Anatomy Of A Monthly Downcycle - TLT (Long Bond ETF)

The Long Bond ETF TLT did an Elliott Wave AB down up (Waves A down and B up, Waves 1 down and 2 up also) followed by an ABC down up down pattern (Wave C down, which was also Waves 3 down, 4 up, 5 down) since the 99.99 Wave 3 Monthly Cycle High in early October, which is also an inverse Elliott Wave 12345 down up down up down pattern, and, a likely Wave 4 Monthly Cycle Low occurred yesterday Friday 11-6-09, see http://bit.ly/1PZROX. Note that TLT put in a relatively large bullish inverse spike on Friday 11-6-09, and, closed at 93.33, near the session cycle high at 93.45, which was well above the session cycle low at 92.46.

The Long Bond ETF TLT's Wave 4 Monthly Downcycle did a large Wave A/Wave 1 Downcycle from 99.99 in early October until nearly 94 in mid October, see http://bit.ly/1PZROX, that did an inverse Elliott Wave 12345 down up down up down pattern. Then, a countertrend Wave B/Wave 2 Upcycle occurred for three sessions, in which volume was very light, which was a sign that TLT hadn't bottomed yet. Also, except for one session volume was relatively light leading up to the mid October Wave A/Wave 1 cycle low.

After October 20's 97.25 countertrend Wave B/Wave 2 Cycle High the Long Bond ETF TLT did a Wave C Downcycle down up down pattern, see http://bit.ly/1PZROX, which was also Waves 3 down, 4 up, and the final 5 down, in which volume exploded for over a week's time (volume bars at the bottom of the chart, see http://bit.ly/1PZROX), which probably explains why volume was relatively light on Thursday and Friday (the market's volume was very light on Friday 11-6-09, which was a major factor also), with TLT probably bottoming and putting in a Wave 4 Monthly Cycle Low on Friday 11-6-09.

The buying/volume spike confirmation of TLT's bottoming price action had already occurred over more than a week's time (see the volume bars at the bottom of the chart at http://bit.ly/1PZROX). So, the volume spike doesn't have to coincide exactly with the FINAL price spike, but, it should obviously be close.

There's never a need to bottom fish (or top pick) anyway. Waiting for a strong Short Term Wave 1 Upcycle/buy signal (about 96 to 97 in this case for TLT, chart at http://bit.ly/1PZROX), then going long AFTER a higher Short Term Wave 2 Cycle Low occurs (93 to 94 (volume spike should occur to confirm bottoming action) or so versus 92.46 likely TLT Wave 4 Monthly Cycle Low on 11-6-09) is a good strategy (wait for a rising bottoms uptrend to be established). A trader should never be panic buying or selling based upon emotion and guesswork. Patience and calmness should prevail.

.......http://www.JoeFRocks.com/