Pure Guesswork

Following the pattern of the March 18, 2008 post, the impulsive high is seen as having occurred in July of 2007, not October. The October high is an irregular "B" or "Y" wave.
On a monthly chart:

The "A" move down, with a low in August 2007, retraced almost exactly 23.6% of the entire move from October 2002. The "C" move down--following the irregular "B" wave--retraced almost exactly 38.2% of the move.

On a weekly chart (showing the internal fibonacci level of the entire A-B-C pattern):

Looking at the rally after the "C" low in March, it first ran out of steam at a 61.8% retracement level (of the entire decline from July 2007 to March 2008). It then fell back to the 38.2% level. Yesterday it pulled back from the 50% level.

Shown on a daily chart:

Having bounced off that 50% level, will we now fall back to 23.%? This would be 1327.5, close to the 1324.4 low in mid-April.

Posted by Pure Guesswork at 7:11 AM | Permalink | Comments (0) | TrackBacks (0)

Follow up from yesterday's post.

Posted by Pure Guesswork at 9:14 AM | Permalink | Comments (0) | TrackBacks (0)

ZEW expectations survey came out below expectations, falling to -41.4 from -40.7. Bloomberg consensus was for a rise to -37. Euro had been rallying before the release, steadily making up yesterday's decline. Tthere was some immediate profit taking when the number first came out, but within 10 minutes this sell-off reversed and yesterday's high was surpassed.
The market was primed to rally because of its euro short condition and some quick study found euro friendly details within the ZEW. First, the survey of the current business situation rose, while the consensus expectations were for a small decline. And in fact, currently the German economy is growing quite nicely. Second, the increase in pessimism about the future which led to the fall in the headline number was predicated on an increasingly prevalent view that the ECB will not be lowering rates anytime soon, and in fact, might very likely raise rates.

Posted by Pure Guesswork at 7:10 AM | Permalink | Comments (0) | TrackBacks (0)

And then taking the actual high last Friday, May 2nd as the delta 1.618 and getting internal fibonacci levels between there and the beta low on April 15th:

Bottom line, look for real support at 1370 or so.

Posted by Pure Guesswork at 10:13 AM | Permalink | Comments (0) | TrackBacks (0)

Crude has overshot the delta 2.618 target
Allowing for (1) the extent of the move (from under 50 dollars to the area of 125 dollars) and (2) the inaccuracies inherent in a chart composed of monthly changing nearby contracts, it is still within the zone of the pattern. But we have to be ready for this pattern to be proven invalid. Hasn't quite happened yet though.

Posted by Pure Guesswork at 9:47 AM | Permalink | Comments (0) | TrackBacks (0)

Posted by Pure Guesswork at 8:37 AM | Permalink | Comments (0) | TrackBacks (0)

Following the posts of May 7, April 23, April 13, etc.--

102.28 would be the 0.786 level.

But the following chart is the result of projecting the alpha-beta base down from last Friday's high, which brings us to the area of support initially found in April after the move to the delta 1.618 level--

Posted by Pure Guesswork at 6:50 AM | Permalink | Comments (0) | TrackBacks (0)

June contract traded at 123.93 yesterday evening. Flat with a slightly downward bias since then, but support coming in around the 123 handle.

Anything above 1.24 will be close enough to be in the "zone" of the 1.2451 delta 2.618 target. In fact, the high already in might be in that zone.

To recapitulate the pattern:
Alpha at 78.40 in July of 2006.
Beta at 49.90 in January of 2007.
A test of the alpha high in August of 2007.
After a pullback, the alpha high is breeched in the later half of September of 2007 and then that level provides support for a few weeks.
In October begins an impulsive move up to the delta 1.618 target. That level is surpassed, but from November 2007 until February 2008, the market zig zags with resistance a few dollars above the 96.00 delta 1.618 target (specifically the 100 level) and support at the 1.272 level.
Then in early February a new impulsive move begins, bringing us 13 weeks later approaching the delta 2.618 target.

On a daily chart, the move between 1.272 and 2.618.

UPDATE THURSDAY AFTERNOON--5:45 PM

After selling off through the morning, the market bottomed around 11:30 AM under 122, and by 2:00 PM was breaking towards the highs again. Popped over 124 right after 3:00 PM. Around 4:00 PM hit 124.61. It has been trading sideways around 124.50 since then.
A five minute chart:

And once again, the weekly chart (with delta 2.618 target met):

Since this is a long term pattern going back to mid 2006 (and a low below $50.00) it is probably wise to give this target a little room. The market could go up up above 125.00 and the pattern would still be valid. What is important now is to look for signs of topping at this general level.

Posted by Pure Guesswork at 8:05 AM | Permalink | Comments (0) | TrackBacks (0)

Holding on at the 38.2% retracement level of December 2007--April 2008 rally.

Counter move and retracement.

Posted by Pure Guesswork at 10:22 AM | Permalink | Comments (0) | TrackBacks (0)

Posted by Pure Guesswork at 6:29 AM | Permalink | Comments (0) | TrackBacks (0)

Unlike gold and bonds, both of which reached impulsive peaks at the climax of the Bear Sterns panic mid-March, the Crude Oil chart never reached its (2.618) goal. That period showed a high around 111.80 in the nearby contract. By the end of that week the contract had fallen under 100. The impulsive goal not having been met at that time, it has been the one market to rally beyond the panic high of March. Today a new high.
The target area is still centered on 124.50.

Once that target is met, and crude joins other commodities in a downturn, there could be an acceleration of the general decline.

Posted by Pure Guesswork at 3:22 PM | Permalink | Comments (0) | TrackBacks (0)

If, as Richard Russell states in his article in this weekend's Barron's, Dow Theory is indicating this stock market rally has a lot further to go, we might picture an alpha-beta base set up like this:

Resistance at the 1.618 delta around 1425. We entered that area of resistance on Friday.

Posted by Pure Guesswork at 1:05 PM | Permalink | Comments (0) | TrackBacks (0)

A 4.236 delta target was met on the move from last June's low to the high in March.

Since the high (made on the Sunday night of the announcement of the Bear Stern sales to JP Morgan Chase), it has retraced about 50% of the impulsive move from beta (in mid-October 2007) to the extended panic high. An irregular X-Y-Z pattern can be seen, where Z = X.

So for now the bottom might be in around 114'20 (note charts are not in 32nds, but decimal) on the June contract, corresponding to about 3.90% yield on the cash bond.

Posted by Pure Guesswork at 6:42 AM | Permalink | Comments (0) | TrackBacks (0)

(for now...)

The break of 38.2% is a critical rally buster. So far it hasn't happened.

Posted by Pure Guesswork at 9:52 AM | Permalink | Comments (0) | TrackBacks (0)