Monday, December 8, 2008
What does the Bradley date, 12/14/08 refer to?
This is a time where we are approaching an important Bradley date. The question is, does this represent the end of the small rally we are currently seeing? Or is it just a late indication of the bottom just put in? I vote for the former so far, as the current bottom at 11/21/08 is quite far, time wise, from the 12/14/08 date given by the Bradley model. That said I tend to think the rally might stretch somewhat past that December date. One would expect a .382 retrace of at least wave 3 of the recent decline (see chart below with Elliott wave counts). It's going to have to really hook if it's going to do that and meet those price targets in that period of time...
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4 comments:
You might be misreading the Bradley Siderograph now and for July '09.
Shankar,
That is possible, if the Elliot count is wrong, and we are not doing a wave 4 here, if it's basically something else.
I only correlate with Bradley dates on general time periods for trend changes. Bradley is not directional, it doesn't give tops and bottoms.
What I expect to see, is weakness in the dollar from now through roughly Christmas, while the current rally continues. Then I expect more liquidation in equities along with a resumption in strength in the dollar as the liquidation of dollar backed assets produces more cash. (The deleveraging is far from over) That process could take quite a few more months, and so I see a bottom midyear 2009 as reasonable.
Regards,
Mark L.
Hi Mark
Question as I was thinking that more cash in $ would produce lower $--can you explain as Im maybe missing something
THX
Hi Lag,
I know that seems paradoxical, but it seems to be happen fairly often. If you go to Stockcharts and plot the $SPX vs the dollar index on the same chart, more recently, market bottoms correlate slightly better with strong moments in the dollar and visa versa.
Probably, the mechanism, is that selloffs in equities, relate to bond rallies (flight to quality). Strength in Bonds translates to slightly higher interest rates, and also to dollar strength, in general.
So I'm making a case that collapsing equities creates upward pressure on the dollar. Because there are so many other factors driving the dollar, this has to be considered in context. But with the truly epochal liquidation we have seen over the last few months, only comparable to the 1929 crash for severity, here you see a dollar rally that is both quite abrupt and powerful.
Regards,
Mark L.
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