UPDATE: 8:30 PM
We reached the target we discussed yesterday and this morning; now, just looking for the reversal. In the meantime, here’s a nice view of the 2008 vs 2011 similarities. Pretty darned similar, when you see them up close like this.
The principal differences are the depth of the plunge below the channel after the “big drop” and the slope of the recovery.
The diagonal lines are 1-std deviation regression channel and the moving averages are: 10 (thin red), 20 (pink), 50 (purple) and 200 (thick red.)
The jury’s still out on whether corrective wave 2 is done or not. But, my best guess is it either completed at 1292 on Oct 27 or will complete at 1307 around the first week of December. Maybe some bright young EW expert will take a crack at the 2008 wave count and impress us with the similarities, if any…
ORIGINAL POST: 2:00 PM
The Gartley and Butterfly patterns we were watching yesterday appear to be playing out as anticipated. The larger Gartley pattern (in yellow) reversed at the .618 last Thursday and is potentially shooting for the .786 at 1276.
To get there, it’ll mean the smaller Butterfly pattern will have to approach its 1.618 extension (1278). So far, it tagged its 1.272 at 1269 and is gathering momentum for another few points rise. If that next leg fails to materialize, we’ve still got a nice little double top and a completed Butterfly that should smack it down to 1220.
Either way, I’m expecting a strong reversal to at least 1238. As always, stops are a very good idea in a market like this.