Mildly Bearish
Mildly Bearish
I’m going to be extremely brief and to the point tonight as I have a full plate for the evening. We all know the market is overbought right now and today’s tape was a first step to slightly releasing this pressure. However, don’t get your bearish hopes up too much.
Let me show you what I mean – above you see a chart I posted on November 30th.
And this is today’s tape. Not bad I would say – so far the tape has yielded to my command (just kidding – I got lucky so far). There are some EWT folks out there who (I usually respect but) are now pointing towards the October 27 low in the SPX (845.27) as the bottom of intermediate (3). The conclusion is that we are now in a triangle and have embarked on wave d to the downside.
Well, as my chart above shows, I humbly disagree for two main reason (and because I love to disagree): Firstly, I don’t put much faith in October 27th being the orthodox bottom of (3) – meaning that the (lower) 839.80 low in the SPX was actually a smaller degree subwave of (3) – nope, not buying it, at least not yet.
Secondly, I disagree with the time dimension. Intermediate wave (2) lasted from 7/15 to 8/11, which is exactly 24 days. I call that a ‘sharp correction’. Remember the rule of alternation: If a wave two of an impulse is a sharp correction, expect wave four to be a sideways correction, and vice versa (EWP page 63).
So, I just don’t see us painting a triangle yet, until at least the market tells me otherwise. Good news is – we should know fairly soon.
NYSE Bullish Percent Index (EOD) ($BPNYA) INDX
9-Dec-2008, 16:00 ET, daily, O:49.03 H:49.03 L:49.03 C:49.03 V:0 Chg:2.55
Bullish Percent (2.00×3.00) chart.
Status Bull Confirmed
© StockCharts.com 100.00 | | | | | | | | 100.00 98.00 | | | | | | | | 98.00 96.00 | | | | | | | | 96.00 94.00 | | | | | | | | 94.00 92.00 | | | | | | | | 92.00 90.00 | | | | | | | | 90.00 88.00 | | | | | | | | 88.00 86.00 | | | | | | | | 86.00 84.00 | | | | | | | | 84.00 82.00 | | | | | | | | 82.00 80.00 | | | | | | | | 80.00 78.00 | | 1 X | | | | | 78.00 76.00 | | X 3 X 5 C | | | + | | 76.00 74.00 | | C O 4 O X 3 | C | X + | | 74.00 72.00 | | 7 O O X O 8 + X 3 X 7 + | | 72.00 70.00 | | X O X O X 9 X + B O X O + | | 70.00 68.00 | | X O B O X O 1 5 + X O X O + | | 68.00 66.00 | | 6 O X 4 7 O X O + X O 4 O X + | 66.00 64.00 | | X O A O X A X O X O O X O | + | 64.00 62.00 | | X O X O X O C O X | O X O | + | 62.00 60.00 | | X 7 X O X O X O A | O A O | + | 60.00 58.00 | | X 8 X O X O X O 9 | O X O | X + | 58.00 56.00 | | X O 9 O 6 O X O X | O X B | X 6 + | 56.00 54.00 | | 5 O O O B O 7 X | O X O | X O + + | 54.00 52.00 | 1 X | O | 6 X O X | + O X O | 5 O X + | 52.00 50.00 | C O X | | O X O 8 + 8 X O | X O X X O + | 50.00 48.00 | X O X | | O X O + | O 9 O X | X O X 9 X O + X | 48.00< 46.00 | X O X | + O + | O X O X O X O X O X O + X | 46.00 44.00 | 9 X 2 X | + | | O X O X O X O X O X O + X | 44.00 42.00 | O X O X | + | | O X O C O X X O 8 O X O X X | 42.00 40.00 | O X O X + | | O X O X 1 X 3 4 O X O X O X O X | 40.00 38.00 | O B 3 4 + | | | O X O X O X O X O X O X O X O X | 38.00 36.00 | O X O | + | | | O X O X O X O X O X O X O X O X | 36.00 34.00 | O X | + | | | O X O O X O X 7 X O O X O X | 34.00 32.00 | A X | + | | | O O 2 O X O X O B O X | 32.00 30.00 | O X + | | | O X O X O X O X O C | 30.00 28.00 | O X + | | | | O X O O A X O X | 28.00 26.00 | O + | | | | O X O X O X | 26.00 24.00 | + | | | | | O X O X O X | 24.00 22.00 | | | | | | O X O X O X | 22.00 20.00 | | | | | | O X O X X O X | 20.00 18.00 | | | | | | O X O X O X O X | 18.00 16.00 | | | | | | O O X O X O X | 16.00 14.00 | | | | | | | O X O X O X | 14.00 12.00 | | | | | | | O X O X O X | 12.00 10.00 | | | | | | | O X O O X | 10.00 8.00 | | | | | | | O X O + | 8.00 6.00 | | | | | | | O X + | 6.00 4.00 | | | | | | | O | 4.00 2.00 | | | | | | | | 2.00 0.00 | | | | | | | | 0.00 03 04 05 06 07 08 |
I’m usually not a big proponent of P&F charts, but the Bullish Percent Index switching into ‘bull confirmed’ mode is another reason why I’m only ‘mildly bearish’. A lot of fund manager look at this stuff and I think it’ll be a tough fight for the bears.
However, the McClellan Indicator shows heavily overbought conditions, so I’m sure we will get some kind of correction. Maybe today was the start of that, and maybe the market will tease it out a bit more, but we will get it sooner than later. I just don’t know what the degree of the correction will be and right now my wave analysis indicates that it will be a shallow one just to re-energize the bulls.
That, my dear steel rats, is pretty much all I have time for tonight. I will make up with intra-day posts tomorrow – promised.
Cheers!
