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Connect The Waves

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Re: Toddo's "Connect The Dots" piece. Take a gander at the XBD index chart he has pictured. In it you can see a clear "5" wave impulsive move to the downside in the XBD from the February top:

Wave 1 from the Feb top to March lows, wave 2 from the March lows to April highs, wave 3 (nearly always the most aggressive impulse wave) from the April highs to the May lows, wave 4 from the May lows to the June highs, and we're now in the 5th and final wave off the February peak that seemingly needs one more up-down sequence (multi-day up, then down) to complete the entire move off the February peak.

What this "5" wave move off the Feb peak implies, in the least, is that another impulse wave down of equal or greater proportion (25%+) can be expected after a meaningful bounce. And heck, that's the bullish interpretation. A bearish interpretation calls for the 2002 lows to be taken out in the next 2+ years. Either way, this down move in the brokers is probably not complete and eventually will see much lower lows than we are currently registering. I'll be doing a longer piece on this soon, but since Toddo had the foresight to post the chart, I'd thought I'd offer the real time, back-of-the-envelope analysis. Never advice of course, but that's a quick and dirty way to look at charts using Elliott wave analysis to determine if further investigation is warranted.

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