Although we were up a bit over 5 points for the week the price bar of the cash S&P500 was again downtrending on the weekly price chart. It is interesting that we made low this week at 1270.5:Low price in October 2002: 768.63.
High price in October 2007: 1576.09.
1576.09 – (.382 X (1576.09 – 768.63) = 1267.64.
720 degrees (2 turns of the circle) down on the Gann wheel from 1576 = 1274.5
We also had a technical buy signal on the daily chart after the market hit the low this week and we counted a complete a-b-c Flat pattern as well. If the 1270 level was a significant low where does it fit in the bigger picture? Today’s chart shows a weekly chart with my Elliott count on it. Note that the recent a-b-c flat is at the Fibonacci grid line marked 500%. The decline from October 2007 is a Fibonacci five times the a-b-c expanded flat that formed from March to October 2005. That was a 32 week (158 TD) pattern. From October 2007 to now has been 15 weeks (74 TD); close enough to 50% in my work to qualify as a price/time match.
These calculations show that the current decline “could” be a complete wave (4) in the sequence from the 2002 low; but I don’t think so. For one thing we have not received a technical buy signal on the weekly chart confirming the completion of a wave pattern. I think it more likely that the recent a-b-c Flat from October is just the first part of a larger corrective pattern.
Tomorrow I will continue my study of Price Pulse theory.
No comments:
Post a Comment