Wednesday, February 06, 2008

Retest Underway

A new downtrend has started in the stockmarket that will test the low established in the week of 21st January. It is likely that at this coming low I will go massively long, unless indicators are telling me otherwise. My moves, up till now, have been very small in comparison. Take a look at the chart of GOOG - there are a nice 5 waves down since the beginning of 2008. The NDX now appears to be catching up in a 5th wave down. From an Elliott-Wave perspective, it's likely that the move from July to August 2007 is a three-wave wave A. We then have wave B from August to early November and since then wave C; with us now in the final wave 5 of C. We can apply the same interpretation to the SPX, except that wave C already got underway in October. The entire formation is an expanded flat. I long suspected that something like this was occurring since July, but didn't know how big each wave would be. Of course I could still be wrong, I don't use E-Wave as a primary method of predicting the market but just one way of putting what is happening into a framework.

My bigger picture is that this move is just wave 4 since the 2002 low and not a major bear market. Expect a bigger correction heading into the four year cycle low in 2010. But expect a bull market before that. Expect most people to be wrong.

The only move I made was buying some XHB puts yesterday. I'm not in a daring mood.


Anonymous said...

This is deceiving! I thought you had a real Moomin blog. I am greatly disappointed. :(

mOOm said...

Sorry to disappoint you. I've long used the name Moominoid, because I am like a moomin in lots of ways. So when I chose a title for a blog, the place that the Moomins lived seemed the natural choice. It certainly confuses all the traders and investors who come here :)