Eureka

First of all, I felt really moved for all the warm comments I received in the last post wishing me the best in my wedding – and married life. My future wife, Mrs. Wolf (as she was nicknamed in on of the comments), also read them and was not less moved than me. The wedding will be on November 30th, and I’ll post a couple of pictures when I return from my honey moon, around the 11th.
Now, let’s go to what really matters (I hope she doesn’t read this line :))
In the last posts I showed a chart pointing to some sort of bottom this week, between Monday and Thursday. The bottom did happened yesterday but, as some might have noticed, I posted a comment saying that I didn’t feel confident enough in this bottom since it wasn’t originated from significant bottoms. I also said that I would keep studying to find a better window time for a bottom, consistent with some sort of pattern or pointing to significant bottoms/tops. Although yesterday we had a new low for the year followed by a sharp rally, I didn’t buy it (in all the senses of the word). I don’t know exactly why, maybe because it wasn’t low enough, maybe because it wasn’t relating to significant tops or bottoms, it doesn’t matter. It just didn’t have that look or feel that the end of a correction has. I believe many made a lot of money yesterday, but also many lost wads of cash. Luckily, not me. I’m a very conservative trader and I don’t place a trade when I don’t feel confident about it. Believe me, I can see the market swing up and down for days without doing anything, and I don’t care. I get in when I feel good about it, and I need to feel comfortable in a position, or I just dump it, profit or loss. I am proud that I got to that level that I am uncomfortable with losses and comfortable with profits (surprisingly, the vast vast majority of people behave the other way: they are able to carry a losing position for days, or even weeks, but close a profitable position in a couple of hours or even minutes).
Anyway, I was looking over the data I have and I couldn’t find another cluster of dates before the end of the year. But I know if there is another low coming – and I believe there is – it’s going to happen soon. So, there must be something in that data that I’m not seeing, some sort of pattern this correction has been following in terms of time. In the last days I’ve been obsessed trying to find the dynamic of this correction and it cost me some nights of sleep. Finally, yesterday morning, fidgeting with the charts and data, totally wasted (I know, it’s such a clichè, but it’s true), I had my Eureka moment. Ladies and Gentlemen, here is what I found: The Spiral.

Please, click on the chart above to see it in its full resolution, because it’s something really beautiful, because it’s perfect. It’s beauty the way Kant defined it (Critique of Judgement), something that only happens in nature, and what you see in the chart above is a pattern in the nature of human mass behavior, as perfect as the shape of a galaxy: a spiral.
The above chart is important because it covers the whole correction – from the top on 10/10/07 – following a pattern. As you can see, we are nearing the end of the spiral and this first part of this huge correction. It points to the dates between the 23rd (which is a Sunday, so I’m using the 24th, Monday) and the 26th of November. During these days we might see the final bottom.
Let’s not get overexcited with any trades and let’s always have in mind that anything can happen. I believe we’re going to rally a couple of days, maybe a sharp rally, and then we’ll turn 180 degrees and head for the last drop. A last advice: whatever you do, stay small. If you go big (proportionally to your portfolio), emotion will take over and you’ll stop thinking and be vulnerable to silly mistakes. This is the most difficult market environment to trade and the most important thing is to stay alive during these times. The so called “pros” got fried. You didn’t. You are the new “pro,” no matter how small or big you are. So, be a “pro” and trade using your brain. Remember: you are always one trade away from humility.