Hi, these are just ideas not recommendations, sometimes I trade my ideas, sometimes I don’t.
Always remember, yours is the responsibility for your trades,
Good luck,
Erick



Sunday, November 6, 2011

Complicated, yet Simple

Here´s a thought from the forest to the trees


The big zigzag started after the Dow topped at 14,093 on the October 8 2007 week, the A wave ended at 6626.94 for a 7466 points or 53% decline from the top.
Big B ended at 12681 for a total of 6055 points, retracing 81% of A, now, B was a 3 a-b-c movement that developed like this:
a, 6626 – 11204 = 4578 points
b, 11204 – 9686 = 1518 points, 33% of a
c, ended at B, 9686 – 12681 = 2995 points, 65% of a, cool

Let´s go to the trees



We have the ¨exact¨ end of B on July 21 at 12,724.41, then 1 ran 2069 points to 10,655.30 on October 3, the return move took the Dow to 12,231.11 on Oct 28 for 1576 points or a 76% of wave 1.
What is next?
a) 12231 was the end of 2, the market will drop to the vicinity of 10,200 or below but then, what will happen with the almost infallible Santa Claus rally on December?
b) Wave 2 hasn´t ended yet, and we are in the b part of an a-b-c wave 2. If that´s the case the following will happen. Wave b of 2 will go down to one of this levels:
11,632 with c stopping at 12,600 max, right below the upper resistance line
11,443 with c stopping at 12,400 at the internal trend line
11,000 with c around 12600 maximum
With a Fridays’ close at 11983, we have a minimum 3% drop for the following days.
Beware of the BIG formation; it can take the Dow to a hopefully truncated C around 8000.

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I am a civil engineer who likes charts, to me, speculating in the markets is both a hobby and a second profession and in my view the stock market is the most honest environment, since it is only your knowledge and preparation that matters. I live, and work in the construction industry, in the Dominican Republic. I read and answer all my mail so please feel free to write sternloinaz@gmail.com Thanks, Erick