Shall we call this capitulation weekend? All four major indices closed above their July/Aug tops on friday, in fact, they gapped above them and stayed there. We now have the NDX/NAZ/SPX all in uncharted, bull market territory. The one laggard is the DOW: it reached an EOD bull market high in March 2005, at 10,940.55, so it has a bit more work to do. Nonetheless, I am sure the perennial bears will state that the market has only returned to where it was three months ago, and thus it has accomplished nothing. However, those open minded investors will now have to concede that this has been a bull market all along.
It is unfortunate that the prophetic abilities of Elliott Wave analysis has all but been virtually disregarded, because of a handful of it's more popular analysts having surmised improper conclusions, in both the recent past and the present. It has been my experience that the Elliott Wave never fails to display the path of the stock market, only those reading the waves, so to say, fail in their interpretation.
LONG TERM: BULLISH.
The cyclical bull market that began in Oct 2002 continues. We are currently in the fifth and final primary wave, and it is extending, as demonstrated by the subdivisions of its waves labeled (1-2) and (i-ii) on the "bullmkt" charts. We continue to anticipate, at least, three significant intermediate term advances before this bull market is over. We are currently in the first one now!
The last time we had a Supercycle end, similar to the 2000 - 2002 decline in the Nasdaq, was 1929 -1932. During the subsequent bull market, 1932 -1937, the DOW retraced about 50% of its decline. Thus, I would expect the Nasdaq to accomplish something similar to that between 2002 - 2007. This would place the Nasdaq around 3000 before this bull market ends. Having only climbed from 1100 to 2200 during the past three years, you can see we still have a long way to go. We remain bullish.
INTERMEDIATE TERM: UPTREND.
The intermediate trend turned up on Oct 13th in the NAZ/NDX and a week later in the SPX/DOW. Since then the market has been impulsing upward in five wave sequences, typical bull market activity. It appears we have completed waves 1 and 2 and are currently in wave 3, with waves 4 and 5 to yet unfold. You can see the wave labeling in the "daily" charts of the various indices. My Market Momentum Indicator has just this week confirmed a momentum uptrend in the NAZ, which means we have a lot more to go on the upside before we get overbought, and this advance ends. Typically the MMI confirms a momentum uptrend when it rises 8% from it's lows, and an impending intermediate term top when it reaches 15%+. In this cycle, the MMI bottomed at about - 3.5%, and has only risen to 5.25% as of friday. We remain in an uptrend.
SHORT TERM: POSITIVE.
After a short term top, and an apparent completion of five waves up from the late Oct lows last fri/mon in the NAZ/NDX, we were anticipating a short term decline. The decline occurred, but only lasted one day, and the NAZ took off again to the upside extending the five wave advance into an extended nine wave structure. As of fridays close, we have completed waves i - iv, and waves 1 - 2 of wave v; i.e. six waves: see "15min" charts.
There is a possibility that wave 3 completed on friday, at least in the NDX. The NAZ/SPX and DOW appear to need a minimal new high before they complete wave 3. So we are close, if not at, another short term 1 - 2 day correction. After, this occurs, another advance should commence taking all four indices to new highs, and then possibly a more meaningful correction will occur. Will keep you posted.
After watching this uptrend for a month now, it's character has begun to reveal itself. This is a strong advance, much more so than either the Aug 2004, or the Apr 2005 advances. Thus, confirming that it is a third wave. I would expect, from here on out, even the short term moves will become somewhat more predictable. Lets see how that unfolds.
Best to your week, and stay bullish!
