Our idea of a triangle wave 4 in the DJIA was obviously incorrect, however the idea of a 4th wave may still be correct. Alternatively, a faied 5th wave could be supposed in both the DJ and the S&P but is a bit of a stretch in the TSE (evenso that would not improve the situation by a whole lot as that would make wave 4, wave 2 correcting the entire down move.) In both cases look for overlap to negate this outlook. So far we retraced about 62% so if it does not get better soon it may get a lot worse.
TSE
TSE , DAX and S&P
Today the TSE traded at or above the 12135 level consistently for the first time. This is the level that we mentioned, now more than a year ago, as a very good possibility for a retracement. I myself did not have the patience to wait this long, expecting the whole thing to take about half as much time as it has, so it is not clearly something that one could have traded to the fullest, after all after 50% who really knows. Now that we are here probabilities are turning to the negative, which is not to say that the market cannot go (a lot?) higher, but that the likelihood of that happening is very low.
Further more its is interesting to note that not just the TSE but also the DAX and the S&P are, roughly speaking, at the very same spot right at this time. We are talking indexes, not individual stocks so some discretion is required but the conclusion should be to sell just about everything!
Remember, you can enlarge these charts by clicking on them and you can then put them side by side if you wish.
TSE, March 9, a year later.
About a year ago we mentioned that the TSE should, applying EW probabilities, retrace either 38% (about 10400), 50% (about 11250) and , most likely 61.8% (about 12100) Higher levels are, of course, possible but not probable. Today the TSE is up 58% and early January it briefly hit 60+%, the Dow Jones is up 61.18% at the opening this morning. Nasdaq 84%.
However you slice it this correction is most probable done. Momentum is terrible, just consider that since early June the TSE did not move much gravitating to about 11000 all the time. Certainty is not a luxury we have in trading the market but now is clearly, or 2 months ago, an excellent time to start shorting this index.
TSE update Feb. 25 .2010.
I never stops to amaze me how the Canadian market operates just like a bunch of Pavlov dogs. Completely and totally mindless they start the day dumping everything and then end the day buying everything. Anyway so much for that. here is the chart.
Remember that we had a first leg down from 12070 to say, roughly 11000, good for slightly more than the usual 1000 points. (wave 1), then we retraced slightly more than 62% to 11750 or so, (wave 2); Then we drop 450 points in what may well be wave 1 of 3; next is wave 3 of 3 and that is where it starts to get serious. We will see.