It is worth mentioning that in the first zigzag off of Mar 2009, that completed in Feb 2011.
(A) = 1219 - 666 = 553
(C) = 1344 - 1010 = 334
(C) / (A) = 334/553 = 0.6 = 3/5
And the nominal top at 1371 was just 10 points shy of the 78.6% retracement at 1381.
A 20% correction for wave X, off of 1371 would bring SPX to about 1,100. A deeper correction is always a possibility. But a 20% correction would put SPX again in the bear territory and invite QE3 from the Fed.
A weakening Euro, strengthening USD would give the Fed enough wiggle room to play down any inflation concerns with further printing. A defaulting Eurozone Periphery would send capital fleeing into the US, strengthening the USD, buying up bonds and stocks. Possibly into Germany and France as well.
That should be the very backdrop for the second zigzag up. Though it would be smaller in time and size than the first zigzag, which lasted just under two years.
For the P3 down it is critical that the bond market collapses as well. In about two years, the size of the US Sovereign debt will become nearly impossible for the bond market to ignore. Possibly larger than the US GDP itself.
For the daily update, the sideways movement is looking more like a Minute 4, as on the 30-min chart.
@ 12 Noon
That almost looks like a triangle, but for a wave 2?
No comments:
Post a Comment