Saturday, May 22, 2010

5/22/10 - A COMPARISON TO OCT 2007

SPX - OCT 2007


I continue to ask the Primary Wave 3 proponents why not wait for a 50/200 day MA death cross before truly getting married to the idea that we are in Primary Wave 3, assuming this even exists. Remember Y2K?  :)

As a side note, here is a link to 10 failed doomsday predictions. Google for  more of course. 

Anyway, there are still valid bull and bear counts that apply so one should certainly remain cautious.

No doubt the near term trend is down but for how much longer? I continue to mention the 50/200 day MA death cross because as is evident in the top chart, it signaled the larger change in trend. 

On the same top chart, notice where the 50/200 cross occurred. The market backtested that cross, which appears to be consistent with a wave 2 retrace prior to a wave 3 down.

But prior to that, take a look at the structure before to the Oct 2007 top. It looks eerily famliar does it not? The index sold off almost 6% below the 200 MA only to rebound to new highs. The RSI print also looks similar to what we are seeing today. 
So fast forward to the present. We are currently looking at a very similar situation with where price stands in relation to the 200 MA as well as the low RSI print of 30.17. The low print was approximately 4.2% below the 200 MA.

Notice that the 50 MA is only starting to slope/curl down while the 200 MA is still rising. It did that in 07 as well as price was climbing to a new high. 

Look at the 3 wave structure I continue to point out with the orange lines. That is all it is at the moment, three waves down. 

Will all this mean anything? Perhaps not, but just throwing caution to the bears as I play devil's advocate. 

My preferred count still calls for a Minor Wave C up once Minor B is complete but also mindful of the bear count.

Let's see what the next few weeks bring.


  1. Grand,
    you have a very nice thought about Oct 2007, which i have a very serious study about it.

    i have a new estimation about the market timing posted on my blog message thread. and i replied your message there.
    i like to see people more actively sharing their charts and comments on my blog, or i just eating people provided free lunch, like yours delicious feast.

  2. Nice comparison Grand. Good work.