Wednesday, October 15, 2008

Dude, where's my bounce?

Bounce over and it was fun while it lasted - for the 5 traders that were able to partake.

Volume during the 900 point day was merely above average. Volume the next day, when the market gapped up to its high before failing was higher. And now volume on a 733 point drop was the lowest of the three. Yawn city. Just look at yesterday's blog post for more on that.

I do believe the bear market - or this phase of it - ended last Friday but that does not mean there cannot be a lower low. Sounds counter intuitive, right? Well, yes, it does but if we differentiate between a bearish trend and the transition period from bear to bull we will understand.

In the transition period, or trading range, the market goes up and down. No news there. But as it goes up and down it may be prone to overshoots of developing support and resistance. Therefore, we may see a lower low even though the bulls and bears are on equal footing.

Perhaps the Elliott-heads out there can explain that Wave 2 can undercut the start of Wave 1. I know waves can be funky in corrections, too, but Elliott is not my main thing. As Dennis Miller might say, that's my opinion, I may be wrong.


Unknown said...

My indicators as of Wed 10/15 shows potential of a bottom on Thurs 10/16 or Fri 10/17.

I anxiously await Thur - Fri indicators for a "Buy" signal !!

Doug said...

based on the futures presently at 7am thurs morning i would say that your "indicators" may be a bit lagging....

Ragamuffin said...

According to one Elliot Waver out there -- whose posts I am reading mainly for is fairly accurate support/ resistance marks in the S&P 500 -- we might be looking at (a) an end of the medium term downward trend and the start of intermediate wave B (upside move, with a medium term goal for the S&P 500 @ around 1400 by May 2009), provided the S&P does not head much lower than last week's lows; or
(b) a 50% retracement cycle wave of the past 5-year-bull-market/ 1932-2007 supercycle (with a goal of DJIA @ 7380 - 7120); or
(c) a 13% overshoot retracement (i.e., full retracement, exceeded by 13%), which would mean DJIA 6350; or
(d) a 61% retracement of te 1974-2007 bull-market-cycle wave/ resp. the 1932-2007 supercycle (DJIA @ 5780 - 5450).

That leaves a few options open, I guess ;)

Here's the link to his blog -- check out his weekend-analysis for the bigger picture.

P.S.: I'm not an E-waver myself, but it's still pretty insightful.

Doug said...

nice kiyoshi, you called that one

Michael Kahn said...


So far, so good, eh?

I have heard two different style analysts looking for dates next week as being some big deal. What that means, I don't know.

Michael Kahn said...


I would throw out all short-term wave counts along with follow through days, and every other type of analysis now. Long-term waves, IMO, still work.

You posted some very long term stuff and although I don't follow eaves that closely you have provided a cluster looking for a lower market.

But the bailout! LOL