low, then we need to look for evidence of a 5-wave decline even if that sort of plan hasn't helped much of late.

At the end of the day, this update has a lot more "ifs" than I care to put in it but such is the confusion from the standpoint of wave analysis in this market. Whenever anything begins to clear up, I will post accordingly but for now, I want to see where we hold and how we get there.

6/01/2009 - 3:00 - Being a technician who uses Elliott Wave analysis, when I cannot come up with a wave count that looks good, it makes me not so confident that my other indications will be of much use but I learned long ago that if you can find the right time, or the right price, at which to trade, the trades will take care of themselves. Much easier to say than to do, I still endeavor to find those right 'prices and times' and right now, absent a confident wave count and for that matter, absent any compelling timing, I am drawn to my price analysis so for better or for worse, here go the levels I think we should be paying attention to. I listed them in the previous post for the SPX but I want to add the Dow numbers to those already posted as well as a few in the NDX so here are all of them and by the way, I've always believed that if you can find a time when we hit levels in multiple markets simultaneously, especially if they are arrived at using different techniques, it should enhance the importance of the numbers quite a bit. So, for the SPX, I love 945/947 followed by 953 which increases about 3 points per day followed by a static level at 962 and then another moving target currently at 982 increasing 3 pts. per day. Then we should move on to at least 1007 followed by 1035 and 1045. Those latter 2 are currently so far away that I hesitate to post them but the truth is that I arrive at them using some Elliott tools and that always intrigues me. As for the Dow, 8899 is the nearest really good target followed by a channel at 8913 increasing about 21 points per day. Above there and I see 9016/9026 and 9088 before the resistance gets pretty light for more than 500 pts. At 1537, the NDX retraces 50% of the downside since 6/08 which looks like the beginning of a 5-wave decline that ended in November, however, if you look at the retracements from the top to the bottom, the 38% level is at 1485 which is interesting when you consider that the high today is 1482. That gives me interest right here as we have come within 2 points of the target in the NDX while the high in the SPX is 947.77, less than a point above a target there.

1:45 p.m. - I was away for the last 3 days of last week and am only just catching up but it seems the stocks have no quit in them. Despite my belief that a correction was at hand before I left, for several months I had felt the next logical target beyond SPX 875, was 945/946 and here we are. If we don't stop here, then I see a minor channel at 953 (up 3/day) and then 962 followed by the lower 980's based on an upward sloping channel. I'll get more precise on some of these projections in the next several days but for now, we are at a great target but with no indication that we will not continue to improve. A failure from here could be substantial but show me 954 and I'll show you 962 and beyond that and it goes 982 followed by 1007. 

5/21/2009 - 2:45 p.m. - Just an addendum to the earlier comment but I've just noticed my Dow chart, which I have been overlooking, has two nearly identical lines trying to hold us right here. One is a channel line that comes from drawing a line over the highs of 4/02 and 5/07, and then drawing a parallel line below the lows that touches the low on 4/23 and contains all other lows since that April 2nd high. It plots a beautiful channel and the value of it today is 8226. The second line is an uptrend line drawn under the lows of 4/01 and 4/23, that crosses today at 8236. Those 2 lines are nearly identical lines as is evidenced by the fact that from the only common touch point, 4/23, they have managed to deviate by just 10 Dow points. The current low is 8223 so absent a rally from here, the SPX needing to hold 874ish is all the more important. Will try to post a chart later.

10:00 a.m. - At least the shorter term picture is clearing up. The SPX now looks to be coming off yesterday's unsuccessful test of the highs in a clear 5-wave move. The first decline was not nearly as clear but there are 2 logical conclusions that one can draw from this and they are that we are working on a flat correction from the highs of 2 weeks ago, or we are in a much larger decline, one that has the potential to go back and test the bottom from March. If we are doing a flat from 2 weeks ago, then we are in the 3rd wave of the C-wave with great objectives near 874. Give or take a little, that area holds otherwise we could be headed down another 50 points in nearly any scenario. The solution to this puzzle will begin to emerge following the completion of the 5-wave decline from yesterdays' highs. That should come only after a 1-2 hour corrective move off of any low followed by new lows. Once we have the 5-wave decline out of the way, the structure of the any rally will be the tell as to what likely lies ahead. Worth noting is the fact that based on the decline from the high of 2 weeks ago, wave equality targets are around 874 while if you measure from the highs of yesterday, to the middle of today's gap, and then extend that down equal distance, you get 877ish and that would of course, assume that the gap is a measuring gap. Bottom line is that from the mid 870's, if we get there after a 1-2 hour rally, we will have a perfect setup for a rally if there is one on the horizon. If that rally is corrective, then look out below.

5/18/2009 - 11:45 - I'm having trouble believing I haven't updated this page for nearly 2 weeks. The truth is, this site is really about the bond market comments and if you've read them, you've read my stock thoughts nearly every day and they haven't changed much in all that time. Actually, the market went higher than I thought it was going to initially, and then fell short of achieving my second best objectives near 946. Now I just don't know what the very short-term picture is telling us although I am certainly not a bull in here. Based on the wave structure of the move down into the March lows, I doubt they hold. Based on the wave structure of the rally out of those lows, I don't really know where we are. We didn't impulse down into the lows and we haven't impulsed up out of them. That would suggest to me that the lows represented an X-wave and we are rallying in an ABC but I don't really know where we are in that rally. I surely think no advise is better than bad advise and when I get a better handle on things, I will lay it out. Until then, I don't like the market here and even if we do rally and go on to my 945 target, I won't like it there either so I am just standing clear for now. Below 873 SPX and I do think the next 50 points can come rather quickly. Above 900 and we just might test the highs. Given a little more time and I will post a more meaningful, thoughtful and helpful update, I hope.

5/05/2009 - 10:15 a.m. - Sometimes I guess you just have too many lines on your charts. I like to keep mine color coded so at a glance, I know what line I am referring to but lately I haven't done that and it has caused me to report something inaccurately. I've written in several updates below that we have been approaching a channel line that was at 908 yesterday and in fact, it was an overhead trend-line that I was looking at. The channel line is a bit higher, currently at 920. It does matter to me since I do not put as much emphasis on an overhead trend-line as I do on the upper boundaries of a channel. While yesterday the trend-line stopped that market in its' tracks, I still place attach more importance to the channels. The implications of anything I wrote doesn't change, but the levels do. The more important channel is at 920 SPX today and will reach 930 by Friday. I'll try to be more careful in the future.

5/04/2009 - 4:15 - Well it didn't take long. Here we are at the close and the SPX has traded to within just a point of the channel. Above the channel line and I see no reason to think we can't go straight to 946 except - and of course there is always that except - except that the Dow has for its' equivalent, 8523 going up about 22/23 points per day. I will always think the SPX is the better index to watch but if there is to be a head fake in here, I think it would come in the form of the SPX breaking the channel long enough for the Dow to fail at the equivalent. Beyond that, and 945/946 SPX comes quickly.

1:30 p.m. - Well, there comes a point in time when any good technician needs to just stand back and say 'what the heck are we doing?' and for me, that time is rapidly approaching. I'm not sure how to read the rally from the March bottom but I thought back before the mid-April highs at 875 that beyond there, the next best targets for the rally to end were at 946 and I'll stand by that statement. The one place that is rapidly approaching and that can be very important is against an upper channel line that defines all that has happened since late March and that line is at 909 today and it goes up by about 2 points each day. I still see bearish divergences all over the place and here about resistance near 900 but I don't see it so as much as I thing this beast is about to soften, my best target from here in the SPX will be 909 moving up to 920 by Friday. If this channel does contain this rally, that doesn't mean we cannot trade higher following a pull-back. For now, I don't know how to read this rally but I do suspect that if we can trade above the channel, especially on a closing basis, then I think that the 946 objective should follow. Thursday and Friday, new-wise, should be important and Thursday has some minor Fibonacci timing importance being 43 days from the March bottom which would be 62% the number of days between the November and March lows. The number of trading days from the May 2008 high to Thursday is equal to 161.8% of the number of trading days from that May 2008 high, back to the all time top on 10/11/2007. Maybe nothing but Thursday does bring us the stress test results. 

4/28/2009 - 11:00 - As much as the location of the highs of 2 weeks ago leaves open the door for a break back through the March lows, the action from those highs seems to be telling us something entirely different. It is difficult to interpret the trade since the 4/17 top as anything but corrective with 2 placements within any correction, still working. One is that we are in the B-wave of a flat meaning we may re-test the highs and even violate them by a small amount before heading back down towards the lower 820's in a C-wave. The other is a potential triangle where we would be in the C-wave or possibly that wave was completed earlier today and we have begun the D-wave rally. The triangle scenario is friendlier short-term since a move back through 831 cannot occur and in fact, today's lows may be sacred in that count. We also should not trade above 866 before at least one more pull-back. Longer term, however, it is not as friendly since a triangle here would have to be labeled a B-wave and therefore would call for a failure following the next rally. If the flat correction plays out, we can see 2 more rallies. Anyway, this may be all academic for now since 2 pieces of news on the horizon may spell the fate of these markets. Tomorrow at 2:15 we get the FOMC announcement and sometime next week, we get the report on the stress tests of the major banks. Either of these can make or break any of these patterns. For the most bearish of them to unfold however, the one that labels the high from 4/17 as the end a C-wave from March, we would need to see a really violent break out of here, one that produces trades below 800 very quickly. Neither Elliott Wave, nor any other work that I am familiar with, is perfectly reliable so no doubt, anything can happen but for now, based on wave theory, the lows in March should not be a bottom and to a lessor degree, the highs from 2 weeks ago are looking more and more like they will not be a top. 

4/27/2009 - 11:45 - The fact that we have recovered so much of the decline off the highs of 2 weeks ago, leaves me to believe that those highs may not hold. There are plenty of ways to count the rally and expect to see at least a slight new high before any sort of break, and of course there remains the possibility that the March low may have been an X-wave low which would call for a 3-wave rally out of it and we would have only seen the A-wave in that scenario, or there could also be 2 more rallies to complete a 5-wave advance from March if that were if fact, a B-wave low. The bottom line is, however, that if we do make a new high now, then we will be eliminating one - or actually 2 - very compelling arguments for a move back to the lows, those being the equality of time and price of this rally to the one that commenced in November. I think a downside break is about to occur but if we can make one more new high first, then I would not be nearly as afraid that the break could produce new lows of the bear market as I would be if the current highs hold. Of course, in either case, all depends on the structure of the decline and still, all signs point to an eventual break of the March lows based on wave analysis.. More as things progress.

4/23/2009 - 11:00 a.m. - Nothing has changed for me in here as if you read any of my past several posts, you will know that I view the equity market as being very vulnerable right here and right now. In an email I just exchanged with a friend - let's call him Lewis - I challenged him or anyone else who claims to understand Elliott Wave analysis to show me a better potential wave count than my preferred which labels the rally from November to January - clearly a 3-wave rally - as the A-wave of an irregular flat correction with the decline into the March lows - clearly a 3-wave decline - as the B-wave and the ensuing rally to Friday's high - the only one that is not clear with regards to structure - as the C-wave. Remember, at Friday's high, the potential C-wave was exactly equal to the A-wave with regards to time and was only 6 points larger following a 200+ point rally. It all fits and now simply awaits the development of the structure of the decline. And to take my challenge one step further, if we do make a new low now below 667 SPX and they come in the form of a 5-wave decline, I will then challenge anyone to show me why the entire formation from 2000 to those subsequent new lows, is not a completed ABC correction and the end of the bear. That of course will need confirmation in the form of the structure of any subsequent rally but as far as Elliott goes, that can be exactly where we are. Billy Ray.

4/17/2009 - Waiting no more for the correction as from near perfect timing and perfect price, the SPX has gapped down with, as far as I am concerned, still undetermined targets. 500+ companies report earnings this week and anything can happen. If the news is on balance good, nothing can keep this thing from going up but the bigger issue right now is whether or not we are correcting in an ongoing rally, or beginning a new leg to the downside with objectives below the March bottom. I still think one of the best counts is that we have rallied in a very bearish ABC irregular flat correction from the lows in November where the C-wave very nearly equaled the A-wave in both time and price; so that count not only is still alive and well, it is my preferred count. If we weaken further but the decline is choppy and corrective looking, so be it. I will shift to a more friendly count. If we blast up through last week's lows on good earnings reports, then the time and price relationship will not be valid and we may well have another rally similar to the one we have already seen. As I mentioned last week, 946 is another great objective. While there is nothing using Elliott theory to point to the bear market as being completed, we could have seen an A-wave rally of an eventual ABC from March, or we could have rallied in the 1st wave of what will be a 5-wave C-wave from March but for now, I will be focused on confirming that the rally that ended on Friday, was or was not the C-wave of an ABC from November with objectives below beginning very near 666.

4/17/2009 - 1:30 p.m. -  Still waiting for the break in equities and while I still think it comes, if we get past Monday without a failure or trade above 882 SPX, I would not hold out for the turn. One thing I have always believed is that 'if  you know you're right, then you're wrong'. You just can never be too sure of anything when it comes to markets and while this is a 'great' time and place for stocks to fail, if they don't stop here, then my next 'great' target in the SPX is at about 946. 

4/14/2009 - 2:00 p.m. - Sometimes it seems your first thoughts are your best thoughts. With all of the targets I have in the SPX, looking back through some previous commentaries I've posted, back on 3/23 in my main commentary, I said that upon making any further new highs, the rally in the SPX should last for about another month or so with best targets between 860 and 870. Then on April 7th, I settled in on this week - with a possible stretch to Monday - being the prime time for a trend change. Well, here we are in the right time frame with the high so far at 864.31 and what looks to be a failing market. I could be all together wrong, or we could still push a little closer to the objectives as we move through the week, but still the time and price are pretty good for a turn around. With what to me looks to be a clear 3 wave decline from January through March, one of the best wave counts would have to be that we are in the C-wave of an irregular ABC from the November low. Elliott says that C-waves should equal A-waves in time and/or price - or be related by a Fibonacci ratio - so let's look at just where we are. First of all, in terms of timing, the rally out of the November low lasted 29 days while so far, the rally from the March low has lasted only 25 so while close, still no cigar. Using some Fibonacci tools, I do see that if you measure the number of days it took to complete the decline from January until March, and then multiply that number by .618, you get the exact number of days from the March low to yesterday's high so there is some timing associated with the high. As far as price is concerned, at this point, the 864.31 high in the SPX, was approximately 98% of the way to the wave equality target of 869.71, close enough for most government. Meanwhile, in the Dow, the C-wave would have equaled the A-wave at 8109 while the high of the move hit yesterday, was at 8113. That is an overshoot of 4 points after a rally of 1,643. Now I know that's close enough for Government work! Bottom line is that right here, right now, the stock market is vulnerable and perhaps more importantly, vulnerable to go all the way back down to new lows. If there is one place on the charts where one can make that statement using wave theory, it is right here where the C-waves are basically equal to the A-waves in both time and price and in both, the SPX and the Dow. What a potentially terrible place to be long and wrong!

4/13/2009 - 11:30 a.m. - The rally at the end of last week took out one good target but left the best ones still to be seen. A trend line drawn off the early November highs crossed on Thursday at 846 while the high of the day was 857. Left in front of us is a wave equality target at 869 as well as solid resistance at 875/877 before we test the upper channel line currently at 881, dropping by about a point per day. If we touch that line, the potential diagonal triangle down from the early November highs will become invalid. That would leave us with 2 potential wave counts, one being that we are doing a C-wave of an irregular ABC correction that began in November, otherwise I would label it an ABC up from an X-wave low in March. To me, those are the only two counts that can be supported using wave theory, the 3-wave structure from the January highs to the March lows being so clear. If we are in a C-wave rally, then it would appear to have a long way to go since it should take the form of a 5-wave advance and we would likely just be in the early stages of the 3rd wave with a virtual explosion likely to unfold in the next several days. That seems to me to make the notion of it being an ABC the more likely and there, we would likely be in the C-wave which could be taking the form of a diagonal triangle itself. There is some good timing this week and extending into Monday, oscillators are becoming overbought, advancing volume is showing clear bearish divergences and - well - it seems only a matter of time before we head back down. About the only thing that concerns me about looking for lower lows is that I haven't heard of anyone who thinks a real bottom is in place and that is scary if you are a bear.

Keep in  mind that wave analysis is not an exact science and especially when you get down to looking for a 5th wave of a 5th wave or a 5th wave of a 5th wave of a C-wave. The point being that if we are looking for the bottom of a 5-wave move from the top in 2007, then to think that the final 5th wave might not develop is only reasonable. After all, if the bigger wave count tells you that you are very close to the end of a bear market, then that says the decline is very mature and only waiting for either the wave to complete, or news to interrupt it and as fas as I am concerned, while I don't think news should interrupt a 3rd wave, not to think it could truncate a 5th of a 5th is just plain stubborn. And finally, and I have made this case on this website linked to from the homepage on a link entitiled Possible wave count for impending end of bear market - 4/9/2009
I believe it is pretty easy to make the case that we near the end of the C-wave of a gigantic ABC that began in 2000 using wave theory and while I have trouble reconciling that with my own beliefs about the economy in general, 'I calls em like I sees em'.

4/06/2009 - 11:00 a.m. - Away the latter part of last week, the patterns have changed but my opinion of where we are is no clearer. From a big perspective, one that dates back to last Fall, it still looks to me like the 2 best wave scenarios are that we are rallying from the March lows in the C-wave of an ABC correction that began at the November lows, otherwise we could be in the D-wave of a wedge that began from the highs in early November. I would be remiss not to include the possibility that the March low was an X-wave and we are in a second ABC from November. Again, about the only thing that seems clear is that we bottomed in a 3-wave move and it is very difficult to explain that as a real bottom using wave theory. The wedge theory is still viable until about 882 SPX, dropping about a point per day. The Dow equivalent is 8201. As far as the B-wave low theory goes, targets for the C-wave are many but a C-wave needs to be a 5-wave move and for now, the rally from the March bottom looks to me to have been a 5, at the 3/26 highs and now, is either a very strange 3, or we are in wave-2 of wave-3 to the upside with a price explosion in the immediate future. We could also make one more marginal new high to complete wave-1 of wave-3 before a wave-2 of wave-3 correction commences but in either case, from somewhere likely to be above 813, I would expect a really dynamic rally. Bottom line is that I don't know where we are or what to expect but I do have some good targets.

As far as the SPX is concerned, they go like this and all are important levels. 869, 875/877, 850 and 882. I do have ones above those but we'll save them for a later discussion. For the Dow, 8109, 8201, 8250, 8315, 8341 and 8406. I love all of these numbers so it shouldn't be too hard to see why I am not willing to make a bold prediction here. I also see important dates for a change of trend on 4/10 and again 4/13-4/16 and then 5/4. I like 4/16 the best and if on that date, or any of the others for that matter, one of the above mentioned numbers comes into play, that would interest me a lot.

3/30/2009 - 11:00 a.m. - Well, let the correction begin. You can always find any number of market pundits to be on either side of the markets but for the most part, everyone I read seems to agree that the bottom is not in, although several do think that this low will support a much bigger rally than what we have seen so far. That argument or any to the contrary will gain - or lose - a lot of steam in the next few days depending on what transpires from this initial break. I still think the 2 best calls are for the lows seen so far in early March as being either B-wave lows from January, or C-wave lows of a wedge from early November. As far as the B-wave scenario goes, if that is the correct count, then we have either finished the entire C-wave rally a little short of normal expectations, or we have only finished wave-1 of that rally suggesting the ultimate highs could be beyond normal expectations.  In the wedge pattern, given that C-waves are generally larger than A-waves, and given that the rally so far has covered about 166 points and finally that the wedge pattern remains intact until the SPX trades above about 880, some simple math may help to illustrate the vulnerability of the market from here. If the wedge is going to remain intact but we have only seen the A-wave rally of the current D-wave of the wedge, then take 880 (where the wedge can go to at the furthest) and subtract 166 and you get 714 which is where this pullback would have to reach at a very minimum, if it were a B-wave decline within a D-wave rally of a wedge such that the ensuing C-wave rally could equal the A-wave without destroying the pattern. That may sound confusing but the bottom line is that if the low in March was a B-wave from January, then we may have crested or following a little more downside, we could commence one more rally. If the low in March was the C-wave of a wedge, then we could have a lot more downside potential from here even if we haven't seen the top of this rally. That means in 3 of what I think are the 4 best guesses for what is happening now, we can get hit hard right now, possibly back through the lows. As we move forward this week, I hope to be able to get a better grip on just where we are but given how each of the above mentioned pattern should unfold, it will be challenging since all of the internal waves in a wedge are 3's. Patience, patience.

3/26/2009 - 10:45 - And as if we need one more potential wave count to deal with, the 3-wave move down to the March low could be the C-wave of a diagonal triangle that began on 11/04. That would explain why every swing since then has been a 3-wave affair. That potential count will be valid until we trade through the overhead channel line from 11/04, the value of which is 860 today, descending about1.6 points per day.

3/25/2009 - 10:45 - Expecting some weakness to potentially develop in stocks, I've suddenly realized a potential wave count not mentioned in the previous update. While having suggested we could be at or near the top of either a wave-1, or an A-wave, it would be foolish not to recognize the possibility that any 5-wave advance could also be the top of a C-wave rally from the low which would complete an ABC correction from November. It is shorter in both time and magnitude that what I would expect for a C-wave, but in a market as weak as this one has been, and one that shows no signs of a bottom yet based on wave theory, it would be foolish not to at least acknowledge what could be a pattern that would lead to a failure. I still like minimum objectives in the 860 area and will try to keep posting on this one.

3/24/2009 - 9:45 - The new highs yesterday could represent the beginning of a 3rd wave rally or a bigger C-wave from the bottom, or they could just be the end of the first 5-wave advance. It is also possible that we are dealing with an ABC rally from the bottom in which we are at, or near the top of the A-wave. By later today we should be able to eliminate at least one of the above placements. In either case, the market should still be headed higher but if we have completed either wave-1 of a C-wave, or the A-wave of an ABC, then we should experience a decent pull-back over the course of the next week or so.

3/23/2009 - 9:45 - The decline from Wednesday's top in the stocks appears to be corrective which means that those highs are likely to be exceeded and once they are, at least the SPX will be suggesting that we have a significant amount of upside left in what is likely to be a C-wave rally from the lows of which we have only seen wave-1, or a second ABC from the lows with only the A-wave likely to have completed. See the comments below from 3/19 for a more complete explanation of my preferred wave placement.

3/22/2009- Just a quick update regarding a very interesting support area below basis the S&P. It's very easy to label a 5-wave advance from the 666.79 low on the SPX, to the 803.24 high (see chart). A good placement for the 4th wave low of that advance is at 749.93. If you calculate the Fibonacci retracement levels between those two extremes, the 38% retracement comes in at 751.45 and if you assume that an A-wave low came in at 782.25 at noon on the 19th, and the B-wave high followed at 792.95 at 2:30 on the same day, then the C-wave would equal 2 times the A-wave at 750.97. That gives us three solid targets between 749.93 and 751.45. When I have a chance, I'll try to find equivalent support in the Dow and the Nasdaq as well as some timing for a low as those would surely help lend confidence to a long trade taken in that area should the opportunity present itself but as it stands now, that is a very interesting area. 

3/19/2009 - Following the FOMC induced explosion in the fixed income markets, the equities got a boost as well, carrying the S&P to within a whisker of invalidating an obvious, preferred count embraced by most Elliotticians. If, as many believe, the equities have been in a 5th wave down, of some degree, from the January highs, then 804 would be the bottom of wave 1 of that suspected 5-wave move and therefore, that level should not be exceeded if we are now in the 4th wave of that larger 5th wave down. The high of the move so far is 803.24 so while not yet 'confirming' that count to be dead, it is clearly on life support. The Dow has more room to go as the wave-1 low there is up at 7909, nearly 500 points away, while the Nasdaq has long since invalidated that count. Collectively, it seems as though it is only a matter of time before the S&P goes the way of the other indices and forces an alternate to what had been the preferred count by most wave counters. My best alternative would be that the January high represents the A-wave of a bigger 4th-wave and once we exceed the 804 level in the S&P, then it will appear as though we are in the C-wave of a 4th wave from the November lows with targets around 875 SPX, with 950/970 not out of the question. Basis the Dow, we still can view that chart as being in the 4th wave of the impulse wave down that began in January and whether that is the correct placement, or whether we view it as being in a C-wave rally, two great target levels come in near 8230 to 8320, and again near 9020. Keep in mind that we need to exceed 804 SPX to prove we haven't just witnessed the top of wave 4 of an impulse down that began in January so until that happens, higher targets are not necessary although I think they are likely to be necessary soon.

The more important wave placement may be with regards to the much bigger picture and that, to me, is very unclear. We could be probing for a bottom of a 5-wave decline from the May '08 highs and that would make the next new low either the bottom of a 3rd wave, or conceivably the bottom of a C-wave from the top; the latter being very bullish. It is also possible to make the case that we are probing for a bottom of the 5th wave from the top in October of '07 and if that were the case, that would leave open the door for 2 potential interpretations. One would be that it was only the first of what would prove to be at least 2, 5-wave declines with the lows not likely for more than a year. There is an alternative to that, however, and that is that the highs in 2000 were actually where the bear market began, since basis the S&P, we basically have a double top from 2000 to 2007. If that were true, then the A-wave bottomed in 2002/2003 and the 2007 top is a B-wave. That would mean that once we complete 5 waves off the top in October of 2007, the bear market will have ended.

We have a lot of potential paths from here and using Elliott wave theory, the structure of the rallies and subsequent declines will be the real key in deciding just where we really are. More to follow.