TSX60C, TSX 60 Capped index.

TSX capped may 2012

Here is the 60 capped index, indistinguishable from the “normal” but the weightings of the individual stocks do not change. As an aside, you will notice that even if different, it looks an awful  lot like Potash below! This index makes calculations a lot easier. From 1000 to 500 is 50%, back to 900 is 80%. The ideal EW target is at 350, the 4th wave of previous degree, also about where C=A even if that point lies 100 points higher depending on when this might happen. Our Head & Shoulder friends should be delighted by this chart. Each shoulder takes a little more than a year (so we may just have a little bounce, in wave 2 of 3 of C). Also the top line and the bottom line are at respectively 62 and 38 percent of the decline in A. 750 would be the dead centre of the whole H&S structure. The pattern targets 600 as a minimum, which point is also found by connecting the lows of ‘02 and ‘09, but if symmetry holds we should be at 500 in about a year. Time will tell.

Originally we would have expected the retracement to stop, on average, at the 62% line from where we would have expected the decline to resume. So , in effect we are wrong by 2 years, but now we are back at the same point equally convinced that the bear will soon grind this market lower.