1. 1/14/200911:01 PM Pacific
“If we cannot reach 882 before turning down and taking out the low, then I expect that the
selling will gather steam and 832 (shown as a 1.618 extension) on the chart is the probable
next target down.” --TMD 1/13/09
The alternate thesis prevailed and it did to the letter and to the tick. So why wasn’t this my
primary thesis, why do I keep looking for a turn?
I always prepare my analysis top down. The highest level thesis that is still operating is the 5
wave C thesis. Within this context I expect the market to turn back up because I do not think
we retraced high enough for a 4th wave to be completed.
There are three tendencies of 4th waves: 1) the most common Fibonacci retracement level
is .382 when wave 3 is extended. Price fell short of the .250 retracement level. The .250
level has been very prevalent for 4th wave retracements on intra-day charts, but I expect more
at this level following such a dramatic and steep third wave. 2) The 4th wave usually
2. 1/14/200911:01 PM Pacific
retraces to the vicinity of the (4th) wave of one lesser degree (blue arrow). 3) You can
usually draw a channel line down from wave 2 that is parallel to a trend line that
intersects wave 1 and 3 and get a good approximation of a level where wave 4 will
Three common tendencies resulting in 3 strikes that lead me to think that wave 4 is not
complete. I could also think that this is not wave 4, but I keep my analysis in the context of
the higher level thesis that is operating successfully UNTIL it is disproved.
Please click here to read TMDUpdateJan62009 again now. The option of extending the wave
up from X to complete a triple combination correction pattern is negated. The most probable
pattern left to extend up is a turn at the .618 retracement level of the entire move off the low
as shown below. The result would be a higher level zigzag, with the double zigzag up from
the low becoming A, this move down B, then the next wave up would be C.
I am always looking for pattern symmetry and Elliott wave tendencies when projecting how
the patterns might play out. The market loves symmetry. Note that a turn at the .618
retracement level followed by a 1:1 extension of the move off the low targets the top of the
Elliott channel and is also in the vicinity of the (4th) wave of one lesser degree. Now, that
would be a characteristic 4th wave.
3. 1/14/200911:01 PM Pacific
I think the .618 retracement level is the next probable target. Whether it becomes the turn I
am projecting (hoping for?) or not, it will probably produce a significant bounce, a bounce
that will provide the next clue.
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ctive provides personal market opinion based on sound technical analysis and research. However, no
warranty is given or implied as to its true reliability. The market detective will make errors and mistakes.
The market detective is not an investment adviser and is not making recommendations to scriber. The
individual must fully research and make his/her own decisions before acting on any information provided
by the market detective. The market detective assumes no responsibility for subscriber investment or