30 years for most people is a lifetime. This chart, unfortunately I could not get a better copy as I do not know the source, runs from 1900 to 2014 and shows for every year along the x-axis what one would have earned for an investment held the previous 30 years. So for today, 2014, the chart shows a return of about 400% which is what you would have earned if you started investing 30 years earlier, that is in 1984. I have added time lines vertically and they occur with a certain periodicity of roughly 25 years. Presently we are at an extreme high once again and at the end of such a period. History may not always repeat itself but it sure does rhyme very often. Maybe the market is a wee bit overvalued.

The S&P is slightly different from the DOW. The chart shown in the thumbnail looks distinctly like a 5 wave move, half and a bit of which has already been retraced rather rapidly. Typically 5 waves do not stand alone. This might imply that a serious downtrend, and at the very least an a-b-c down is in the making. However, it may also imply that the second top at 1850 is actually the top of a b-wave and the big drop is a c that completed an entire a-b-c down already at the 1737 low. There are a number of reasons not to prefer that alternative but we have to remain alert to that possibility. In the DOW, not shown here- see previous blog- this could be a minor 4th wave to be followed by a fifth before this drop is over. The wedge on the S&P suggests a drop to about 1620 should be favoured.

There was this fellow by the name of Walter Zimmermann of United-ICap in New York who makes a bear case for the S&P ( and the others, presumable) on BNN the other day. The basis for his call is the wave pattern, which he believes to be an expanding triangle wave 4 (of some super degree). He combines this EW concept with the adage of selling in may and going away, especially now that there are certifiable too many bulls around. He is ultimately looking for 400 even though the trend line runs at about 540. An expanding triangle requires 5 waves in total all of which must be 3-waves each. On that basis e down to 540 now would do the trick and complete the whole pattern in about 2016.       Then there is this other fellow who swears by the “Jaws-of-death” pattern. It cannot be termed Elliott Wave as it is not recognized by them. Anyway he starts the pattern with the big up move as wave a, which means that we have just finished, or almost finished wave e and are about to drop in a very nasty abyss.

     Then there are the real orthodox E-Wavers from Gainsville that literally wrote the book. To be safe they propose 4 distinct “possibilities” but reject all but one on the grounds of either size or the lack of an internal 3-wave count (specifically in wave c, which I disagree with!) in the individual waves. That leaves the count where the first a-b-c is wave A, and the rise from the lows of 2009 to now forms wave B.This B-wave is topping obviously but still could go just a little higher to let the DJIA catch up. 

    They could all be wrong! Some might argue that there is no such thing as a triple top and this will just keep going. I would prefer to take the prudent path and get out. There are these IQ test that ask questions like this. In a series that goes 100% up –50 % down – 100% up – 50% down –100% up what comes next????

According to BNN the S&P has alternated between an up and down day 14 times in a row if we close up today. Last time we managed this was back in 1941. Who knows what it means other than, perhaps, that everyone is a little confused.