The
A-B-C correction typically follows an Elliott Wave five wave bull phase. When I
count waves on many stock sectors from the September 2011 lows I get a
completed 5-wave count and so I can now assume a typical A-B-C type corrective
period to follow.
Just
to review the structure of an Elliott A-B-C
Wave
A is a downward move that comes “out of no where.” – The fundamentals continue
to improve and investor psychology goes from very bullish to moderately
bullish. They do not believe a new bear
market has arrived
Wave
B is a “phoney rally.” - Normally weaker technically and the fundamentals
sometimes start to weaken, sometimes not. Investor psychology goes from
slightly bullish to very bullish, usually more bullish than it was at the top,
creating a negative divergence between momentum and sentiment... This is the most
reliable sell point
Wave
C is the “killer wave.” Being a serious down trend with serious losses and deteriorating
fundamentals. Investor psychology goes from very bullish to very bearish.
A
final note on the C wave – it is the longest wave and it can subdivide into
five smaller waves. The chart is the Dow Transports and my best guess for a
downside target is the 200 day MA currently at about 6755 on the index
(Average) Other sector worries would be the SPDR Financials and the Russell
2000 – have fun.
Posts
6 comments:
so Bill, how relative will be the performance of XMA to a pending broader index correction. Per your earlier post, will XMA correct less than XIU (or not at all) given its relative strength.
Scary stuff! So we should sell then?
As an aside, can only Google Account people leave their identity?
Hello
The pending C wave down on the broader US stock indices is still very likely to get underway - I still like the XMA due to its past inverse relationship to the S&P500
Bill Carrigan
Is it still a valid B wave at the moment?
Is this still a valid B wave?
Hi
Yes still a valid B wave - but the next five days will be the test
Bill C
Post a Comment