Finally,
it looks like we may have a bottom!
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It has been awhile since the last newsletter, that is partly because I was to be honest a little disappointed in the turn out for the January seminar. But mostly, because I did not have anything new to say. I did not want to sound like a broken record stating the markets had more downside. In fact, since the seminar there has been very little upside. 22 out of 33 days were down. First, let's back up to the OCT 10, 2008 newsletter where I stated: If we break through the 75% mark there is an excellent chance we will take out the Oct02 low of 7197. Well, we all know that happened on Feb 23rd, 2009 giving more confirmation we were in the wave 5 of a major 5 wave down Elliott Wave pattern that occurred on Feb 19th, 2009. It is worth noting that the SP-500 confirmed its own wave 5 of the 5 wave pattern on Feb 27th, 2009. However, the NASDAQ did not confirm the 5th wave until Mar 6th, 2009. Now we have all 3 major indices in the final leg of the 5 wave down pattern. The bad news is this does not mean we have reached the bottom on any all these indices. The good news is we could be very very close to the bottom. |
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First, I want to look at where the DJ-30 was at the time of our seminar and what we briefly discussed. The below chart show the DJ-30 has just completed the corrective wave 4. I think it is worth restating here that in Elliott wave theory the wave counts are never casted in concrete. Nonetheless, the Fibonacci projections make excellent targets. As a refresher you may want to go back to previous discussions in newsletters, Do Fibonacci's really work and How to use my Fibonacci Calculator In this example, I have shown the Fibonacci extension retracement and I have included Fibonacci time for Wave 2 high to wave 3 low and wave 3 low to wave 4 high. The vertical blue line in the first chart was my attempt to predict when we might reach a bottom.  |
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second chart shows where we are as of Friday close on Mar 6th, 2009, my
predicted bottom date. If that indeed does turn out to be the bottom
then I guess I can become yet another of those self-proclaimed GURU's
of stock market wisdom. To that I say, Whoopee!!. What I want to point out is how close we are the the 61.8% of the wave 3 movement (6365). Let us hope we do not reach the 100% (4673) move of wave 3. That would mean we have enter a depression not a recession. I believe we are very close to turning the corner and will start looking for candidate for long positions which I will publish in the next few days.  |
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Summary:
As always I want to hear your thoughts on these and any subjects. Please, feel free to send an email with your suggestions, complaints, and comments to kermitp@tradingourway.com Thank You, for taking the time to read our newsletter and good trading to all, Kermit Prather |
