Zooming Into the Analog

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Over the weekend, I printed out a bunch of charts and checked in with my 1937-1942 analog. It seems to be playing out as beautifully as ever. I'll share a couple of the charts here. This is a close-up of the period in the late 1930s that I am following:


For me, 2010 is all about the move from "L" to "M". I don't know if we are at "L" yet – – it could be as high as 1170 on the /ES, which is nearly 50 points higher from current levels – – so there's plenty of room for the bulls to run before this analog is invalidated.

Below I've tinted in cyan the range where "L" may terminate. Because I don't know when it will happen, I am keeping stops very wide. Once we start falling, I'm going to hang on tight until about 925 on the S&P, at which time I will cover everything.


Waiting for "L" is a drag, but no one is going to ring a bell an announce a nearly 20% drop is about to take place. I want to be ready for it when (OK, if and when) it comes.