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Sunday, June 6, 2010

Sunday Observations

**** 5:30, The Euro has just broke below 1.19, currently at 1.1896!!!
****It is now 3:56, PM on the west coast, and the currency markets have been open for a few minutes, the Euro is selling-off hard, now down to 1.1931, if this continues, there will be a sea of red tomorrow morning!!!!
The Bears avoided a bullet Friday with that huge move down, if we would of had any sort of an up day, the 20 day MA would of crossed over the price action of the above chart, the Percent of Stocks above their 50 day MA, most likely confirming a bottom was put in. Now that the bears have the ball back, they really need to follow-thru Monday to keep this trend in their favor. Now the bad news for the bears, there is not much room left on the chart for it to go lower, or reach zero. I suppose, if we are really in a major sell-off, that is P3 down, which at this point, I am not all that confident we are, then we should expect a sustained period of time where the market was dropping so fast, that the chart could just flat-line near the bottom. But if this is more like a correction, I would expect one more drop down near zero, then a quick reversal, and a new bullish trend, that would occur with the cross of the 20 day MA.
The top chart does a great job of supporting this count, that is it provides enough room for one more wave down to complete the 5th wave, before a reversal for the 2nd wave up. And if the top chart flatlines, that would support the 1-2, 1-2, down count. Either way, I believe that a cross on that chart would signal a reversal and a bottom of some sort being put in.
**Binve, my partner in crime, wrote an excellent post this week-end on the above count, A Look at the Waves, Discussion of Options and Diagonals, and a Review of the Big Picture , so I will not go into detail about it here today.

1 comment:

  1. Thanks Col! I appreciate that brother!!

    I agree with you, this is a critical juncture. And an LD right will just really confuse both bulls and bears. We will not get a massive breakdown, but instead a bounce at support (~1000). Then a large rally (LD's typically retrace 78.6%). The one in 2007 retrace ~70% (more than 62% at any rate). So this will give the bulls a lot of confidence and deject the bears. And just about the time everybody thinks that the trend change is now up, the market will take off in a Minor 3 down that will have enough momentum to break support at 1000.

    If this is the way Mr. Market wants to play it, you have to admire his deviousness :)

    Thanks bro!!