20 February 2009

Wave 'e'?

What is Wave 'e'? It supposed to be originated from Elliot Wave 5-3 cycle. When the third wave in Bear market which is Wave 'c' unable to fully capitulate the market and the condition become worsening we shall see Wave 'e'. I am not sure where is the source for Wave 'e' (let's forget about the source, maybe it is from me :D), but from the STI chart I have put up we can see some similarities between 1998 and 2009.

Let see the overlay between both charts. Between June to Aug 1998, we see a flag that is quite 'flat' (like what happened last Nov 2008). Many must forgot what I wrote here, look for the last two paragraph.

And now, another round of Double Bottom likely to form. Will STI able to form another double bottom? Or break down? Not until neck line has been breached, we are unsure the formation of major trend.

I see if Double Bottom is formed from this formation, the rally won't last long to become a Bull market. The Double Bottom need to be extended to form better base. Otherwise it would become a short rally like early 1998. Anyway, it is because of early 1998, many of us got back what we have lost on 1997. So, yes or not, depends on you.
Look for the bold text, I have stated the condition for birth of new Bull market. You should read this article of Double Bottom if you haven't.

The million dollar question today is whether does Wave 'e' exists. If it really exists, are we heading for the Wave 'e' soon? How to identify Wave 'e'? What to buy as the recovery will be at very fast speed?

Technically speaking, we are heading for Wave 'e', provided the bearishness of the market breaks the previous double bottom formation at shoulder line at confirmation (commonly >5% confirmation to avoid fake break down). You can refer to my Head & Shoulder chart pattern and look for STI shoulder yourself. Wave 'e' should be very sharp and scary too.

It is very hard to catch Wave 'e' because the knife is very 'sharp' and can appears to send wrong rebounding signal too. The best is not to commit fully until the new trend is confirmed which is the completion of double bottom (break out from neck line). Even though it never happened to STI, I believe there is a condition for another Wave 'g' (another down wave) if market is not completely deleverage. So, too much possibility and my views too can change from time to time (I am part of the market too) however longer term for investment by buying bit by bit at value shall reaps better profit long term.

House Number

01 AmFraser
08 CS
12 Lim&Tan
20 Philip
21 KimEng
25 Daiwa
26 BNP
31 DMG
35 SBI E2
36 Fortis Clearing
37 Lehman Brothers
39 Instinet Singapore
71 Nomura
72 Daiwa
73 Macquarie
77 ABN
78 Merrill Lynch
79 JPM
82 MS
83 Citigroup
84 UBS
86 DBSV Online
87 Westcomb
Thanks ccloh for providing my long lost house number list


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