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Monday, December 14, 2009

This is Why Columbia Rocks

We have been having some great discussions here recently about this crazy wave. Whether it is Minor B or Minor C. There have been several great ideas, and I can't focus on all of them. Several analysts have been maintaining these counts for a few weeks: Gumbo has been calling for one last down wave (Y of B) before Minor B finishes and we head up in to Minor C, Kevin has been calling for a larger triangle on the SPX, and a double three on the other indices, before Minor B is finished, Columbia has been saying that we are in an Ending Diagonal for Minor C.

The waves are not at all clear. Consider this: B waves are very volatile and overlapping threes. An Ending Diagonal is a series of overlapping threes .... you see what I am getting at?

Figuring out the end of one, the beginning of another is *not* an easy task.

So that is what I was trying to do in my last post Options and Contradictions, to try and wipe the slate clean and see if the confirmations / non-confirmations between several indices could give us a clue.

And based on the investigation of the *CASH* indices, it looks like we are still in Minor B

..... But not so fast!! Columbia put out a fantastic post this weekend Week-end Outlook!! where he was doing some work on the futures and the diagonal is *much* clearer as is the end of Minor B.

The crux of this argument is how you treat the spike down from the Dubai debacle.

That made a *clear* lower low on the ES, but by the time the SPX cash opened, it had mostly recovered.

Well, this morning I decided to look at the futures for the Dow, Russell, and Nasdaq. And all have very clear lowers lows. And moreover, the discrepancies I list in my options and contradictions post all point to an ending diagonal like Col has, if you assume that the lower low on the 30th is the end of Minor B.

This is not at all a clear call, because what is the more valid representation of the market? The cash index or the futures?

No, not clear at all.

Until we break out of the trading range, there is no way to know for sure.

If we break out low, then Gumbo and Kevin's call of Minor B is ongoing is true, and if we break out above then Col's call of the ending diagonal is true.

So here are the 2 main contending options as I see them. I have redid them on my charts, but they are clearly based on Columbia's and Gumbo's counts. And I cannot honestly say I have a preferred count at this point:

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