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Markets are fascinating at any time but right now they are compelling viewing. A further email from Naresh:
‘Many thanks for including my observations in your articles.
I still feel that we are about to culminate the uptrend as the current range has reached same range in terms of price and time as the previous range.
Regards
Naresh’
Naresh, I definitely would not argue with you as even though we have seen the All Ords climb to 5048 it has to hold it and as I write on Thursday it has fallen 20 points from that level. So the next few days will be very interesting indeed.
To another email:
I remember an article from a few months ago that said you were bearish on RIO. Is that still the case?
It tried to make a new high and failed last week.
Chris
Chris I can’t recall when i wrote that bearish article on RIO but I can say that up to October last year yes I was doubtful about RIO but it has pulled itself out of the woods.
But let us visit the chart at that time:
click to enlarge
One of the great features of ProfitSource is that you can go back in time. The above chart is weekly and it points to the prospect of a final impulse wave down that would complete the Elliott five wave pattern.
Let's look at the same chart but as at this week:
click to enlarge
The pattern actually changed from a bearish pattern to a bullish one in February this year and continues as a bullish pattern.
What we are seeing now is the prospect of a wave four pullback. But this of course could take some time to play out especially if markets were to sail through the 50% retracement and go to 61.8% retracement. And as you know that is very much a hot topic at the moment.
RIO’s failure to make a new high last week could indicate that the wave four retracement maybe in the making – despite it holding a new weekly high as I write.
One of the problems in using a weekly chart is that it gives – in my view – something of an esoteric perceptive. I am not cynical about weekly charts but am weary using them to trade so I use them only to give me the big picture. And even then this is to tell me what ‘could’ happen. I trade off a daily chart and use a 90 day Elliott. Like any short term chart/indicator you can thus experience many false breakouts.
If I may make one final point on this. When we write here in TTN we are very conscious that we write using snapshots and project on the basis of data available at the time. Of course, as each day passes, new data becomes available and that of course changes projections.
I have been bearish on global markets for 18 months now and this has caused me to have missed out on this run up but I am disciplined enough to stay away until I am comfortable to move in. And part of my criteria is buying on a pullback. I know that will come and I will make up for lost ground.
Enjoy the ride
Tom Scollon
Chief Analyst
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