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Friday, August 17, 2012

Update on Long Term Projection (08/17/12)

While the last few months have been very confusing regarding the Minute/Minor Degree waves, my larger view of the market remains unchanged. For the last large update, see this post: Long Term Projection, Macro, and an Analysis Retrospective.

All of the macroeconomic and fundamental analysis in that post is still very valid, as is the sentiment analysis from market indicators. Also with the VIX recently making a new 'recovery low' makes a confirmation in my mind that this next market peak will not be 'the top'. Like I have been saying for a couple of years now, we are in the middle of a cyclical bull market and any pullbacks are mid-bull corrections. I think this cyclical bull still has a few years left in it.

No new analysis in this post, just chart updates.

Long Term Projection History and the Current Projection

I have a long track record of being consistent with my projection. It has obviously adjusted based on how events actually unfolded (absolutely *nobody* can predict the future), but this long term projection which serves as my preferred count has been quite good in general directionality and intermediate timing.

-- Nov 2010: Abandoned the Primary 2 count and adapted my leading alternate count which was a Cycle X count - The Large Count

-- Jan 2011: Rethought the size of Cycle X with some historical analysis and comparisons. I lay out my thoughts for March 2009 - June 2011 (projection at the time) being only Primary W of Cycle X - The Large Count with Historical Perspective

-- Jan 2011: Macro thoughts that accompany my projection - Macro Thoughts and Observations. Is the Bear Market Dead? Is this the Start of a new Secular Bull Market?

-- Feb 2011: Long term context - Secular Bear Market Projection in Historical Context

-- Mar 2011: An in depth study and a comprehensive list of references and analysis of previous work. I highly recommend reading this post and following the references - First Derivative of the S&P 500, Long Term Study

-- May 2011: Count of the large structure (the top of this wave) being completed in real time - May 5 (and a Long Term View Update)

-- Aug 2011: Macro thoughts in the middle of the August crash putting this wave in context (specifically refuting that this was the start of 'P3') - Update on Long Term Projection

-- Oct 2011: Real time count that pointed to the October low as being a significant low based on how the waves and indicators unfolded - Revisiting the Large Count

-- Jan 2012: Confirmation of the October low being a significant bottom - Update on Long Term Projection

-- Apr 2012: Large macro, fundamental and sentiment update. In depth post and a recommended read (many links to previous analysis) - Long Term Projection, Macro, and an Analysis Retrospective

Primary Wave Projection

The May 2012 pullback while sharp, was not in retrospect a 'major' pullback. I think it is just a Minor degree wave down and we are now probing into the top to end the Intermediate wave up since the Oct 2011 low. If my count is correct, the next wave down will be an Intermediate pullback (think the Apr-June 2010 pullback and not the May-Oct 2011 pullback)

Secular Bear Market Projection / Long Term Count

For the SPX:

And NASDAQ Composite for good measure:

4-year Cycle Chart

This chart comes from this study (A Look at 4-year Cycles) and fits pretty nicely with my long term projection. I think the next pullback would fit timing wise with the next 4-year cycle bottom (which as I show on my chart can simply be a mid-range correction).

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