Just a coincidence that Merrill Lynch and Washington Mutual announced big earnings downgrades moments before the employment data? 3Q07 earnings season is shaping up to be an interesting one.
Well the actual write downs were more like $5 billion, more than anyone expected. And guess what: the share price went up 2.5%. You gotta laugh...
I hardly think this little blip we have just had can be called a severe market correction.
Look at the real correction in 2000, then look at what we have just had, you can hardly see it on the chart it is that minor.
Not to say we won't get the big correction but we certainly haven't had one yet.
Just a coincidence that Merrill Lynch and Washington Mutual announced big earnings downgrades moments before the employment data? 3Q07 earnings season is shaping up to be an interesting one.
But herein lies the problem.Are the earning downgrades true?
When these large financial institutions lose a lot of cash,the Fed desists from requiring that the losses be be marked to market value.
Sassa,
Indeed the revision to August payrolls was welcomed by the market. It just shows how much statistical noise there is in the numbers and that you need to pay more attention to the revisions rather than the current month's data.
However I wouldn't say these are great numbers. If you consider that the increase in payrolls has averaged 97,000 per month over the past three months and that the US economy needs to add between 150,000 - 200,000 jobs per month just to keep up with new entrants into the labour force, then these numbers are not very good at all.
The unemployment rate rose 0.1% and it will continue to rise if the economy can only produce 100,000 new jobs a month and economics 101 tells us that rising unemployment is often a precursor to recession. That said, current employment numbers a long way from recessionary levels at the moment.
The NAHB housing index is usually a pretty good leading indicator of payrolls and judging by the current trend the future doesn't look good. Source: http://contraryinvestor.com/.
This is my take on the current EW count of the DJI (Weekly), Have tried to number this chart as objectively as possible adhering to the rules and guidelines of the EWT as much as I can. There are other possibilities....
Cheers
Wavepicker, after the completion of the wave 5, where is this in a larger degree count ?
Are you expecting an a,b,c correction in relation to the count on the chart, then another impulse higher or a larger degree correction.
Just interested in your thoughts to compare with others and my own count.
Hi Porper, this is the way I am looking at things. This great bull market began after 1976 int he DJIA. This long term wave count since 1976 counts best as an almost completd 5 wave structure(on log chart-sorry don't have a chart handy)
There are quite a few alternates to the chart with both bullish and bearish implications. The best alternate that comes to mind is that within red
wave 5, green wave 4 is incomplete and blue wave b is about to complete and green wave is thus more of a sideways complex correction with green wave 5 of red wave to come later.
There is a good chance we may have hit an important cycle point on Friday or will do so in the next few days. This might be the start of a major correction that will be deep and last till mid November OR it could be a only minor (11-14 days) and then the market continues bullishly until early next year where there are some very long term cycles overlapping. But those same long terms cycles could even take effect from now.
I am short the DJIA and XJO as of last week, and will see where it takes me. If I get stopped then then the market is more bullish than I estimated and I wll tarde to the long side till next year.
Cheers
Thanks for your thoughts Porper,Thanks Wavepicker, here is a count in log of the Dow since 1946, with a few basic time projections thrown in (still learning) anyones thoughts appreciated.
My thoughts :Wave 4 is too short in time to be a completed wave.It must be longer in time than any corrective wave of 1 less degree, which it isn't.
If wave 4 isn't completed then wave c of 4 could go on 'till the next time projection which is 2014 !!. That means a bear market from anytime soon 'till 2014.
If wave 4 is complete then maybe we will have a bull market up 'till then.
Also note the next time projections which are in 2026 !! I'll almost be a pensioner by then
BTW Is your long term wave count software(Dynamic Trader) generated or is it done by you?
"Option traders buying of puts now exceeds buying of calls."
This is a fair indication that the Dow has reached its peak.
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