This is what we said on 7 Feb

"The larger picture for us, as we mentioned prior in ‘The Primary Corrective’ is a cycle degree flat. We think the large B primary is over and now we are in a C down. Remember it's the C waves that are the fastest and most damaging. There are advantages of a C also, it’s a trending move compared to the complexity and overlapping behavior of A and B waves. Finally we just might get to see some trend, after the complexity and deviousness of B primary wave from Mar 2009.

C waves can be assumed to be straight and clear (the preferred view). The C wave we are assuming in the alternate case is more of a C from a Running Flat. And this C could also be an ending overlapping diagonal. If this is happening, we might see 4 wave getting into territory of 1 wave back into 19,000 before starting the collapse till 13,500. This is an aggressive projection, but if the ongoing formation is a running flat than a correction till Sensex 16,500 is not only less but also disproportionate in the overall cycle degree structure from 2007.

The good part of the aggressive projection till 13,500 lows is that we are headed into another multiyear accumulation opportunity that should take markets up well into 2012-2015. Remember a running flat only happens because the trend behind the market is strong."

What happened? Prices push near 20,000 and have reached our anticipated target near 16,500. Even if I would have made an overlapping fourth wave projection (illustration) that would have made it look more like the happened case, Elliott is not equipped to estimate time as well as price. This is what we tried to explain last time that pattern price recognition is not enough, a time estimate is needed.

I was in Toronto a week back and had an opportunity to meet many technicians. 80% of the global technicians are in the New York and Ontario region (80-20). While discussing with Dan Popescu a market technician from the 1970's he mentioned that Market Technicians need to put more work in market timing. He also mentioned that cyclists look at timing conventionally like a single confluence approach (conventional time). Our Time projection (time triads) approach is an improved extension of the work (nested time).

Nested time can be used mathematically also, which we will explain in our later articles. It can also be used like a time pattern conventional tool. We illustrated this time projection technique on 31 May. In the respective update we mentioned that time projections proportionality suggests that markets are heading in or out of a short and medium term bottom. What happened? It took market almost 70 days to break respective lows. Now assuming the short term cycle of 100 days is running, the current negativity should extend into 02 Sep 2011. Unlike the nested time, which is an idealized structure, large time windows alternate with proportionately smaller time windows (nested times non-idealized). We don't expect a bottom extending beyond early Sep from where a 15-18 month bull market should begin. The reasons, the causes, the sectors, the macroeconomics, the Intermarket perspectives are all there in the performance rankings and Jiseki cycles, which we will discuss next week.

Mukul Pal, CMT, Orpheus Capitals, Global Alternative Research