TSE

TSE AUG 2010

The TSE is potentially showing a very scary 1-2, 1-2 situation. Given the overlaps not too many alternatives present themselves. We should go down a little further tomorrow and then come back into Monday to keep the spirits going, thereafter it COULD be all downhill for a while. After hearing that our “authorities” are more concerned about losing the potash cartel than the price at which Potash Corp. might be taken over, I would not be surprised to see a backlash  against an economy that prides itself on torpedoing free-enterprise wherever it shows up.

TSE

The TSE is just as confusing as all the others. Multiple possibilities exist, but if we simple follow the approach we had on the Dow Jones, we get the following;

TSE AUG 2010

As with the Dow and the DAX the TSE is loaded with overlaps, making it hard to come up with a confident count. The bearish count shown here assumes a wave 1 down (a diagonal type 2, a very rare beast that does allow overlap) followed by an A-B-C counter trend correction. Mathematically speaking the equivalent point on the TSE would be 11893, just 30 points away from where we were this morning. If nothing else this confirms that as with the Dow and the DAX the TSE is also at some critical point.

Other counts are possible. The most bearish would be the 1-2, (1)-(2) etc. situation where both wave 2s retraced an inordinate  percentage of the respective preceding down-legs. Another, less bearish count would have this whole thing as a diagonal type 2 structure, which I think is very unlikely.

On the bullish side, an argument could be made that a complete corrective move was finished at the early July low and that we are back in a bull market on our way to new highs.  This view makes more sense if one assumes that this correction started around Jan 7th and the chart above just shows the C wave of a larger A-B-C, itself a B wave in the much larger correction from the lows of May 2008 of about 7500. (as per below).

tse aug 2010 2

Very unlikely given the big picture!

TSE, DAX, FTSE and S&P

Stock markets are behaving in rather strange ways lately, volatility is rather high with  about 14 days with more than 90% up or down days over the last two months. Normally there are only 2 such days in an entire year. Only a month ago we had the flash crash and I understand that something like 70% of all trades in the S&P are now of the “frequent trading “ variety which essentially means that they are computer driven and almost always geared to momentum that is to say, mindless  monkey do as monkey sees type of stuff. Very frustrating for both bears and bulls. Furthermore just a few days ago we were at levels fist reached back in September or October last year , meaning that we accomplished nothing for almost an entire year.

    From an EW point of view things are not that much better. In both the S&P and the FTSE a clear 5 wave down can be seen followed by an equally clear counter-trend a-b-c. This very strongly suggests that the large down-leg anticipated has actually started. The TSE does not show the 5-waves down but the start could have been a “diagonal” type 2 (the only impulsive structure that allows overlap). The DAX, to be bearish, must have been a 1-2, 1-2 sequence but the percentage of the retracements is approaching levels that make this scenario less likely by the minute.

For the moment stand aside until things get clearer. Here are the charts;

tsx june 17 2010 DAX june 17 2010

S&P June 17 2010 ftse june 17 2010

TSE = DAX

By the way, the TSE and the DAX are still listening to the same drummer, just enlarge the two charts below and slide one next to the other. The a-b-c X a-b-c count is just a guess; in both the TSE and the DAX a rising wedge or “diagonal” could be fitted in even though that would make the 3d wave within the diagonal the shortest which should not be.

TSE March 27 2010 DAX March 27 2010 2