Elliottwaver Makes Similar 2007 2011 Comparison

This Elliottwave site makes a comparison between the 2007 and 2011 time frame to argue possibly that we are at a similar juncture for a break down as was the case in 2007.

Recently I have also done a 2007 2011 comparison with respect to the head and shoulders bottoming formations that were occurring near market highs.  The comparison is compelling and the elliottwave argument is also compelling.

Having said that I have to admit that the recent talk by politicians and TV network pundits on how the stock market will crash this Monday if there is no debt deal is quite concerning from a contrarian standpoint.  Suddenly the politicians and the TV talking heads are expert stock traders and can predict a market collapse this Monday?

Something does not click here.  From a contrarian standpoint I have to say that all this ‘market will dive’ talk unless there is a huge deal by end of this weekend is concerning.

The typical pattern in the current market has been that something large was feared, but then the government came through and everyone sighed relief and the market shot up 300 points in a day and was off to the races. 

At this time I cannot entirely rule out the upside bullish scenario. 

I am looking for a confirmation of weakness from the current price level to see if the H&S pattern on the sp500 can complete and continue to turn the longer term indicators into more confirmed bearish territory.

The other observation I would like to make is that in both the 2007 and 2011 periods there can be constructed a very minor sloped arc over the recent peaks which seems to serve as an early resistance point.  Of course with a huge upside rally this week, the minor arc resistance would be invalidated almost immediately.  It would not take much or a rally to bust it.

sp500arc2007

sp500arc2011

Posted in Long Term Charts, Long Term Trading
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9 comments on “Elliottwaver Makes Similar 2007 2011 Comparison
  1. ed says:

    2 hours before Asian markets open. We may or not have a head fake to the down side but I don’t know of any crash that has been preannounced to the day, especially by government types.

    When and if a crash comes it will be out of left field with no real warning

  2. Geoff says:

    Ed – – totally but 100% agree with you, at most may be setting up for head fake down only to reverse course “miraculously” and soar upward. i have read several commentators who expect market to go up for a couple months or so and than down hard.

  3. RMT says:

    Yeah too many people are talking market crash, so its highly unlikely that market makers will let this market fall significantly. If no deal by Monday, probably a gap down to get amateurs to short, and then a big reversal after that. Who knows, it’s a guessing game now and it’s not smart to trade off this kind of news. The best deal in my opinion is to raise the debt ceiling with significant cuts in spending with an ultimate goal to have a balanced budget. Lets see what happens. I’ll be interested in seeing what the dollar does. Whenever there’s a crisis, the dollar usually spikes but this time the crisis is in our own backyard. I just hope nothing crazy happens with the dollar.

  4. JR says:

    I see a lot of smoke and mirrors here. Unfortunately, things never are what they appear to be.
    Here is what is really strange, if we believe the hype, the Republicans are holding a gun to their head and saying if you don’t do what I say, I am going to blow my brains out(destroy the economy). NOT!!
    That said, lets look at it as theater. After the performance, Obama makes major concessions (something he was hired to do by the oligarchy). The congress all of whom need major money from the oligarchy for their election campaigns, go along with the concessions, which will be very little tax increases and major reductions albeit over the next ten years, in the social welfare entitlement programs.
    The Democrats will pretend to cry and moan and say “Oh my what could we do, the Republicans are so mean.”
    The oligarchy wins and the middle class losses. So what is new.
    Change we can believe in!
    And OH Yeah, the market chugs upward!
    Finally,
    All will be revealed in the fullness of time.
    If we are smart enough to see what is behind the curtain.

  5. JR says:

    If you really want to think Machiavelli devious, no resolution on Sunday. Let the foreign markets tube. Enter the politician’s best friends on Wall Street, like the hedge funds. Think Cantor’s $300 a bottle French Wine.
    Anyway, the Wall Street boys cherry pick the foreign exchange. Timing is everything, maybe even no announcement on the debt by the time the US Markets open. Whoops off the cliff, then miraculously, around 11:00 AM NY time, a compromise (?) is reached and the US market soars.
    Miraculously, the charts were right and also wrong. The algorithm hedge funds boys and the Wall Street insiders make another fortune and in the famous movie “Never on Sunday”, the rich all go to the sea shore.

  6. Tom says:

    I hate to say it, but I think there is a chance that ‘this time it will be different’. What I mean is that yes, the pundits and politician have been curiously become experts in market crashes, but sometimes mainstream predictions like that actually do turn out to be true, although not that often.

    If the price high of last Thursday was the final high for 2011 then still I think we are still in the somewhat early phase of the decline. It takes time to weaken the foundation enough before we can see rapid down price movement.

    However from a psych point of view, the fact that so many mainstream pundits are suddenly experts about the next market direction is concerning in a different sense. The mainstream remembers clearly what happened in 2008. So now they are wiser to market declines and bad economy etc. So their ability to pull the sell trigger may happen much faster this time around? That would seem to be consistent with this being a wave 3 down in elliott wave terms.

    I don’t know if this is a wave 3 down or not, but my understanding of wave 3 downs is that sometimes they can begin with crashes or quite fast price movement.

    This is consistent with my observation on some of the monthly charts that we could be in for the worst price action in October.

    A nagging concern for the bearish case however is that a good portion of big cap stocks seem to be at or close to record highs, AAPL etc. including the QQQ.

  7. Geoff says:

    well, it will be interesting to see what market call you make. i think you are currently on NEUTRAL.

  8. Tom says:

    Well I will let the CAT out of the bag right now.. I know you can’t wait 🙂

    I will switch to BOT Short on a confirmed MACD histogram sell signal (on the daily). So that means that we will need a follow on close under today’s price low.

    I suspect today though that we will see a large intra day reversal to the upside.. gap down opening and then fill the gap on some Harry Reid new proposal… blah blah..

    But it will be very interesting to see what the actual close is today.

  9. ed says:

    Double top on DJI could play out

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