The Monthly chart is showing us a possible ended five wave rally since the low at 3.19 in 1997 to the high at 364.90 in early 2011. A rally of 361.71 points, that took 164 months (look how theres numbers gets very close to the Fibo-numbers 3.618 and 1.618) One should also note, that the final rally from the bottom of wave
4 from the channel support-line went to the channel mid-line, where it did stall. Finally on the long time chart it worth to notice, that wave
3 extended and was over 423.6 time the length of wave
1, while wave
5 became almost exactly 1.618 times longer than wave
3. All add confidence to a possible top or to a ongoing topping process.
Looking at wave
5 going from a low at 78.20 to the high of 364.90. It too was a nice looking five wave rally. The break below the wave 2-4 channel support could be a warning, that the entire rally from 3.19 is over, but we need some more evidence, therefore zooming in even closer at the last part of the rally brings to the last chart below.
As can be seen we have massive negative divergence on the MACD indicator, we have broken below the wave 2-4 supportline and we have a possible Shoulder/Head/Shoulder top. What we need is a break below support at 326, which will trigger the S/H/S top, but will at the samme time be the first confirmation that the above count is correct.
The Monthly chart is showing us a possible ended five wave rally since the low at 3.19 in 1997 to the high at 364.90 in early 2011. A rally of 361.71 points, that took 164 months (look how theres numbers gets very close to the Fibo-numbers 3.618 and 1.618) One should also note, that the final rally from the bottom of wave 4 from the channel support-line went to the channel mid-line, where it did stall. Finally on the long time chart it worth to notice, that wave 3 extended and was over 423.6 time the length of wave 1, while wave 5 became almost exactly 1.618 times longer than wave 3. All add confidence to a possible top or to a ongoing topping process. 
Looking at wave 5 going from a low at 78.20 to the high of 364.90. It too was a nice looking five wave rally. The break below the wave 2-4 channel support could be a warning, that the entire rally from 3.19 is over, but we need some more evidence, therefore zooming in even closer at the last part of the rally brings to the last chart below. 
As can be seen we have massive negative divergence on the MACD indicator, we have broken below the wave 2-4 supportline and we have a possible Shoulder/Head/Shoulder top. What we need is a break below support at 326, which will trigger the S/H/S top, but will at the samme time be the first confirmation that the above count is correct.
I wonder whether there will be a selloff in equity markets as the Fed's QE2 expires in early June. If this "darling" rolls over ahead of many other crap stocks, that does bode ill for indices
ReplyDeleteHi FX Trader
ReplyDeleteI totally agree with you. If Apple rolls over before the rest of the crowed we know something is terrible wrong. Apple is one of the leaders, which is why we should keep an eye on this one.
One should also remember that when QE1 ended the indices rolled ahead of the termination of the program, so I'm not sure that we will get to June, before the equity markets begin to roll over, but from a timing point of view it would fit the picture nicely I must admit.
Regards
EWS
Thank you EWS.
ReplyDeleteI should have been clearer on the timing of tops but yes i agree with you that we will not get to June. I wonder whether we have started topping process already.