Sunday, June 16, 2013

The case for an October top

One thing that is really interesting me lately is the fibonacci relationship among the waves since the 1266 low, for the waves themselves and their retraces.  It certainly suggests a very large-scale 5 wave impulse move, which would place us now in the midst of a wave 4 still in progress.

W1: 1266 -> 1474, 208 pts
W2: ~.618 retrace
W3: 1343 -> 1687, 344 pts, or 1.65x W1
W4: .382 retrace @1555
W5: equals W1 at 1555 + 208 = 1763, in mid-October

W4 and W5 are in italics because they have not completed yet.

It suggests more downside before a low -- also likely at a fibonacci-significant area -- and a final rally into the fall.  Remember, if we need to touch the upper wall of the 2009 rally channel, the longer we take, the higher it runs.

SPX 1763 would be roughly October 18th.  A sharp sell-off would precede the October 30 FOMC meeting, which would trigger the first minor wave 2 bounce.

SPX 06-16
The equivalent of the 2008 waterfall would then arrive late in 2014, but with even more violence, and look very 3PDH at the end of the day.

5Y

3 comments:

Permabear Doomster said...

Its pretty clear..if 1608 fails..then 1550/30s....before another major up wave.

If the Fed spook market, then down we go...

otherwise...UP to 1700s.

I'm guessing...the latter.

treider_ said...

the 1667s top is valid for this week? for tomorrow ? jejeje

Christian Gustafson said...

Permabear Doomster likes the inv H&S target of 1675. Draw a channel from the 1598 and 1608 lows, and it suggests that would be mid-next week.