Wednesday, October 19, 2016

[DB] update

In the backlink I provided the model below which essentially said small dip possibly but look for higher highs afterward.

In the current actual, that is what we got, but because of the wave shape I am changing my model per below.  Please keep ion mind that my call for higher prices happened at the black arrow below.  So this model change is not a result of failure or money loss.  It is simply a fact that the herd has free will which is why a high level model must be reviewed often.  The rising expanding wedge has become the most likely candidate for being the peak of the first motive wave off the bottom.  If this model is to continue to play out correctly I would expect a fairly rapid breakdown of the top rail of that horizontal triangle that likely peaked today.  If that doesn't happen then I would have to begin reconsidering other possible counts here.  But in any case the pullback should be to about as shown.

Today I got an email from market analyst Harry Dent.  Dent is very smart and he has a capable team from what I have seen, but he thinks that he knows the fundamentals that drive market moves.  From the fact that you never hear him reference Elliott waves you can be sure that he doesn't have a clue about short or medium term market direction.

Long term I think he will be right - we will see a deflationary crash followed then by a global currency event (inflation/rising interest rates/fed loses control of the bond market).  But short term, I would ignore Harry, at least about DB shares, and then look to buy the bottom of C of 2 which should occur after another 5 waves down transpire.  Not because of fundamentals.  Not because some rich, high powered pundit said so, but only because the Natural Law of Elliott waves indicate that this is most likely what is going to happen.

If I were listening to Dent exclusively then I would not be trading these markets out of fear.  The problem with this is that there are no trigger events associated with it, only emotional statements like "going down in flames".  Well, markets can behave what appear to be irrationally (at least to a person who has his mind made up about the future...) for longer than those trading against them can remain solvent.

Dent could turn out to be right here.  But I will know it almost immediately because if we get anything except 5 red waves down as shown above then I will either not buy in if I was adding new money or I would sell if I was already holding.

BTW, a higher high than black 5 says that wave 2/B is likely already in and wave 3/C is playing out.

1 comment:

Redondo Beach dude said...

Hi Cap'n,
Harry's singing the same song...
Would be very interested in your current analysis.
Thanks in advance

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