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Long Term Bull and Bear Models

Posted by pugsma on October 27, 2009

I have two longer term models going currently.  One is very bullish and the other very bearish.

The Bull Model assumes the SP-500 entered a cyclical bull market after the low of 666 in March of 2009.  This model assumes the move off the May 2000 peak was an A-B-C corrective.  A-wave was the March 2003 low (about 875), B-wave was the Oct 2007 high (1575), and C was the Mar 2009 low (666).  We are currently in Primary Wave 1, P1 up on the chart.  P1 should reach about 1200 later this year or early in 2010.  Then a correction re-trace of 38% down to the 200-day SMA in the spring of 2010 for P2.  P3 should take the market to new highs later in 2010 and beyond.

The Bear Model assumes that he move of the Oct 2007 peak (1575) was a Primary Wave, P1 down.  We are currently in an A-B-C-X-A-B-C corrective wave P2.  Once this corrective wave completes the large rising wedge formation, it will collapse later this year.  The Bear Trendline and Point of Recognition Lines will be respected and the Bear Market will continue to new lows in P3 later in 2010.
No matter if your long term bullish or bearish, there is no denying that we are coming to a very critical stage in the markets over the next several months.  Either the bear trendline will be respected with the breaking down of the large wedge between now and late November or the markets will correct slight here in late October and early November and make new highs towards the end of the year.

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