OK so it is the 13th, but at least it is not a Friday.
I have requested permission to use a rebuilt chart from 1790 to present and if I am given permission shall put it here! That is to show you the most complete industrial era picture I have come across. (Permission kindly granted 14Oct12 with thanks)
Start of Industrial Era – Circa 1727, Pivot 1 1836, Pivot 2 1843
Zooming into Dow from 1920
So let us just have a look at the final wave of the industrial Era that started some 300 years ago!
Lets zoom into the final wave detail from the October 11 low
Let me present my case that this is the top of Q-2
M 1 made a perfect wave turning on Q451ML and M-3-4-5MLH and made a simple correction to M2. God Bernanke was good with QE1 – because this is the ideal reaction point for this pivot off the October 2002 low,, 2007 high and 2009 low! Also it met my rules expecte minimum off the 200 high!
Had anyone even heard of him then or was he still with GS? Oh so I hear you all say this is a conspiracy!
M3 turned on the M-3-4-5 MLH but QE2 ran out of steam to cause a break out!
The expected complex correction to M4 overshot the M-3-4-5MLL – think of it as a car suspension – if your shock absorber’s are gone and you hit a bump it oscillates back to its neutral position. Or does it? Look back at the first chart and you will see it was supported on the Q012MLL which is from the 1932 low which to me is no surprise – time warped fractal waves – MAP Analysis! I am sure Bennie did not think of Operation twist way back then – was he even born?
M5 Turned just above Q345MLH and is a stones throw away from a perfect cycle of it sling fork to Q-1. Also it is at it next scale down fractal wave M123SP to 4 – again an almost perfect wave cycle!
So lets look at wave M5 off the 2011 low
W1 showed good momentum which is not surprising as M4 avershot!. M3 did not make the ML – slowing momentum so expect W5 at WL-1 where sure Q-2 turned! Note how good Bernanke and his European mates are. But hang on this must be a longer term conspiracy as the points used date back to 1932!
I could bore you with a repeat down to 5 more fractal waves scale but you all want to know where to from here?
Depends on what fractal wave scale interest you! Until 2032 shown in the first chart – ideal wave intersection if simple correction just below 2000’ish early to mid 2027. If this is an alternate complex correction just under 200 2032/3.That will be followed by a 300 year bull market.
I hear you say not possible! Every pivot I have shown is through the use of a rule based system – no subjectivity – and if you recall in MAP Analysis Part 3 – A cycle is a repeated sequence of events I believe the main driver of these cycles is our behavior and so unless we change our behavior we are doomed to do the same thing that has happened so far through out our recorded history during sovereign debt crisis- implode within 30 years of the peak – every empire. Go read your history! So short is the way to go – long term bearish!
However most of us like to play a bit in between because if we just went short then we will see our profits see saw and provided we do not fall into the classic traps of waves described in MAP Analysis Part 2 – Trading patterns Explained you will end up loosing most of your money!
The targets shown are thos for ideal waves. They will change as fracturing occurs, however they will always be working back to the bigger fractal wave scale.
W-1 Ideal wave target. Expect to find different fractal pivots on or near every line in between!
As reasonable fractal waves scale pivots develop I will post updates like before. Down 1 or 2 days then up rest of the week. Guess where I am expecting a sizable pivot. The reaction most likely will be a retest of the recent high on the 4H MLU and Wave 3 will be with us no later than the 25 Oct. Notice the lovely wave which reached a slight oversold status only to revert back into its channel – great job Ben and high speed traders or what ever people call them! Also does the sky blue fork not give a nice momentum indication. If you identify your pivots fast enough they are the best indicators I have ever come across but indicators is for another day!
Now come people. This is really against the bull market brainwashing so I would expect a few cages to be rattled. Leave your comments!
UPDATE 19 October 12
Did not quiet make ideal pivot, and has subsequently also made D-2. You can fool some of the people some of the time, most of the people most of the time but not all the people all of the time!!!
Nicely followed the channel of the 19 October update, making pivots on the lower and then upper rail. Then more energy was needed to break the remaining M234MLL (lower orange bold up sloping line) where it made H-1 and H-2 and then nicely followed the H channel which it will break to put in H-4 in the green triangle. This will be followed by a low as late as the end of December in the region of 12100 to 12200 depending on where it hits the purple rectangle shown.