BUD ROLFS' DOPPLER RADAR REPORT ON THE MARKET CORRECTION

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Erica Shaw
10 years ago
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1 BUD ROLFS' DOPPLER RADAR REPORT ON THE MARKET CORRECTION FINAL REPORT # 6 DEC

2 Hello again TIGERS and TIGRESSES, and attached is the DECEMBER MONTHLY DOPPLER RADAR REPORT #6, final report of your 6 MONTHLY DOPPLER RADAR REPORTS ON THE MARKET CORRECTION. Just as you tune in to your TV or radio to hear the latest DOPPLER RADAR WEATHER REPORT UPDATES on any current storm situation affecting you; our intent with these 6 reports was to give you a MONTHLY UPDATE on WHERE WE WERE CURRENTLY WITH THE "STORMY WEATHER" CAUSED BY THE CURRENT MARKET CORRECTION". Just a few notes to help ensure you follow all the symbols and markings on the charts you saw each month: CHANNEL LINES: There are 2 major forces always fighting for control of PRICE MOVEMENT on any chart: the DIAGONAL and HORIZONTAL FORCES. The DIAGONAL FORCE wants PRICE TO MOVE in DIAGONAL CHANNELS and SUB-CHANNELS. Though stock prices don't move in straight lines; amazingly enough, they move BETWEEN STRAIGHT PARALLEL LINES, called CHANNELS or SUB-CHANNELS. CHANNEL TREND LINES are strong enough to form BOUNDARY LINES for UPTRENDS and DOWNTRENDS. On every chart that I do; I try to use SOLID BLACK DIAGONAL TREND LINES for CHANNELS; and DASHED DIAGONAL LINES FOR SUB- CHANNELS and SUB-SUB-CHANNELS. Note: SUB-CHANNELS and SUB-SUB-CHANNELS act the same way that CHANNELS do, but just control PRICE MOVES INSIDE OF CHANNELS. PRIMARY TRADING RANGE LEVELS (PTRs): the second major force trying to control PRICE MOVEMENT is the HORIZONTAL FORCE; and the very strongest of these horizontal forces is a PTR. PTRs are just as strong as CHANNEL TREND LINES. One of the truly amazing things about PTRs is that once you correctly identify THE GAP BETWEEN PTRS ON ANY CHART; that GAP STAYS CONSTANT VERTICALLY BETWEEN ALL PTRs, which allows us to know where support and resistance levels are AHEAD OF TIME; even in areas where the stock has never traded. Just as channels are strong enough to control price movements in uptrends and downtrends; PTRs ARE STRONG ENOUGH TO CONTROL PRICE MOVEMENTS DURING SIDEWAYS CONSOLIDATIONS. I USE THICK SOLID BLUE HORIZONTAL LINES TO DESIGNATE PTRs ON ALL MY CHARTS. MID-PTR ICE: Half way between every consecutive pair of PTRs; is a level of support and resistance that is not quite as strong as a FULL PTR; and we call that "MID-PTR ICE". MID-PTR ICE is not strong enough to contain a longer term CONSOLIDATION; but is OFTEN STRONG ENOUGH TO CAUSE AT LEAST A TEMPORARY REVERSAL OF PRICE DIRECTION (often back up or down to a PTR). I always use THIN RED HORIZONTAL LINES TO DESIGNATE MID-PTR ICE, but I usually only show it in the CURRENTLY MOST RELEVANT AREAS because showing EVERY MID-PTR ICE LEVEL makes the chart too DATA-OVERLOADED AND HARDER TO READ. ABCs: I usually show the A,B, and C-Legs of my ABCs using 3 arrows; and typically label them. The typical RETRACEMENT AREA expected for that ABC shows as a BLUE ZONE (not always shown because it blurs other details). 90% of C-Legs TOP OUT in the Fib Expansion area; while 5% TOP OUT in the Fib Expansion area, and 3% TOP OUT in the Fib Expansion area. I try to indicate these levels to help manage WHERE THE CURRENT C-LEG WILL MOST LIKELY TOP OUT! RETESTS: A RETEST is a "RETOUCHING" of an area after CROSSING A MAJOR TREND LINE. Every time you cross any CHANNEL LINE, SUB-CHANNEL LINE, or PTR; and any TRADING RANGE TOP OR BOTTOM LEVEL...YOU NEED TO EXPECT A RETEST. (MID- PTR ICE DOES NOT GET RETESTED.) RETESTS can vary from a "QUICK TOUCH AND GO" to a long period of GOING OVER AND UNDER THE TREND LINE IN QUESTION. 2

UPDATE on WHERE WE WERE CURRENTLY WITH THE "STORMY WEATHER" CAUSED BY THE CURRENT MARKET CORRECTION".

3 On this MONTHLY SPY CHART above, I have marked the PTRs and a MID-PTR level. NOTE: I have "TWEAKED" these PTR levels a bit from previous reports after a lot of technical work over the previous month. (There was a technical inconsistency that I was uncomfortable with that caused me to redo my PTR levels starting with the monthlies, and as you know, those trickle down to the lower charts as well.) I am MUCH more comfortable technically with these modified levels, though they aren't very much different for all practical purposes.) On the right side of the chart, I repeat the 2 ABCs that overlay and the Fibonacci Expansions that apply to the black and red C-Legs and where they are likely to TOP OUT. Please note that BOTH the black AND red arrowed ABCs shown are AT LEAST in the minimum expansion areas where 90% of C-Legs top out; AND that the C-LEG on the RED ABC is now in the zone where 98% of C-LEGS TOP OUT!. Also note it is technically OVERBOUGHT (Over the upper channel line); AND that it still needs to RETEST the 175 WEEKLY PTR LEVEL. All those factors signal a high probability that the SPY has TOPPED OUT HERE; however, it is not a certainty! As you can see, it is now just "kissing" (or retesting) the upper channel line as drawn on this chart, and if that is true, the retest could HOLD, and it could go even a bit more OVERBOUGHT! (to MID-PTR ICE at the area) Regardless though, it has yet to RETEST the BREAKOUT from the 150PTR (upper end of its LONG TERM TRADING RANGE). 3

) I am MUCH more comfortable technically with these modified levels, though they aren't very much different for all practical purposes.

4 And here we have my latest WEEKLY SPY CHART, showing even smaller ABCs. The SOLID LINES show a SUB-CHANNEL within a much larger 6-7 year UPTREND CHANNEL (not shown). That much larger CHANNEL is taking the S&P500 to the 2350 area over the coming 3-4 years as we diagnosed in great detail both in May and June at our Webinars for you! We started to make a FULL SUB-CHANNEL CORRECTION back to the area back in June, but then jumped off that track and went OVERBOUGHT. WHY? As we have explained...oftentimes, once you finish the COMPLETE MOVE TO THE UPPER TREND LINE WITHIN AN UPTREND CHANNEL, you break out below the SUB-CHANNEL (dashed lines) that took you there, and wind up doing a big ABC TO RETEST THAT SUB-CHANNEL. (And sometimes, in doing that retest, you go OVERBOUGHT...over the upper trend line...as we have done in this very case! As you can see (and likely feel) though; we are running out of gas. 1. We may already have finished an ABC retest of the lower dashed line using the RED ARROW ABC. 2. Or we may yet LIMP to that lower dashed line at the MID-PTR ICE area sometime in Q1 before we turn DOWN and begin the long overdue correction to the 1500 area! HOW WILL YOU KNOW FOR SURE? ANY WEEKLY CLOSE UNDER 171 SIGNALS THE SPY HAS BEGUN THE CORRECTION BY COMING BACK PAST THE POINT OF NO RETURN 4

We started to make a FULL SUB-CHANNEL CORRECTION back to the 1500-1550 area back in June, but then jumped off that track and went OVERBOUGHT. WHY? As we have explained.

5 Each Chart view gives us additional data and evidence; and this DAILY SPY adds to the viewpoint that we have ALREADY TOPPED OUT AND ARE READY TO BEGIN THE 17% CORRECTION. The dashed line SUB-CHANNEL shows the path that the SPY has used for 2 years now on its climb from the 107 area. As you can see; we are not only OVERBOUGHT (vs. the solid channel line) but also have hit the upper dashed line as well. Last time we did that on the SPY (May 2013) we CORRECTED about 7.5%. This time; we are OVERBOUGHT, so a 7.5% CORRECTION takes us BACK INSIDE THE SOLID CHANNEL LINES and that is typically how LARGER CORRECTIONS BEGIN AFTER YOU GO OVERBOUGHT! (Once back in, it won't likely get back OUT to the upside again, so it will tend to do a full channel correction!) It has been my sincere pleasure and honor to serve you! May God bless you in all that you do in the markets and everywhere else in your lives; and may He grant you the Merriest of Christmas times and peace and health throughout the New Year! All My Love and Best Wishes...Bud Rolfs 5

the solid channel line) but also have hit the upper dashed line as well. Last time we did that on the SPY (May 2013) we CORRECTED about 7.5%. This time; we are OVERBOUGHT, so a 7.

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