Subject: 12-30 TT
Sunday, December 30, 2007
How the Dow
Correlates with Financials
Below is a revised hourly chart
for the Dow going back to the August lows.
What has changed is that the diagonal on the far left which I had labeled
an ending diagonal in error, is in fact a Diagonal II, which begins a long
move. Just eye-balling it you can see there are 5 clear waves in the diagonal
II within the diagonal II. Its retracement minimum was completed by wave
(b). Once again we are forming the exact
pattern on a bigger scale and can expect wave 3
to exhibit 5 waves. Once we reach wave 3, we
must come back down at least to 12,950, where
the Diag II began. If we take the previous as our template you see that
wave 4 retraced quite a bit more than the
minimum. What this all means is that on
Monday we completed the slight transitional retracement and begin iii of wave 3. Three
Diagonal II’s all serve to compound the
force of the final Spike.
If we step back a bit on the
daily chart we see the large Diagonal triangle which began in March. It’s an
extension of the original diagonal triangle marked by the market turn in 2003. That’s why this is a bear market rally,
since it subdivides into 3’s rather than 5’s.
Here’s how this correlates with
the Financials which have started down in 5 waves. As you can see the Dow will likely be peaking
in the Spike at about the time we reach the apex of wave
(2) in the Financials. While the index here has a likely upside of 23%, subscribers
receive a short list of individual financial stocks with considerably higher
upsides…. Wave 2 is the correction of wave 1 down, and logically cannot end below
the move it’s intended to correct. As you see in the chart below the 1.618 (a) = 580 from the low of (b).
We have yet another market sector
that should outperform even the financials, and likewise, a short list of the
very best…but you’ll have to subscribe for those. We can’t give everything
away, otherwise who would pay?
Happy New Year!
Eduardo Mirahyes
“Opportunistically timed investments
that maximize wealth”