Tmd09252008 Evening Edition

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Market analysis from TheMarketDetective.com that utilizes the Elliott wave principle and Fibonacci analysis.

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Tmd09252008 Evening Edition

  1. 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. 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. 3. 9/25/200810:29 PM Pacific Retracement Expanded Flat
  4. 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. 5. 9/25/200810:29 PM Pacific The market detective 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 buy, sell, or place orders relating to the futures contracts, ETFs, or stocks that he writes about. The responsibility for decisions made from information contained in this service are solely that of the individual subscriber. 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 trading results.

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