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For Erik

For Erik

by The MoleMarch 2, 2009

UPDATE 12:41pm EST: I promised Erik to put up a chart about the 650 level I mentioned in one of my comments. This one is for you buddy:

I never cease to marvel at how Fibonacci levels are key to projecting possible targets in the wave count. Here’s what I uncovered yesterday afternoon during my weekend charting session: As you can see the Friday close brought 3 of (5) to the length of 1 of (5). My reasoning was that we would either bounce here and see a truncation or continue down and meet at least the 702-704 level.

Why 702 – 704?

Because it happens to represent a 123.6% multiple of 1 of (5). The next fib is 680 and the one after than is 650. What is interesting about that is that this is Erik’s range and at this stage I see two possibilities:

  • We bounce right here and touch 760 – 770 and then descend into 650.
  • We continue down and that of course would also either mean two things:
      We are completing 3 of (5) at either 680 or 650ish. Then we rally and we’ll see a bottom of (5) around the 600 area. Unless of course this move was too rapid and 5 of (5) will be a truncation.
      We are actually already in 5 of (5) and this is the end of Primary wave {1} of Cycle wave c. Meaning we rally hard and that soon.

This is why I’m a bit cautious and took profits earlier this morning. But if you’re aggressive and are only exposed with play money there is a possibility for further downside.

UPDATE 1:05pm EST: BTW, this happens to be my 400th post! Due to the ongoing recession I can only afford one single confetti and a digital audio recording of a cork popping out of a bottle of Cristal.

Paxoramus asked what I think about the ISEE readings right now. Well, they are very bearish on the Indices & EFT column, indicating that we’ll either get a complete capitulation here or that a temporary low is in. I am still trying to make sense out of the bullish readings in equities. Perhaps that also confirms the current Zero reading.

About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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