Thursday, 04 February 2010 00:00
If The Bear Comes Back Will We Ready?
In
2009 all of us were enjoying the bullish movement in capital market.
DJIA rose back to 10.000 from 6.400. In Asia Nikkei, Hangseng, Jakarta
Composite Index also moved in same way. Now we are at the end of 2009,
the biggest question is will the bullish extend? Or the bear army will
come back in 2010? To be honest whether bull or bear we must make a
profit to support our live.
But
how to make a profit if we do never realize to the major trend
reversal? What is the most important thing to be understood by trader?
That is the trend reversal price and time. In 2010 we are not sure the
bull will extend. The big problem in US financial system is not over
yet.
The
price and time harmony has warned us about this issue. Let’s imagine
how if the 2008 crash is only the beginning of the real crash? If the
bear comes back in 2010 will we ready?
CEO Briefing
What
will be happened in 2010? This is the big issue of financial and
capital market. In my opinion 2010 is the gate of major bearish
continuation. Let’s take DJIA index for the example. The highest peak
in 14.000 is the end of secular trend bullish movement and may follow
with major trend correction. According to the nature harmony theory on
the market, we have to admit that price always moves in 3 fractals.
Many people stand to the fundamental reasons and use it as a primary
guidance to determine the market direction. I cannot see that is a
valid and accurate way to predict the market movement. In late 2008, I
announced the end of correction target around 5.000 – 6.500, in fact
the lowest DJIA was at 6.400. Therefore, even though hard to say, we
still have to believe that the nature harmony can predict market
movement accurately. Now you are reading my opinion about the market
outlook in 2010 – 2012 based on the nature harmony in technical
analysis. I can say for sure, I will not sit here with you if this
method useless. Try to believe and use it as a reference to manage your
portfolio.
As
we know the average must confirm each other just like Charles H Dow aid
in his venerable Law. Global market movement eventually happened in a
period of 10 years. William Delbert Gann, one of historical trader from
US put a high respect to this time cycle. Now let’s take a look to the
ow Jones Industrial Average chart from 1900 – 2009 and mark it using
lliott Wave method.
The picture below is DJIA chart from 1900 –
2009. We call this a secular trend chart for 20 years period. The
impulse wave can be seen very bvious from the beginning of trading day
until today. Based on Elliott ave principles we can found that 5 waves
movement has completed at 4.000. The next phase will be possible A,B,C
correction in large degree. Simply says the next 2 years will be a
correction for prior secular trend bullish, started in 2008. Of course
this not a good news for investment banking and share holders. But we
still have to face it and make a profit. Later we will discuss about
DJIA index and world market in 2010.
Five
waves movement has completed in 2007 at level 14.000. The next will be
a possible A,B,C correction. Like or not we have to face it. The crash
happened in 2008 was a formation of wave A. DJIA dropped from its all
time high to 6.400 in 17 months from middle 2007 to late 2008. In 2009
we can saw the optimism of all investors and traders to re‐invest their
money to the stocks market, and the result is upside movement from
early 2009 till today. The first law of analysis is you have to find
the answer whether the newest price movements is a trend or
countertrend. Unfortunately I am afraid to say that the upside
movement during 2009 was a countertrend or only a correction. We can
mark this correction as wave B, which is still has opportunity to climb
more than 11.000. But honestly the upside should be near a completion.
Let’s take a look to the next chart.
Traders
and investors have to take serious attention to this condition. Since
momentum and price always move in a harmony we have to realize that
DJIA upside may be limited when price arrived above 10.000. We will use
the art of Elliott Wave analysis and Astronacci© trading system to
determine the price and time cycle in DJIA. The peak at 14.000 was an
end of secular trend wave 5. On October 30th,2007 DJIA had started a
big correction signal. It fell to 6.400 for 17 months to March 2009. We
are afraid to say that this is just a beginning of a major correction
movement. Downside movement from 2007 to 2009 is wave A which is
consists of 3 wave movement.
Based on Astronacci© time analysis we analyze the width and angle of
correction. DJIA has been declined for 17 months and its equal with 17 monthly
bars, 17 monthly bars is equal with 74 weeks bar. In Astrology there are few
important counts of week numbers, and one of them is 78, pretty near with
total weekly correction bars in DJIA. Therefore the width of the correction was
valid. Then in 2007-2009 correction prices has overlapped the bottom of
October 2002 correction, indicated the decline is a countertrend wave or
entering major wave A correction. Until today it was moving 3 fractals wave
inside the wave A. In 2009 price goes up from March to December for 10 monthly
bars. It is equal with 41 weekly bars. We also note for the important count of
month rules. Astrology mentioned in 12 months cycle the prices may change
significantly. The 10 months rebound is very near with the 12 months astrology
cycle and the 41 weekly bars is equal with
45 weeks important count. We also found two price targets of this rebound
(correction) are around 10.500 or 11.600. Both of them are the meeting point
of 50% - 66% retracement with 100% - 162% alternate price projection. If the
price can close above 10.500 for at least 4 weeks, it will reach 11.600 –
12.000 before reversal. The conclusion of this analysis is the upside movement
from March to December is surely a wave B that consist of 3 fractals. This
rebound (correction) may extend until the next 2 months to reach the price
correction target.
The
Astronacci Momentum is one of our tools to determine when price meet
the time, you can read it as same as oscillator indicator. Astronacci
Momentum indicator is hung at an extreme overbought area, followed by
price which is near the end of rebound (correction) target, and the
end of time cycle (approaching 12 months cycle or 45 weeks cycle).
There will be no reversal before price meet time target. In this case,
the Astronacci Momentum has arrived at its destination before the
other. Therefore it should wait for price and time to meet before big
reversal in wave C starts.
Conclusion
For
now we have 3 factors that may influence price movement. First is a
time cycle. The rebound (correction) should be limited when it was
approaching 12 months cycle or 45 weeks cycle. Second, Price almost
reaches the end of correction target at retracement 50%-66% and
100%-162% alternate price projection target (We will discuss this
later). The last is Astronacci Momentum has arrived at final
destination target.
Why
we have to analyze DJIA index in high detail analysis? As we known DJIA
has a strong influence to all markets in all continents. The pattern
and price usually formed in same position. Therefore it will be a must
for us to know the leader destination.
After
learn from monthly chart now we go for smaller time frame, weekly
chart. In weekly chart we will examine the detail of March – December
2009 rebound to have a confirmation whether it was an impulsive or a
corrective wave. First of all we have to remember the primary
characteristic of impulsive wave. An impulsive wave should not overlap its
prior peak or bottom.
It will moves in good angle of climb, at least 45 degrees up or down
with no overlap. In DJIA weekly chart there are 3 obvious waves
movement only. We recognized it as ABC correction. Take a look at
chart below, the ABC upside with green line is a corrective wave of
major downtrend. The upside movement has been rose for 10 months / 42
weeks until 10.500 in December 2009. Get the end of wave c correction
value is very important to unload all investment in long or call
position in stocks and option.
There are 2 important zones for the end of wave c. Zone 1 is around 10.400 –
10.600 and zone 2 is around 11.600 – 12.000.
Zone 1 is typical target of wave C and zone 2 is maximum target of wave
C. Weekly oscillator tells the same direction. Upside will continue in
a few weeks. This upside movement should be used for exit not new buy.
Where
is the next destination after reach the end of wave c? The downside
from 14.000 to 6.460 formed in 5 corrective waves, and it was marked
as A. Based on corrective wave rules when wave A subdivide by 5 waves
it will form 5-3-5 Zig Zag correction. After price reaches the end of
C correction or B, it may decline for 5 waves to fulfill highest degree ABC
correction target. It may happened when weekly momentum makes 2-3 times
bearish momentum reversal.
We
predict the price reversal may happened around February – March 2010,
or Maximum on September 21th 2010. During February to September price
movement may moves in sideways to up.
THE END OF WAVE C TARGET
Correction target can make us really unhappy, but we have to prepare for the
worst part to survive
The phi 0.618 or an equal movement
Market
respects to geometry and mathematics. By using the golden ratio number
we can predict where is the exact end of a price movement. The end of
wave C correction can be predicted using Fibonacci ratio. The
Fibonacci and wave can never be separated. They must walk together. We
call them the harmony between pattern and price. The end of wave
usually meets the golden ratio. Now we will explain the end of wave C
and price target rules.
Wave C characteristic
Wave
C is a third movement of fractals, almost same with wave 3. Wave C more
than likely overlaps wave A bottom or top. Wave C is a shadow of A and
B, a reaction of prior 2 movements. Wave C minimum price target is 62%
alternate price projection of A from B, and typical target around 100%
alternate price projection. Wave C sometimes subdivided into 5 waves
and then extends to 162% alternate price projection. DJIA will enter
wave C soon and it will reach at least a minimum target. There
are 2 options to determine its target. The master is at the end of wave
B. If the end of wave B around 10.500-10.600 the minimum wave C target
will be 5.500 – 5.600 and typical target around 2.700 – 2.800. If the end of B
around 11.600 – 12.00 the minimum wave C target will be around 6.800 and
typical target around 4.000. This correction may takes minimum 16 months
straight after wave B target has reached.
THE
END OF C TARGET WILL BE REACHED IN JUNE 21th 2011 – DECEMBER 21th 2011
at Summer Solstice or Winter Solstice Astrological cycle.
Last Updated on Thursday, 04 February 2010 13:39
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