Subject: 2-9-08
Monday, February 11, 2008
Wave
IV of the Diagonal II
We are fast approaching wave IV (4) of a Diagonal II in most of our stocks and it will soon be
time to cover shorts and go long again. This time we know that the previous
high is the minimum upside. Diagonal II’s often elongate, so wave 1 could be a stretch, and a commensurate
profit.
In a diagonal II wave IV
must overlap wave I, marked by the blue
hashed line below. The Dow has completed wave IV,
wave V should exceed the previous high of
12,750 by a generous margin. Wave V will in turn equal
wave 1, wave 2 which corrects wave
1, should take us back down to at least
this level.(12,100)
The financials index also appears to have completed wave IV, at the minimum retracement. Like the Dow,
the next move up is powerful one.
The Diagonal II is the most bullish pattern of all
and marks the beginning of a long move. What’s more, the strength of the move
is further indicated by the b waves
that exceed the previous III’s. The
subdivisions of waves I, III & V are 5-wave structures, like a bull move. While waves II &
IV are 3-wave or a multiple of 3 waves, typical of a correction. On the
next up move we have a long proven stretch to complete wave
1, since the previous III must be
exceeded. This time we have a good road map to guide us. Wave 1 is followed by wave
2, which after a Diagonal II often retraces back to the very bottom.
Meaning we have yet another chance to short and go long an even longer
trajectory.
Best regards,
Eduardo Mirahyes
