Friday, October 9, 2009
Aside from the last push today, mounted atop a diminishing set of predominantly sideways, sooorrrt of triangular 4th waves, pushing 30 points higher than my forecast 9,832 top, I couldn't help but notice something mildly interesting. As the Dow hovered right where an EW'er might forecast a top for what seemed like a long time, the President spoke. The speech was fairly anti-business no matter what your politics, and as he sat down, the Dow experienced a bit of a surge to above my expected high. Hmmm.
There are several ways to look at this. I'll propose three.
(1) Meaningless. Noise. Being too close to the minute by minute ticker to mean anything at all. Let's group just plain being wrong into this category too since there is nothing I can do about it.
(2) Market manipulation, a quick little dump of taxpayer money to ensure the President's kinda harsh agenda doesn't appear rebuked by the business community, or to mitigate the effects of a rebuke (see, I get the gov, I can even say, mitigate risk and branch on effects-based conditions). The timing of the speech itself, late Friday, would tend to support that view. After all, why, it is a matter of national security that the markets follow the President's lead, right? What's a few million tax-bucks to save the world?
(3) What I will call a shotgun blast, that is, some non-market influence that interrupts birds instinctively flying south. It scatters them momentarily, then, they line back up, and fly south.
Don't get me wrong, the entire foundation of EWs is that market movement makes the news happen, not vice versa. But one has to account for the possibility of something affecting markets that is not part of the cycle: an asteroid strike, whatever. Or at least these kinds of events have such a long wavelength or low sampling rate, that we can't estimate nature's plan or pattern.
So let's go backwards since (1) is uninteresting to me.
(3) and (2) can be related. And it is the relationship that interests me. If one assumes the government or campaign operations team is not particularly market savvy, the two tie together. But what if they are a more regular part of the marketplace? The wave principle should account for all the usual influences.
If you look at the ABC pattern since the 6,500 bottom and compare it to the smaller degree ending formations, and even within the ending formations of today's pattern, each lower degree reach for a top slightly exceeds the last larger degree C marker. The USD/EUR is doing it too as it reaches for the end of the first 1-2 Wave in a very large C. Is there some identifiable psychology that could drive this?
Those who follow waves know that we are constantly bombarded by frighteningly predictable daily interactions, at the personal level. Most people have no idea they executing a well defined program as they bounce through life's decisions. What do we see happening around us?
We see worry. And each tier of worry takes on a fractal flavor:
* We have "investors" (my favorite Orwellian market speak), that is, wild capital gains speculators worried that they won't recover losses. They are worried enough to apply leverage to push a C wave.
* We have short sellers worried while trying to call the turn. They sell to push up prices as they enter, with implied support at the higher ask price. They may buy if they think they misjudged.
* We have a Fed Chairman worried enough to make carefully timed remarks that create a tip on the turning point. He is worried that he has run out of ammo and must make careful use of words. He also popped the C wave a little higher than a previous mark.
* We have a President worried that he won't be able to control the markets and might absorb blame. His words/actions popped a smaller degree C a bit higher than previous.
So there is some pattern, even if it may not be completely clear to market participants. Ascending, somewhat technical but nevertheless predictable pushes at the end of each completing C fractal.
Does any of this matter in the big picture? No. Nothing changes the macro outlook, waves always form as differently sized groups harmonize. But, I must admit it does make me wonder if we won't see a slightly higher C peak than the 9,918 currently in place. Perhaps it will be the result of some carefully timed "news" from some faceless agency hellbent on exploiting an obvious squeeze opportunity. After all, a neat 1.5 Fibonacci of C over A would be more like 9,950.
It is always interesting to watch the rocks go by as Mother Nature crests the mountain.
Posted by fdralloveragain at 11:44 AM