I'm finally beginning to get the picture. The movement which started in early August is a "flat" in the traditional or in Elliott wave terminology for corrections. The 4th part or wave of the third section of the flat began either at the October 6th or October 13th low. It may have ended on the 19th and the 5th and final section of the flat may have ended on the 20th. Or the 4th part may have ended at today's high and the market will dip down again to the lows for Hallowe'en.
The bigger question is what will this three section flat have corrected? Did it correct the advance from the April low(s)? Its duration and size would be appropriate for an advance of that size and duration.
Did this flat from the August high instead correct the whole larger advance from August 2004? It doesn't seem quite long enough in time although it has retraced about 3/8 of that August to August move in about 1/4 of the time.
This flat cannot be considered to have corrected the whole move up from October 2002 to August 2005. Therefore one must look as honestly and objectively as one can at one's feelings about the state of the market at this time. If you go down the page and look at the article "Some 'Funnymentals'", you see that I have begun to get a little defensive or looking for the exits. I have been bullish most of the time since early 2003.
The SPX has barely gone up at all since January 2004 to now, although many other indices, stocks, and funds have done extremely well indeed. The economy recovered quite well overall, and corporate profits have soared. The Lagging Economic Indicators peaked this summer, and some people regard this as being "as good as it gets" for a normal cycle. Clearly it was timely for the markets to begin discounting a slowdown in advance of the actual event, and this may be what is happening.
If this is the case, and if the comments above about what the markets have been correcting have merit, there is almost certainly more time and "size" to correct. That in turn suggests that what we have seen to date is the first section itself of a larger three section correction either of the 2004-2005 rise or the 2002-2005 rise. There will be plenty of time to get into details on those issues, but if we have completed a first section, or are about to, then the next section is going to be upwards. It could even go to new highs above those of August.
Based upon sentiment and other factors, some of which I've mentioned or hinted at, I think there is a good chance of going all the way back up or more into December. The forest (longer term) is very important, but we must not forget to look at the trees (shorter term) first.
I'll put up an illustrative chart later. This is just to think about while looking at your own chart.
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