A View at the Brink ~ The Risk Averse Alert

Friday, April 09, 2010

A View at the Brink

Following is a view suggesting the bear market that began in October 2007 might resume as soon as this coming week...

NYSE 5-min

The fifth wave nearing its end is seen as possibly completing five waves up from early-February...


And, as you know, five waves up from early-February are seen as likely completing five larger waves up from March '09 bottom.

Duly note relative strength's fade at successive new peaks set this week. My suggested Elliott wave count is substantiated by this indication of increasing weakness.


Another feather in the cap supporting my wave count's likelihood is momentum's behavior during the unfolding of wave 5 of C since early-February ... first, by its keeping to its long-standing divergence while [all] major indexes continued pressing higher ... and now by its flattening much like occurred during the formation of wave v of 1 of C (late-May, early-June 2009).

Further demonstration of growing weakness [in the market's advance since early-February bottom] can be seen everywhere under the covers. This condition likewise supports the Elliott wave view presented above.


Once top comes, the market's initial move lower could lop off 20-25% ... that is if the expected reversal of fortunes continues the relative similarity to the market's counter-trend rally from March - May 2008 (and thereafter), such as has been the case since March '09 bottom.

Fast Money
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