Monday, October 22, 2012

I’m an avid follower of Tom DeMark’s works. It ties in with all the Elliott Wave and Fibonacci analysis just nicely. DeMark was a Bloomberg staple so I was surprised to see him on CNBC’s Fast Money.   Whenever he speaks, I certainly listen and I try to determine if I am in the same ballpark as he is – counts wise. I was a bit adamant that a higher high in the SPX to about 1500 will come. DeMark says the cash SPX maybe has one more leg to 1478.03 – 1485.33 before a higher degree downturn. Using the chart above, the cash SPX daily count is a bit messy but I believe he is stating we are either going to finish a 13 sequential count sometime soon or complete a perfect 9 count which will equal or best the old high.  I had trouble embedding the video in WordPress so here is the link to his interview.

Here is an Elliott Wave interpretation of his interview. Given we did hit a lower low, we can rule out the triangle. In place of it, we have an expanding diagonal which doubles as a wave 1 or a wave. Wave 1 says the top is in and A wave says we get a retracement and that is all she wrote. The zig zag combo is still in play which will resolve to higher highs if it plays out as such.

Given the SPX came back above 1430, I’m still 10% allocated to the long side and taking short intra day trades for cash flow. SPX 1430 is still my bull/bear marker.

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