Feb 9, 2016


The move lower is not finished which is not a surprise and with this 50 points lower it counts better as wave 5 from the top in November. In fact if you are a bull you want to see a lower low this is much more bullish.
The indexes look different. NYSE and DJIA well above the low, SP500 close to the low, Nasdaq and Russell2000 made a new low already. We have so far 3 waves lower from the top last week so waiting to see a finished pattern and reversal.

The same story with the so called "risk off" trades - EUR/USD traded in the range 1,12-1,13, today USD/JPY traded in the middle of the range 114-115, TLT is in wave c of a huge a-b-c which begun in July 2015(see long term post). So we are waiting to see finished patterns and reversals for this trades too. Based on this I am expecting an important low for the stock indexes.


  1. Alternative count: the peak between 1 and 2 should be counted as 2. The following low should be sub 1) of 3, then a-b-c to the current 2 which should be 2) of 3. The current 3, 4 and 5 should be 3), 4) and 5) of 3.

    1. Theoretically yes, but I think this count has much lower probability.
      The panic lows are usually the lows for 3/C and test of the low with lower low and divergences is wave 5 (with higher low like August confirms reversal wave C).
      When I look at the indicators, market breadth and cycles I expect move higher not for 2-3 weeks rather than for 2-3 Months. I do not think this will be wave 4.
      I will not be surprised to see only corrective move higher, but I think it will last much longer than the most expect(the bearish sentiment should be purged) and this will be wave X not 4 with another zig-zag lower for the rest of 2016 and 7 year cycle low.

  2. According to your chart, it looks like the projected bottom is before Feb. 16th. So that would line up to be either Thursday the 11th or Friday the 12th, am I right? thanks. Nice charts. And good interpretations.

    1. On the intraday charts I do not pay much attention to time it is about the pattern.
      From my experience I would say the "big boys" make reversals always difficult to catch - Friday lower and gap on Monday, or Monday gap lower and reversal.
      So if this is wave 5 which should bottom soon we should see the price around 1800 and low on 12th or 15th.