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Thursday, August 18, 2011

Elliott Wave Update ~ 18 August 2011 [Update 8:23PM]

[Update 8:23PM: Gold, Dollar, Bonds. My counts have each forming a long term extreme in each. The key is keeping an eye on sentiment data.

Seems its heading for the upper trend-line as I suggested a few weeks back:
Mainly we are looking for an extreme in sentiment for Gold. This data is a few days old, but we can imagine it is starting to break higher. Charts via Sentiment Trader
Still tracking a narrow target range for the dollar:
Like, GOLD, the key I think is to keep an eye on dollar sentiment. This data is a few days old. Working toward a negative extreme.
30 Year yield still has not confirmed the low end of the yield curve.  I am betting it doesn't confirm. I may be wrong but its still my hunch.  Notice anything about yields?   Bonds are already reaching an extreme and P[3] has barely begun!  My prediction for when "all-the-the-same" market selling will kick in (bonds, commodities and stocks selling off) is in Minor 3 of (1) of [3] and particularly during (3) of [3].   We are still in (1) of [3] and bonds are being piled in to.  If bonds and stocks sell together in later phases of Primary [3] down, the dollar should be the winner.  But for now, its not the case. This was sort of expected at how the start of P[3] would behave.
And once again, we are looking for extremes in bond sentiment.  This is the bond put/call ratio 10 day average updated tonight.  Its hitting extremes.  I expect some fresh sentiment survey data tomorrow.   There has been a rash of 90% Daily sentiment on bonds lately including a recent 98% reading.  Again if everyone is piling into bonds now, what happens in Minor 3 down if stocks and bonds sell and there is no one left to buy?

After all, Bonds are a Ponzi scheme in my opinion. I have tried to stop using that word Ponzi lately as it is overused but it certainly is accurate in my opinion for bonds. You have Primary dealers flipping to each other in a game of hot potato with the FED having an expanded balance sheet bloated with them. There is simply an abundance of paper. The bond market gets it wrong is what I rather would say.  A debt crisis and people are buying debt? Doesn't make sense to me. And sooner, rather than later, the market will agree.
In my estimation, gold, the dollar, and bonds, are heading toward long term extremes such as how stocks seemed to have done so first.  For instance, Gold and the Dollar may reach extremes together and Bonds may hit their extreme at the bottom of Minor 1 of (1).   These are best guesses based on long-term sentiment and wave patterns and keeping in line with Prechter's theory of "all-the-same" market.

On Minor 3 of (1) down is when the dollar should finally be a winner.  Bonds and stocks should sell at key spots of panic together.  Again Minor 3 of (1) of P[3] down would be one likely such area.

The primary count is Minute [v] of Minor 1 of Intermediate (1) of Primary [3] wave down.

Wave fives should be less intense than wave threes.  On both charts below you can see the market internals were less so far then wave [iii]. That fits the wave [v] profile.
Squiggle chart shows five waves down from yesterday's peak. Could be a wave (ii) bounce coming then (iii) of (v) should work the market lower toward the 1100 or lower SPX goal.

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