The market detective is a Chartered Market Technician (CMT). He uses technical analysis to identify market turning points and opportunities. He is primarily an Elliottician, he uses the Elliott wave principle and Fibonacci ratio analysis to uncover clues about the direction of the market. He uses other forms of technical analysis to corroborate his findings in such a way as to assign a probability factor to them.

1. 9/25/200810:29 PM Pacific
Here is the chart from last night. The turn and channel breakout call was right on. Even
during the day today, the pricing targets I communicated in the alerts were all accurate,
and all based on rising motive wave ratios.
Below is a close-up of the move up today, the way I was counting it throughout the day is
in red, and the way I am counting it now, in black. The incorrect count didn’t matter at
all on the way up, but the unexpected severity of the retracement was a clear indication
that the count was incorrect. The NASDAQ e-minis (not shown) was a mirror of the
S&P e-minis all day with ratios and targets working, followed by an even more severe
retracement and alarm that something was wrong.
The biggest piece of evidence that I am considering in shaping my bias and thesis is my
interpretation of the motive wave up from the low to 1291, and the corrective structure of
the retracement, as discussed yesterday evening.

2. 9/25/200810:29 PM Pacific
Within this thesis I was considering that wave2 had completed, and the five waves up
today were wave (1) of wave 3. I need to analyze the most recent retracement structure to
see if fits this scenario. Sticking with this thesis the count in black would be wave 1 off
the most recent retracement low, and this current retracement would be wave 2. I have
said many times, the most common retracement for a 2nd wave is between .618 and .810.
As I write this the S&P and NASDAQ are past .810 and the NASDAQ (not shown) is
closing in on a 100% retracement.
In the chart labeled Retracement below, examining the structure of the most recent
retracement I have to conclude that it is 5 waves. 5 waves that are probably ending right
now (too tired to trade).
Now I have to reconcile the 5 waves up this morning followed by an almost 100%
retracement down, but only one set of 5 waves. There goes the short-term wave 2
hypothesis. However, as I have discussed many times, there is option that allows for a
single set of 5 waves. I will see if it fits.
In the chart labeled Expanded Flat below, if I get rid of the uncommon z wave, and end
the first leg of the retracement with the double zigzag, followed by an expanded flat, then
our 5 waves up today are wave C of the expanded flat. It fits. The ratios are perfect.

3. 9/25/200810:29 PM Pacific
Retracement
Expanded Flat

4. 9/25/200810:29 PM Pacific
So now what? A double zigzag, an Expanded Flat, then 5 waves down. We are not done.
We are in a triple corrective combination. We will now see 3 waves up (5-3-5), followed
by 5 more waves down, to complete the triple combination. In the chart below is a
hypothetical depiction of how this could play out. A move up to .382 or .500, followed by
5 waves down, that extend to either .618 or 1.00.
What does it mean? Well the hypothetical scenario doesn’t take out the low. I like the
.618 extension option because it doesn’t take out the .810 retracement level either, of the
large motive wave up from the low.
In summary, I am sticking to the longer term thesis of a motive wave up from the low and
we are still in the 2nd wave retracement.
In more immediate short-term action, with the idea that we started wave 3 abandoned we
are in the 3rd wave of a triple corrective combination; a double zigzag, expanded flat, and
now a probable zigzag of which we are half completed.
DW/TMD

5. 9/25/200810:29 PM Pacific
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