Saturday, January 8, 2011

Revisiting the Long Term Bullish Count

Back in August of 2010 when I was working on my other site, I posted a long term bearish and bullish count as possibilities going forward for the rest of the year. At that point, the assumption was that were were in a bearish Primary 3 by most EW bloggers and writers. And while I don't really use long term counts to trade because I find time distorts prices, counting waves few months at a time could conceivably work out well for a trader with a long term perspective. The count I want to bring up is the bullish count from August as this has turned out to be accurate on the levels we have reached and how we have reached them.

Back in August I wrote:

"The bullish count has Primary 1 as S&P 1231 and Primary 2 as S&P 1010. Minor 1 would be at S&P 1131 with Minor 2 still at work or at the S&P 1069 low. This count calls for a Minor 3 upwards in the next few weeks. Therefore, we should know which camp of Elliotticians are right in the next couple of months. As traders, we should watch carefully where we position ourselves during this time and set our stops tight as a lot of traders will lose money for being on the wrong side. So will it be S&P 1350 by December 2010 or S&P 500??"

And now looking at the count, I can see a clear ABC move to the triple bottom at 1041 on August 31st that completed a Minor 2 wave. And what followed after that was a Minor 3 wave which is just now ending. So if we are to presume this count is right, we will see a Fib correction and then we will see another push to the 1350 area. As of now, Minor 1 was 127 points and the Minor 3 wave from 1041 has been 236 points so far. If Minor 3 were to be 2 X 127, we would get 1295 on the S&P. So it seems to me like we are getting there soon and wouldn't be surprised if we see 1295 by the end of this month. What is interesting is to see what will the correction be like at the end of this wave. We could get that Fib retracement to the 1170 area of correct sideways/triangulate and then push higher so perhaps old S&P highs will be taken out after all at the end of 2011/early 2012.

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