We were always of the opinion that the steep drop late last year was a 5 wave structure indicating the start of a bear market, in this case wave C. There are always other possibilities, it could, for instance, be part of an a-b-c irregular correction so one has to be careful not to jump to conclusions. 7 1/2 months went by and the index came within 161 points of making a new high. All hell seems to have broken loose after that. We seem to be in what Don Cox of Basis Points fame used to refer to as a cascading waterfall. He is the only one I know that could effortlessly mix Greek mythology with economics. The problem with the waterfall pattern is that from an EW perspective it is hard to pin down exactly where you are. Having done about 1200 points, a little over the obligatory 1000 points, our best guess is that we are almost completing wave 1 of 3 of C. Next is wave 3 of C.
Fundamentally this could work. Our economic backbone of commodities is pretty well in trouble throughout the spectrum, from oil to gold, lumber to potash with the only bright spot being hay in Sasketchewan going for $200 a bale (roll), this without the usual supply management system. Politically we are at a stalemate with unpleasant elections coming soon. Some of our top guys have trouble believing we might be in trouble and choosing denial as the best remedy. We will soon be going into the Sept. to Oct. season that is always good for some awkward outcomes. Time to unload some of the banks!