From the beginning of 2007 we have seen 5 waves up, which indicates a motive wave. After the end of motive waves we can look for a corrective move, and from looking at the chart we are currently in it.

I have us currently in a (c) of C down, initially targeting the 110 region or the 50.0 extension. Since nothing is guaranteed in the market we need to keep an open mind and have all counts on the table. This is where I can see another scenario taking place… it could also be (a) of C, with the (b) wave to come. This second count would mean that we would see a bounce of 1-2% to the upside before we continue on to lower levels. It would also target the bottom of the box near the 105 region, possibly extending further down to 102 area.

All of this is calling for another 5% drop to go in the yen with the possibly of extending down another 11-12% in the short term.

Author: Peter Nitso

pnitso@yahoo.com

Twitter: @PeterNitso

According to the results below, the average return was 0.18% (since 1992 until 2011). Efficient market theory would suggest that these phenomena do not exist, for rational investors would naturally front-run the rally…this would however create the rally and subsequent sell-off early and thus negating the whole thing. Another possible explanation includes the more psychological confirmation bias. This is basically the decision to favor information that confirms a thought, while negating or writing off information to the contrary. This could include media personalities supporting the myth, for it is naturally ‘nice’ to be bullish during the holiday. Similarly, the optimism bias can also relate, for a small sample set of prior events may sway opinions. For example, if the prior year was a good time for the market, which it was, one may be overly optimistic for the future, negating the larger sample set and only looking at one independent observation. Either way, the data is interesting and the market will move.

Below is the aforementioned excel sheet.

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salernoma@mx.lakeforest.edu