But if this count is correct then the big rally is still some weeks away. Wave 3 should end next week and then we should have Wave 4 up. That should last at least a couple of weeks (Wave 2 up lasted 3 weeks). Then we would have the final Wave 5 taking us to further new lows to complete the pattern and make everyone think the sky is falling and then……. the big rally we’ve all been waiting for! Maybe in April? Oh well, enough crystal ball gazing for now.

As for Prechter being on CNBC, that can only be viewed as a contrarian indicator that the bottom isn’t too far away.

Good observation – you’ll notice I’m sidestepping this question in the public blog. I’m not convinced either way and am open to both possibilities – I am not comfortable yet to label a public chart one way or the other… preferring instead to focus on this 5th wave’s completing.

What’s important to me from a trading standpoint in my accounts is that either way, you’re looking at a big rally up very soon. My thinking is that when we get there, I’ll have more information and can make a decision at that point as to which count is more likely. It’s almost like cheating to buy time. Either count has us going up so why not try to capture some of that gain? I think it will last until mid-2009 or later which is plenty of time to figure up if that is Wave 1 up (meaning we finished the Bear Market for good) or Wave 4 Up (meaning Wave 5 down is yet to come).

And guess what, both counts will align again When it is Wave 2 Down… or Wave 5 Back down.

The tipping point will be if the Wave AFTER the big up wave makes a new low or not. IF it makes a new low, then we’re in Wave 5. If it finds support and hooks back up, then we just saw Wave 1 of a new bull market and might be in a powerful 3rd Wave up at that time.

But we won’t know for sure until 2010 perhaps.

I’m not paid for an accurate Elliott Forecast… I’m paid if I’m trading profitably. So, as long as the counts are aligned, as a short-term trader, I don’t care which one plays out or which one is correct as long as I am able to make money and not get whipsawed around too much.

Pursuant to your earlier discussion of two separate counts. Is the 5 down you’re counting the completion down from peak S&P 1576 on Oct 2007? Or are you counting it as fractal 5 of 3 down, that 3 down starting from S&P 1440 in May 2008?

Personally — and I know bulls will hate me for saying this — my intuition pushes me towards the latter count, and the November lows were 3 of 3 down, and now we’re completing 5 of 3 down. Which would mean we are in for a months-long wave 4 up yet and then even a 5 down after that to rather scary lows.

Hard for me to explain exactly why I feel like this is a better count, it’s a lot of disparate factors put together and really has more to do with long-term forecasting than just the shape of the graph. There is a lot of uncertainty out there, nobody knows how much bleeding is left to come in the credit unwind, and as you said yourself, half the mainstream is still calling bottoms over and over again, which feels like wave 3 psychology to me rather than the end of a bear market. If we were done you’d think bulls would be universally ridiculed right now, not constantly competing for airspace.

More: top to bottom in dot-com was ~3 years and we’re only 1.5 years into this slide. By the time we hit the bottom of the markets in dot-com, GDP growth was approaching zero again, not still falling faster every estimate. 3/10 momentum in monthlies is at a 10-year low, and still falling more negative. I could go on.

Anyway, just wondering what you think. I would agree that soon we’re going to hit some kind of bottom that lasts for at least several more months, it just doesn’t feel like THE bottom.

Kevin

We don’t think it could happen and is a very low possibility, but the Dollar could be worthless 10 or so years from now. ETFs might surge in value but the dollars would plunge if the worst scenario happened. The Dow Jones might reach 25,000 or 50,000 or even 100,000 25 years from now but that won’t mean much if the dollar is worthless (due to inflation or whatever other reason), which contributed to the index price inflation (quoted in dollars).

If Market isn’t higher then Metals will be only safe place. Silver Coins and Gold along with Oil & Nat. Gas.

You will have to be holding actual items not ETF’s of the stuff.

“Corey, if people stop buying chocolate, then something is very, very wrong with the economy.”

It was said sarcastically, but his company is now perhaps inches from bankruptcy as people have stopped buying chocolate and everything gourmet/luxurious as something really is wrong with the economy. Lehman and Bear Stearns no longer exist – who saw that coming in 2005? 2006? 2007? So much has gone so wrong.

25 years from now, I think everyone’s in consensus that the stock market will be higher so the risk is might be worth it.

But just like he said and you said, if the market is not higher 25 years from now than it is today, chances are something seriously, seriously went wrong along the way and I dare not think of what may have resulted in that outcome.

I’m 40 with 200K plus in 401K currently. I will not touch 401K money for another 25 years. My job is ok currently however personal income will drop in 2009 but still making more money than bills. I own both my cars and have 61% of my home paid off currently.

Really looking to get positioned for nice gain using this 401K cash. It could really help me later on in life if I can keep even or even get ahead using 401K even in this Bear Market. If this market isn’t higher in 20 years from today’s levels then IMHO There will be no Stock Market period.

Thoughts?

You’ve held up much better probably than 90% of investors during this bear market so that is an excellent accomplishment.

I can’t give you any specific advice as I don’t know your situation but as Bob Prechter and many others using Elliott Wave are saying – we’re probably due for some sort of (perhaps big) counter-rally back up, but from exactly which price it will start, there is no consensus. Where it will end? No consensus.

But however you label it, odds do seem to favor some sort of correction up – perhaps even a big ABC – is the most likely swing(s) – but there could still be one or two more down-waves to go, particularly if we’re in 4 of 5… that means we have one more down wave to go before the ABC comes.

If we’re still in fractal 3 at the moment, then we’ll expect a smaller ABC 4 (that won’t go above 800) before a larger 5 comes to finish out the larger 5 wave pattern.

We’re very near the end, but we either have 1 swing or 2 more downswings to go in my humble opinion. Both could be small, but we need them to complete the Elliott ‘form’ or structure.