I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Tuesday, October 5, 2010

So much for that theory ... sort of

Move down from the 1157 high turned out to be a three and couldn't develop an impulse down. So what of my question from yesterday: Just a pause on the way to new highs?... I'm not so sure about that. Do we head up to 1170-ish like many are saying?

Again, I am not so sure about that.

First I don't buy the triangle theory. The move up today is a very clear impulse. It is already to the top of the range, so I highly doubt it will serve to be the A leg of D of a triangle. I don't buy that at all.

I think it is far more likely that this move is part of 5 up. The question is how high?

Consider the fact that Minuette 3 based on how I count it, is appox 4.24 times Minuette 1. This is a Fib extension ratio (see Randomly Useful: Fibonacci Ratio Table) and a highly extended one at that. So does the market make another strong run after that? I think the odds point to 'not likely' IMO.

All of my 'Top 10' observations are still in effect (well, more like 8 of them) so I still think we are near a top and don't have a lot more upside with this wave.

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