On the left hand, the monthly chart I mentioned in part 1. Significant is the trendline we tested at the low at 1500 and we closed below 200 month MA. The 1500 level also marked a 78% Fibonacci level. The wave count on the monthly chart shows we are clearly in wave 3 of 3. Well, we need to do 2 things in November. One thing, which we discussed several times, is that the prices need to return into the Bollinger at some point and the other is that, in order to start wave 4 up a retest of the lows. The bottom line is that we get a temp low in November from where a substantial correction will appear. As you can see in the chart, turning points are rarely defined by one bar except for the famous reversals. October is definitely not a reversal month, which is a highly probable indication we need to test the lows or even make new ones. For the Tech indices, I think we saw the lows of wave 3 - we might just retest them. For the DOW and SPX, it might be a bit different but the intermarket divergence is a normal thing to occur at these stages. How high the correction goes, we will define as we have the lows confirmed but 25% is the lower end of the potential.
Sunday, November 2, 2008
COMPOSITE technical outlook - part 2
On the left hand, the monthly chart I mentioned in part 1. Significant is the trendline we tested at the low at 1500 and we closed below 200 month MA. The 1500 level also marked a 78% Fibonacci level. The wave count on the monthly chart shows we are clearly in wave 3 of 3. Well, we need to do 2 things in November. One thing, which we discussed several times, is that the prices need to return into the Bollinger at some point and the other is that, in order to start wave 4 up a retest of the lows. The bottom line is that we get a temp low in November from where a substantial correction will appear. As you can see in the chart, turning points are rarely defined by one bar except for the famous reversals. October is definitely not a reversal month, which is a highly probable indication we need to test the lows or even make new ones. For the Tech indices, I think we saw the lows of wave 3 - we might just retest them. For the DOW and SPX, it might be a bit different but the intermarket divergence is a normal thing to occur at these stages. How high the correction goes, we will define as we have the lows confirmed but 25% is the lower end of the potential.
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