Nov 9, 2016
What should I say... the pattern was right as always - relief rally and more to the downside. Do not listen to the "experts" explaining you how the market was wrong about Brexit or the elections. This rally which started 3 days before the elections was a bad sign for H.Clinton - to repeat for n-th time when the market pushes in one direction before news/event it moves in the opposite direction after the news. Now to the charts - it is very difficult pattern, but for the first time since the top it looks like something and it fits perfect with cycles. It looks to me like complex zig-zag W-X-Y - one zig-zag lower (the low early September),huge flat for wave X until yesterday, the plunge today is wave a of Y and we need one wave higher "b of Y" than drifting lower for "c of Y" for one more zig-zag lower. If I am wrong Brexit will repeat - the pattern is finished and the market will turn higher. Of course everything is posible, but the pattern and cycles will look.... unfinished. For Brexit we needed an impulse lower and we had it. Now we need zig-zag.... if we do not see the market drifting lower the whole beauty will be gone:) Very beautiful chart showing the psychology of a correction.... In a zig-zag(correction) you have two waves lower A and C with a pause in the middle B. One wave takes time(more often A) and the other... you can see the fear(more often C). It is about psychology - the more common case the market is drifting lower for a while (wave A) no one believes in a correction, but than there is no more buyers and boom wave C bloodbath and fear. The opposite case - the market is shocked bloodbath and fear (wave A) everybody is scared and sold, a bounce follows but the market continue drifting lower because there is no buyers they are still scared (wave C). The first zig-zag from the August top illustrate the first case and now it should be the second case - bloodbath sellers already sold, but buyers are still scared which should cause a drift lower for a while. P.S. the markets are faster than I write. Obviously this is not the end of the world:) and "b" is already running.