The above graph shows the B and C waves of the recent corrective Primary wave (which I deliberately don't identify). Stepping out at this scale shows us a few things we might have lost in the Micro and Submicro waves of intraday charts.
The upper thick black line is, of course, the 1370.58 invalidation of the entire Primary count. The thick red line is the trendline from 1370 (May 2) to 1356 (July 7). This line is in the 1320s for the rest of this month, and I think it would provide strong resistance should the market manage to make it there.
The thick pink line is the trendline from 1356 (July 7) through 1347 (late July), which comes awfully close to marking the 1292 high, and which, notably, has not been retested since 1292: all the action since then has been contained beneath it. It is entirely possible that the line may in fact not breach at all--Minuette (c) of [y] may truncate or barely surpass Minuette (a), making [y] truncate as well, which would not be out of character if Minor 3 is imminent.
For ease of exposition I have offered a "road map" for the rest of Intermediate (1) (assuming, of course, that the October low was only Minor 1 of (1)). In order to make the graph visible, the slopes are shallower than they will probably be. It is entirely possible that more Zweig breadth thrusts will be triggered during Intermediate (2) if it acts as a typical second wave (sharp and not particularly long-lasting); Intermediate (2) will probably be associated with some sort of excuse - likely an announcement and/or inception of QE3.
The rising black line from the Intermediate (B) low to the Minor 1 of (1) low is a logical termination point for Intermediate (2) (and before that, Minute [ii] of Minor 3), but its ability to get there may depend on how far back up the market has to travel. Although given the market's recent penchant for steep retracements, it should not be ruled out.
How can the intermediate wave 2 be associated with QE3? QE3 would be a massive continuation pattern, not just a slight rally that would give back all of its previous gains.
ReplyDeletehttp://thecompletecoveragereport.blogspot.com/
True, but if we consider the start of Intermediate (1) to be May 2 and that we are *just now* approaching the end of Minor 2, seven months later, Intermediate (2) could easily last a half-year or so with Minor C of (2) lasting a quarter or so.
ReplyDeleteThe perception might be that "we need to do something RIGHT NOW or everything will fall off a cliff". QE3 could be a quicker injection, much like QE1 was, rather than QE2 which dragged out over a longer period of time.
The idea is also that QE3 might *fail*, and again it's not necessarily a guarantee that we have one to begin with, let alone that it has to be associated with Int. (2).