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Friday, November 5, 2010

Elliott Wave Update ~ 5 November [Update 9:42PM]

[Update 9:42PM: A closer look at CMG's proposed extended wave (5). This was fun to count.
[Update 9:10PM: Ok CMG looks pretty ripe. I mean WOW I am laughing my ass off at this chart. The wave count is real nice and an extended wave (5) looks right. Waiting for a sign of a reversal. ]
[Update 8:10PM: This chart of India always stared me in the face when I pull up one of my private chartlists. And I keep reminding myself the markets cannot turn until this makes a new high (under the premise of all the same world markets for Anglosphere/Eurpoean).

For weeks it has always chugged higher.  Having charted this as a wave 5 of 5 event, and seeing a small fourth degree wave as of recent, this market is finally (hopefully) heading to a target somewhere higher than its 2007 peak.

So my point? We are getting closer 45 points to go at a minimum....
[Update 7:45PM: My thesis on bonds is pretty simple as it comes. Bonds have been in a 30 year market and are due to turn the other way. This fits in perfectly with P[3] down. After all its all about the debt.

How to know they are due to turn?  A major non-confirmation which I believe is happening now. Basically  a while back I suggested the 30 year and perhaps the 10 year would not match yields previously met in 2008 while the other duration debt did.  This major non-confirmation has never really existed on this scale in the entire bond bull market.  Whenever yields go to new lows, the entire spectrum has eventually made their respective new lows too.

But not now.

I propose that the rising 30 year yield will drag lower yields UP rather than the other way around. This makes sense to me.  Nobody wants the 30 year because its risky. No one may want the 10 year becaue it too may be risky. The risk time scale is shrinking. This is a natural effect of the Great Ponzi.

WAVE PATTERN: The 10 and 30 years appear to have 5 waves up from 2008. That is one good reason to think I am on the right track.

I disagree with MISH on this who largely sees us repeating JAPANESE style long term deflation. I rather think we have a RISING YIELD deflation over the long term. Collapse in bonds resulting in rising yields which will in turn trigger massive defaults on all the debt out there. The massive defaults will of course be very deflationary and trigger massive unemployment.

This is the real reason the FED is scared! And desperately trying to get a perpetual bubble going!

Equities will be toast.  Commodities will take a hit. Where will the money go?

King Dollar baby!

Yes it seems the irony of all ironies - a collapsing fiat system sees its currency in high demand! But currencies are relative to other currencies  (why do people not know this??)- and all the rest may be worse.

Know what? Goldman sees the 30 year yield going back down - front-running mofo's - that of course means its headed the opposite way - yields up!
[Update 6:50PM: Another reason my update EW count makes sense is from an NYAD count I have. I am still looking for a wave 4 on my NYAD count and that would coincide nicely with wave 4 on the market indexes.]

Wave 3 on the NYAD is very mature and is now hitting against the middle of the channel which seems about right. Looking for a wave 4 pullback still - this would coincide with a Minor 4 on the market indexes.
The NYAD weekly looks like its heading to the upper trendline that would connect wave I, III, and V. I still would prefer to see a Blue 4 pullback on the weekly - which means a multi-week pullback is likely right around the corner - I would think 1170 is the pullback support.  That may form a nice wave 4 I think minimum.

[Update 5:51PM: Ok here is what I was talking about how the fractals seem to be repeating.  I don't think we have ever charted a zizgag this large - hence who is to say we should have perfect impulses on a countertrend?  I say not.

So yes, I guess I am simplifying. I might be a hard-headed bear, but I do love to chart waves and try to figure out why they trace the way they do.

Note that the wave (C)'s subwaves are so far smaller than (A).  1 is smaller, 3 may wind up being smaller. This is evidence that, yes, we may have some more to trace out but the upside is likely to be limited.  This is also evidence that the trend is waning overall (from the 666 low) And wave 5's of (C) can always be muted and truncate although I suppose I have no reason why it has too. However overhead resistance and waning momentum may cause it to be.

The revised count assumes the market is trying to find the top of Minor wave 3 of Intermediate wave (C) of P[2].   Within Intermediate (C), wave 3 should expand by some Fibonacci ratio from wave 1.  At the moment the wave 3 has expanded 1.67 which is almost a perfect 1.61 FIB ratio.

We also have a recent ascending triangle formation that could only therefore logically be Minute [iv] of Minor 3.

Working backwards and forwards, The count seems to look very nice.

Note that the width of the ascending triangle would be the approx breakout target which is very close. I'll analyze that later.

In a way, the Minor wave 3 of (C) is somewhat of a fractal of  Minor wave 3 of (A) in the following manner:
1.  Strong rebound from a wave 2 low.
2. Then choppy up action in the middle of the wave
3. Strong finish out of a triangle to wave 3 peak.

Minor wave 3 of (A) had a similar trait to Minor wave 3 of (C). I think this is a function of a bear market 5-3-5 zigzag.  Your strongest up move is not necessarily the middle of wave 3. Its the beginning and ends of wave 3 and probably the beginnings of wave 1's. Why? I am not sure but I have a thesis and will post some on it this weekend. This is something that just came to me today thinking about things today. I have not flushed all my thoughts out on it just yet.

This overlapping weakness is what caused me to think the market was waning way back last year in Minor 3 of (A).  I made the same mistake here - thinking this overlapping mess could not be a wave 3 and that it was ending - yet somehow for a bear market counter-trend wave - it may be perfectly normal. As I said, I will be exploring this more.

In this case cycle-sized wave trending - down - would produce awesome impulses. But countertrend P[2} has more or less evolved. And one couldn't expect a perfect "third of a third" to occur on a counter-trend move.  Small scale - yes.  But a 5-3-5 zigzag as large as P[2] would not look as impulsive like P[1] as it is counter trend.  Yet all the same, the move from 666 to April's 1219 was accomplished in basically 5 waves. 2  major correctives and 3 ups.

I am good with these thoughts.  P[3] up? I highly doubt it. I think the dead giveaway is the ugly internal waves (in the Minor 3's)  that make up this move from 666 low. Thats the best I can say for now.  Its easy to say its a bunch of zigzags - yet that doesn't really work when you factor in the recent correction to July.
SPX subwaves are close. 1228 is the 61.8 FIB of the entire retrace from 2007.
I'll have more charts later.
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