Monday, March 16, 2009

Fun with numbers...

Well we hit the target a little early again...I think thats about it. Now its just time to sit on the position and see what happens. Minimum retrace of 38.2% takes us down to 74.11, 50% to 72.91, and 61.8% to 71.72. Wave 2's tend to trace 62.8%.

Ok...lets start counting some chickens...

The equation for a typical complete wave structure is:

1x -.618x + 1.618x -.382(1.618x) + 1x = complete wave move

Assuming that wave 2 retraces .618 and wave 3 is a 1.618 expansion of wave 1 and that wave 5 is approximately the same as wave 1. If we assume wave 5 will be equal to wave 1 (
94.45-80.18 = 14.27), then the above reduces down to:

2.382x = 14.27

So if we assume that this wave 5 will retrace the same amount as wave 1 then we end up with the first wave of the 5 wave structure be a length of 6. The high was 77.96, so wave 1 down should make it to 71.96...thats pretty close to the retrace we are looking for above (71.72). This also means that the final wave 5 low will be 77.96-14.27 = 63.69. Also for those good with numbers...wave 3 of 5 should end at 77.96 right there at the previous low.

Ok...lets say 5 gets a bit extended and is equal to wave 3 (87.7-67.1), then

2.382x = 20.6

Now wave 1 of 5 down will equal 69.31, and the final wave 5 of 5 target will be 57.36.

So we have some idea of what might transpire in IDEAL Elliot Wave terms. Wave 1 should end somewhere between 71.96 and 69.31.

Ok...done counting chickens...lets see what happens.

P.S. This is assuming we have started wave 5 of 5 of primary 1...heck we could be in primary 2 (per kenny)...or still in wave 4 of 5 of primary 1...But heck I have nothing else to do noticed the inverted hammer on the daily right? :)

P.P.S. Lets continue this little numbers game...and look specifically at wave 1 of 5 of 5 which should be 6 long from above...if we say it will be a 5 wave structure, then

2.382 x =6
x= 2.52

subtract that from the high and we get 75.44 for the end of wave 1...or if you believe in the extended version then the end of wave 1 will be 74.33...So what does that tell me?
It tells me we might get a small gap down tomorrow somewhere between 74.33 and 75.44...then a retrace up and consolidation for wave 2 (76.57 - 76.94)...Then wave 3 down.

Please take all this with a grain of salt...I may be right but I maybe wrong...I am just throwing this out there...I am not trading it :) My short position has been built over the last 3 trading days, I am just going to sit and see what happens now.