Sand Spring Advisors LLC
Sun in My Eyes
September 25, 2003
by, Barclay T. Leib
As the sun poured into my office window this morning, and I was perusing a variety of charts, the above hourly chart of Sun Microsystems hit me for its potentially classic formation.
I constructed this chart in a three-step manner.
First, I labeled a potential Elliott wave count that looked fairly clean to my eye. A recent wave 4 has nicely failed to overlap with a wave 1 decline. Wave iii of 3 down clearly stands out as it should. Implied of course is that a 5th wave decline rests in the near future.
Then as a second step, I streteched my Fibonacci bands to try to spy a potential downside target that would fit the fractal rhythm of recent price behavior. A price objective toward $2.70 emerged.
But then the moment of true revelation and pleasure came when I asked my computer to draw some freeform Gann angles between the $5.64 high on Sun and my projected $2.70 downside target. Bingo -- the angle lines picked up recent levels of support and resistance almost perfectly. It is a re-enforcing indication that $2.70 -- a price level that some may consider is almost pulled out of nowhere -- is a highly likely downside target to be reached.
60-minute charts can always be a dangerous level to work at, but we'll see how this one plays out. A low toward $2.70 is what is implied for Sun -- possibly by the morning of September 29th. This is of course a large enough potential move in a brief number of days to be wary of "crash-like" conditions in the overall market. It thus prompts us to post our only occasionally-used bear mascot below.
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