04/5/12 – Wave Count Last 40 Years © ™

WHAT’S HAPPENING?

I declared a short term peak on 04/03/12.  The actual peak date was 04/02/12.

Presently the wave count indicates that it’s prudent to be SHORT TERM bearish.  Scenario outlooks are: (1) A failed rally attempt (no new high) will drive the nail into the short term coffin.  (2) A token new high could be disregarded under certain circumstances.  (3) A legitimate/significant new high could mean we have an extension for Very Short Step #4 and #5, which would mean we could meander around the area of the prior peak before a more significant decline takes place.  (4) The market moves basically in a sideways pattern to break the uptrend since November.  This would qualify as breaking the “Look” of the uptrend. (3) and (4) could almost have the same appearance on a chart.

Presently I favor the failed rally scenario.

Sometime this year (or 2013), the bull market that began in 2009 should exceed the all-time highs of 2007.

Any significant change in my opinion will be followed by a blog update.

MISC

I intend to post an updated Hurst cycle chart.  I have also been doing some work on how Hurst cycles approached the bottom in March 2009.  Did it anticipate the bottom correctly, etc??  I hope to post these charts before too long.  All I need to do is find the time and I haven’t been too successful with that, mainly because I have a life beyond this blog.

PAST ISSUES

If you are new to this blog, please read the  Glossary and many of the back issues.  You will find a lot of useful information in the past issues that will help you understand the present situation.

WAVE COUNT

The following was copied from MY CHARTS  and it shows my interpretation of the wave count over the last 40 years.  The chart number refers to the chart placement on the first page.  The charts begin with monthly periods and descend to 5 minute periods.

Following this blizzard of numbers is an explanation of how the wave count works.  It’s rather simple once you understand it; 3 up and 3 down.  But truthfully there is a little bit more to it than that.

***********************************

SUPER LONG TERM IS UP, (1974 to Present)
Chart Number 10.1, Dark Green Wave Count

Super Step #I Up = 1974 To 1976
Super Step #II Up = 1978 To 1981
Super Step #III Up = 1982 To 2000 – (Conventional peak followed by a wave extension)
Super Step #IV Up = 2003 To 2007
Super Step #V Up = 2009 To present

***********************************

VERY LONG TERM IS DOWN, (2000 to Present)
Chart Number 10.1, Red Wave Count

Very Large Step #1 Down = 01/00 To 10/02
Very Large Step #2 Down = 10/07 To 03/09

Very Large Step #3 Down will be the longest and largest of the 3 steps, possibly ending in 2018.  For now we will enjoy the bull market, which will make new highs.  We won’t worry about this future until it threatens to arrive.

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LONG TERM IS UP, (03/09 to Present)
Chart Number 10.2, Black Wave Count

Large Step #1 Up = 03/09 To 05/10
Large Step #2 Up = 07/10 To 05/11
Large Step #3 Up = 10/11 To Present

***********************************

INTERMEDIATE TERM IS UP, 10/04/11 to Present
Chart Number 10.3, Blue Wave Count

Intermediate Step #1 Up = 10/04/11 To 10/27/11
Intermediate Step #2 Up = 11/25/11 To 04/02/12

Intermediate Step #3 Up should begin at the conclusion of the current correction

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SHORT TERM UP IS COMPLETE FORMING INTERMEDIATE STEP #2, (11/25/11 to 04/02/12)
Chart Number 10.5 , Black Wave Count

Short Step #1 Up = 11/25/11 To 12/06/11
Short Step #2 Up = 12/19/11 To 02/12
Short Step #3 Up = 03/06/12 To 04/02/12

***********************************

“OLD” – VERY SHORT TERM
Chart Number 10.5, Red Wave Count

Very Short Step #1 Up = 03/06/12 To 03/19/12
Very Short Step #2 Up = 03/22/12 To 03/27/12
Very Short Step #3 Up = 03/29/12 To 04/02/12

***********************************

“NEW” – VERY SHORT TERM IS DOWN
Chart Number 10.5, Violet Wave Count

Very Short Step #1 Down = 04/02/12 To Present

***********************************

WAVE COUNTS SIMPLIFIED

Wave counts simplified is a apparently a joke because NONE of my friends get it (I have lots of stupid friends).  Just don’t bring Elliott into this thought process or you’ll get messed up for sure.

Sometime during the period that I was subscribing to Edson Gould, 1973 to 1979, I changed Gould’s method of wave counting to my 3 steps up and 3 steps down theory.  It was also during this period that I noted a wave extension where a 3 step could turn into a 5 step (not a 4 step per Gould).

To keep from bolting too quickly from an established position, I have the channel concept.  Staying within the channel tries to discourage an early and erroneous change of position.  Frequently I take a wild ride and declare a count complete well before a channel break, sometimes I’m right and sometimes I’m wrong.  It’s important that you remember that last sentence.

  • My wave counts are not Elliott Wave!  It’s simple and functions without a maze of exclusions.
  • Simple minded people like simple things and I am a strict believer in KISS (keep it simple stupid)
  • There are 3 peaks (or dips) to a completed wave count, which is then followed by a reversal of trend.  Often times it’s as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy.
  • In a downtrend the same rules apply except you are counting 3 dips instead of 3 bumps.
  • 3 steps must stay confined to a channel.  Laying a straight edge on the chart will help you visualize the channel.
  • As the larger trend progresses, all of the steps/waves that make up the trend will be confined to a larger channel.  Sometimes a channel doesn’t become clear until the surge phase (vertical move) has ended and the market settles into a methodical uptrend.  “Usually” the longer the trend the wider the channel.
  • When the market breaks its channel (regardless of the perceived wave count), the step has been terminated.  In a long wave extension, this may be your best indicator that the wave count has been completed. 
  • Uh-Oh, here comes the weird stuff.
  • Sometimes ONE of the 3 waves will sub-divide into another 3 waves.  I call this an extension.  When this happens (1) the trend is still intact, (2) the overall channel will widened and (3) instead of a total of 3 steps, there will be 5 steps.
  • There are always trends within trends from the short term of a few days to the super long term trend that may last centuries.  Fitting it together gives you remarkable market perspective.
  • The correction following the second step is normally larger than the correction that followed the first step.
  • Usually I will use the terms “step” and “wave” interchangeably.  I frequently think of a step as shorter in duration and a wave as longer term; such as there are 3 steps to a wave.  But the steps/waves are all kinda the same as they fit inside one another like a matryoshka or Russian nesting doll.
  • THE FOLLOWING IS ALSO AN IMPORTANT CONCEPT
  • At the conclusion of a completed trend there will be a counter move.  This counter move MUST be of sufficient strength (or duration) to BREAK THE CHANNEL of the prior move.  Breaking the channel has the appearance of breaking the “LOOK” of the prior move (channel).
  • If a channel break doesn’t occur after ALL of the counter trend steps have evolved, you have miscounted and the previous trend is likely not finished.
  • Breaking the channel is a very important concept because this may be the only clue you have that your count was incorrect.
  • Reading the glossary helps in the understanding of this blog.  There are a lot of useful ideas in the glossary.
  • Glossary Link
  • Reader feedback will allow me to clarify my presentation.  Please use the comments section at the bottom of each issue

All Rights Reserved  © ™

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One Comment on “04/5/12 – Wave Count Last 40 Years © ™”

  1. Ernest Says:

    Thank you, Bob. I appreciate your technique.

    Ernest

    Like


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