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Saturday, August 22, 2009

Now That's Teamwork! and The Wave C Blaze of Glory

The last couple of days, the bulls have been putting a vice on the bears .... avocados ... :) But clear direction is better that the "did the mega-extended Wave A end? Are we in Wave B? Is Wave B over?" nonsense that we have been experiencing the past couple of weeks.

First -- Now That's Teamwork!

Columbia and I were discussing on Friday morning that were were in the final Wave C and that based on the move so far and the fact that we believed that P2 would like to extend through September, chances were that C would turn into an ending diagonal. Col put together a great chart on that.

But then at 12:57 in the CIL on Friday Russ put up a chart of a 1-2, 1-2, 1-2 for Wave C. This was the first time I saw it and I believe that Russ was the first to spot this possibility (and I ultimately believe is the right one).

I thought about this count for a bit, then at 13:48-13:49 I came to the conclusion that Russ was on the right track, identified a Wave 4 triangle setup (which turned out to be right) and added this to the conversation:

"Russ, I have been thinking about your count and have an option I am throwing out there

Maybe C doesn't want to drag out sideways like Col and I were discussing this morning. Maybe the bulls do want to burn things up in one last vertical move like your count suggests.? Just a thought"

So, my point is that in the CIL, we all iterated fairly quickly on some possible count options to the one that looked the most promising and called the rest of the day (and the depth of the correction) correctly. All before this count showed up in the more popular blogs.

Now that's what I call teamwork baby! :)

Second -- The Wave C Blaze of Glory

Like Young Guns and Bon Jovi and all other cheesiness, I think Wave C wants to go out in a Blaze of Glory. Since July 9 there has been absolutely no meaningful pullback. This rally is expending copious amounts of energy in making new highs with no real pullbacks. And no matter what Bernanke, the Fed, Krugman, zeroeth year Economics, or any other mainstream egghead economist tells you, the US economy is not getting better. It is getting worse. And the offsets / "stimulus" for the government to make GDP look better is not a solution. It is a band-aid in the short term but it is poison in the long term. Which makes this stock rally built on emotion and hope, but not sustainable fundamentals. Very bad news for a 54% rally off the bottom in 5 months on the SPX. This is a candle burning up the last bit of oxygen in an enclosure, not a new star being born.

Early to mid September (not mid-Sept / early Oct, like I was thinking before) looks like the more likely spot for Minor C / Intermediate Z / Primary 2 to end.

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