After the TSX bought Venture in late 2001, the index was in a major uptrend until it peaked in 2007. Between 2006 and 2008 it formed an erratic looking head and shoulders top. The neckline breach in mid 2008 was followed by a sudden collapse (which roughly coincided with the world wide market crash). After a massive decline, it bottomed in December of that year at 678.62. The next 2 years were up, but started down again in early 2011. Unlike most US indexes which went on to make new all time highs and confirming a bull market, Venture went into a 4 year downtrend.

A feature of the 2010-2012 period is another large head and shoulders top which measures a minimum decline of 1000 points down to about 400 on the index. At the time I thought this was extremely unlikely, but now looks quite possible - even probable. Furthermore, there appears to be a much larger ABC Elliot Wave correction in play (wave C started in early 2011). This formation is so large, it spans over 7 years and appears to be far from complete. All this makes it very unlikely that the 2008 low will hold – we are probably due for a lot more downside.

So why am I messing with this stuff now? Even strong trends don't generally go in a straight line. We are just a few bad days from the 2008 low, and year-end selling will soon be winding down. This sets up the possibility of a strong bounce starting in a couple of weeks or so. The bounce should last until mid January at the earliest and March at the latest. After that, I'll be out – perhaps for a year.