Not a bad call, S2. Maybe its a little too early but a move like this doesn't seem to be a fluke. Uptick restore plus possible mark to market revision plus better than expected operations at the banks looks to be the fuel for a solid bear market rally. Not to mention that at some point Geithner will flesh out Treasury’s plan to deal with toxic assets. Sure, he hasn’t been all that smooth but at some point he has to show why people liked him so much in the first place. Time will tell especially with this market.
Just a quick question, which wave are you using to draw your expectation for the rally that looks to have started today? I’m a little confused by your chart on the main page because you only show three waves yet refer to 3 and 5 then wrap it all up in an A wave retracement projecting to 500-600 on the Russell 2000. If A truly is an impulse, composed of 5 legs by definition, then wouldn’t the retracement have to include the entire span from 1 to 5? The only reason I ask is because, by my estimation, the A wave from the peak in 2007 isn't resolved yet, I think we have 1 wave to go.
I took a shot at a wave count I think makes sense. Following some basic eWave rules like wave 3 has to be the longest, etc. There are some unpretty implications to this chart like wave 5 of impulse A has yet to be seen and the bear market is only just about done with beginning. Then again, you could say that we’ve been in a bear market since the 2001 peak in which case we are in wave C of that 3 wave correction (trough in 2003 = A, peak in 2007 = B, trough in 2009? = C) which would mean that a new long term bull market may be about to start…have you heard anything about this type of interpretation? This type of situation is exactly what Kondratiev (the K in K-wave) described...
At any rate I think this move stalls at the 200DMA which I expect to meet us in the 950-1000 range in the May-June time frame. Need to conquer the 50DMA then pass a retest first…
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