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Friday, April 29, 2011

Elliott Wave Update ~ 29 April 2011 [Update 9:37PM]

[Update 9:37PM: Gold, Oil, Bonds and yes Apple.  Gold hit the double trendline as I suggested many weeks ago. looking for some final bumps - (like [iv] and [v] of 5 of (5) of [5].
The potential ED pattern is still in effect for oil. That means once it tops a nasty drop to under $85 should be in order.
Bonds still need some more retracing.
Crapple. I dunno, I'd say its overbought on the monthly and shows signs of rolling over. Probably 200 hedge funds own it.  I don't care what the P/E is, many a tech company has much lower P/E's. When the spark dies thats it. Just look at Intel. Great company. Even does a dividend.  P/E of....11.  Microsoft...P/E = 11.

If any stock has retail piled in by the droves, its certainly Apple.

And its sports a cycle-sized 5 wave structure.

[Update 9:04PM: Its time again to reiterate that the trolls are getting a bit out of hand again.  Either you behave in a decent way and try and add something of substance or you'll be booted for a while. As I said a while back, I don't really care what people think, but the Yahoo crap is going to stop. Thanks have a nice day.

(Unfortunately I do not always get the chance to catch every post and thread)

[Update 6:10PM: Some anecdotal evidence that Apple is indeed near its all-time high. Last night I caught the new South Park episode as I saw it was severely lampooning Apple and Steve Jobs.  They didn't paint Apple in a good light, they ridiculed them rather shockingly harsh http://en.wikipedia.org/wiki/HUMANCENTiPAD

Poor Kyle.

Next week (I think) Apple will be re-weighted in the NASDAQ. I have no idea how it will effect things but it seems they are changing the rules mid-stream.

These 2 events are likely marking near the ultimate top coming in Apple.

They have been lampooned on South Park, there is now nowhere to go but down.

ORIGINAL POST
Primary count is the market is working on Minute [iii] of Minor 5 of Intermediate wave (C). The evidence of Minute [iii] is that overbought readings on short term charts have been ignored and trampled over a bit. This has occurred the last 4 days.

Using EW logic, we now have enough of a wave pattern to set price points and key markers.

For instance on my squiggle chart, we have a Blue box area that ideally will not be retraced into until at least Minute [iii] is over. If ii does, then we must be on high alert that another count is taking place.
I still show the alt of a "running" correction either an expanded flat or a running triangle. But as I said, the continual updraft despite overbought has a telltale sign more of a Minute [iii] of Minor 5. However if Minute [i]'s price peak of 1339 is breached, then obviously we have to question the Minute [iii] of Minor 5 count.

Again, I do not expect an ending diagonal triangle pattern (where price of wave [iv] overlaps the price of wave [i]) for Minor 5 since Minor 1 within the same 5 wave structure of Intermediate (C) was a leading diagonal triangle. Also the internal wave structure of Minute [i] doesn't look like a "three" nor does Minute [iii] either.

Also within the context of the larger Intermediate (C), internals are on a downtrend. So that is consistent that we are in a wave 5 move. Again, this is not my bias, I didn't make this chart, the market did!

E-minis [Update 3:13PM]

[Update 3:13PM: A very detailed count of where I figure the market is about now. I feel like I got a good read on things again. I figure we are soon due a sharp little minuette (iv) of [iii] correction either gap down Monday or something like that.
[Update 1:30PM: Tweaked the e-mini count to match the cash index count.]
[Update 12:55PM: best guess squiggle count for Minute [iii] of Minor 5.  Within Minute [iii], once again I have projected the first subwave to be the longest as has been mostly the case at many wave degrees the entire P[2] bull. This is no small matter, it helps identify this entire P[2] rally as counter trend against the primary trend (down).
Best guess count as for Minute [iii] of Minor 5
MINOR 5 TARGET RANGE
If we are in Minor 5 up, which is now my primary count, we need to have a target range. That range is 1367 - 1396.

This range is derived from where Minor 5 = Minor 1.

1367 is in pure price point terms.

1380 is roughly in percentage terms.  I.E.- Minor 1 advanced the market 10.5%, if Minor 5 advances the market another 10.5% you'd get about 1380ish.

1396 is where you place a line measuring the length of Minor 1 on a log chart and project it for the length of Minor 5 in log scale. This is where the "it looks right" comes into play visually.
I thought it was important that we establish a target range for Minor 5 now that we think we are indeed in Minor 5.  I was short-changing the range to 1367 maximum because I was only thinking in pure price terms of 5 = 1.

Incidentally, the lowest price point we can probably expect for Minute [iv] is 1344, a retest of breakout resistance.  I don't expect 1339, the top of [i] to be revisited until Minor 5 is over.

There is no reason to suspect an ED will occur as Minor 1 is clearly a leading diagonal, it would be unorthodox for 5 to end as an ending diagonal. I do however have Minute [i] of Minor 5 as the extended wave therefore I suspect Minute [iii] will be shorter in length as I explained in this chart last night http://4.bp.blogspot.com/-oS4GeFNrlII/Tbn7FLfFh8I/AAAAAAAAJG8/1mQ15_uAzr4/s1600/wlsh.png

So to recap this is my primary count and my target range for 5, thus P[2] itself.

So too bad for you who think I was going to crack and give in to the bull emotionally-wise.

If we get to 1400SPX, above my range, then maybe I'll crack. until then lets track Minor 5 the best we can.

The whole discussion above is null if 1339 price point is breached.

Thursday, April 28, 2011

Elliott Wave Update ~28 April 2011 [Update 9:06PM]

[Update 9:06PM:  A proposed Minor 5 count. Since I have wave [i] as the extended wave therefore wave [iii] would be shorter in length.  Then a wave [iv] which should not breach 1339 in price (top of [i]). Then wave [v] should be shorter than [iii].  I have no reason to think an ED would occur as Minor wave 1 was a leading diagonal, the final wave 5 should not be an ED.
[Update 8:30PM: The Nikke/Dow divergence rages on.]
[Update 7:45PM: Yet again another chart with my naturally bearish bias built tight in.  The point of the chart though is to show how Minute [i]'s have been extended waves, [iii] has been shorter and [v] has been a "blip". All we are really looking for is a short consolidation sideways blip we can call Minute [iv] and then a new high we can call [v].  Internals seem to be suggesting that buying power is waning so we'll see.
[Update 6:55PM: And here is the same chart of Intermediate (A). It also had the same down-trending internals. However the peaks and up volume ratio averages during (A) were much higher than was is occurring in wave (C).  Yet still at the end, the market flash-crashed when there was no more buying power.

The price correction was aggressively bought for weeks after the flash crash.
[Update 6:40PM:  Charting the internals of proposed Intermediate (C) yields results that are in line with the current count. This is not my bias at work here, I didn't make this chart, the market did.  And the market's internals are getting harder and harder to muster up a volume ratio that is capable of sustaining the advance much further.]
[Update 4:54PM: Gold. Getting closer.]
[Update 4:47PM: China]
[Update 4:39PM: I added the Dow Utilities to the chart below. They are even more anemic than the Industrials.  Between the three, they are obviously severely fractured long-term. And in Dow Theory, that represents an unhealthy technical condition and is a serious red flag warning.]
ORIGINAL POST
A potentially huge bearish signal was triggered today. As of now, the market is officially on the "non-confirmation" clock between the Dow Industrials and the Dow Transports.  The Industrials must move to a new all-time closing high in order to confirm the so-called cyclical bull market.  As of now the non-confirmation shows a severely "fractured" and unhealthy advance of the markets.

Normally the the bearish non-confirmation would be resolved in due time and confirm the move. But in this case, unless the Industrials proceed to gain some 1300 points in a short amount of time, the chasm between the 2 indexes will stand out.

This is the largest non-confirmation in history between the two indexes no doubt.
We are only points away from where 5 = 1 within (C). The problem is Minor 5 lacks a decent subwave count at the moment.
Potential squiggles:

E-minis [Update 12:22PM]

[Update 12:22PM: Possible e-mini count has the wave (i) - not really paying attention to degree here - as the longest wave in this current sequence. That would place (v) at approx 1367 SPX, or where Minor 5 = Minor 1 within (C).
[Update 11:26AM: Overthrow or breakout for IYR?
[Update 11:06AM: Local squiggles:
[Update 9:54AM: Current squiggles
[Update 9:15AM: A tiny five wave move up on the dollar.
[Update 9 AM: Dollar. Looking for signs of life. So far, an a-b-c up. Rooting for a fifth wave up.
Got TOS working again
I cannot get Think or Swim to open. Anyone else having problems with that platform?

Wednesday, April 27, 2011

Elliott Wave Update ~27 April 2011 [Update 9:29PM]

[Update 9:29PM: Oil update, on track for an ED pattern high. That would align with a panic-selling dollar low perhaps. No doubt, things are getting extreme in all markets, worldwide. How long it lasts is why we count waves.   
[Update 8:42PM: The final wave (5) of the NYAD count eerily reminds me of the way Cycle wave V in the S&P500 advanced from 1987 to 2000.  Seemingly never-ending with perhaps an extended wave three. Yet the underlying clues - see the indicator note at the bottom - are on my side at the moment ( I think!)

What will it take to change or make me doubt my view? Well lets say the daily A/D ratio or volume up ratio pops radically to the plus side as it did during the 2010 correction.   So far that has not been the case. If its coming then so be it. But until then, I have the count of an Intermediate (A)(B)(C) - P[2] to be precise - in large part because of this chart.]
[Update 6:42PM: Debunking (arguing against) the P[3] UP wave count. This isn't my bearish bias talking in this chart, it is simply EW theory.

We are approaching the point where one of the 2 EW camps ( long term bullish or bearish) will be vastly wrong. Sentiment on P[2], or a giant A-B-C zigzag, is at an extreme low I would think just by judging comments over the last months alone.]

[Update 5:30PM: MUB chart update.  That recent triangle is textbook.]
ORIGINAL POST
DOW theory is headed for a major non-confirmation. Should the transports close a mere 50 points higher than today, there will be a major non-confirmation with the Industrials.  This is a certainty as the Industrials cannot possibly capture its all time 2007 high without a major non-confirmation period existing with the transports.

If this is a near certainty, can we already declare that DOW theory is flashing bright red for this market? I say so.
It felt as if the beginning of a "zany" period started in the markets today. 

We have Minor 5 = Minor 1, a most common relationship, at 1367 SPX.  We are 11 points or so from that target. Problem is, the wave pattern does not yet sport a subwave [iii] and [iv] within Minor 5 just yet so we are again just probing around waiting for a clearer subwave count to emerge.

We could still be in Minor 4 since it shows no alternation with Minor 2. We have a "3-3" pattern so far since the February prices peaks.  This 3-3 pattern could become a Minor wave four 3-3-3-3-3 running triangle, or a more bearish downturn in prices in a 3-3-5 expanded flat. 



E-minis

Tuesday, April 26, 2011

Elliott Wave Update ~26 April 2011[Update 8:52PM]

[Update 8:52 PM: Very low long-term sentiment on the dollar. Lowest on this chart yet prices are not the lowest. Divergence?. Chart via Sentiment Trader http://www.sentimentrader.com/
[Update 5:32PM:
"MR BERNANKE, IS NOT WHAT THE FEDERAL RESERVE DOING IN FACT A PONZI SCHEME?"

I hope some reporter has the balls to ask the Fed Chairman that point blank tomorrow and get aggressive with the facts that Primary Dealers are acting as Ponzi agents for the FED and then selling bonds to the FED within weeks of initial buy.  I can see it on the DRUDGE REPORT plastered in big letters "FED STUMBLES ON PONZI SCHEME QUESTION"

Ah, but that would be too close to reality. Instead I presume the reporters were "screened" and will throw softballs for 30 minutes.  Or at least present questions that can be gobbledygook in some economic-academic-vomit-speak until time is up.

Wall of worry?

Yeah do you think the worry will abate 100 SPX points higher? 200 points higher? The "cat is out of the bag" so to speak. The debt is there, will not recede, and will only get worse. The Fed is boxed in people. The World is boxed in.

The wall of worry will only grow taller as the total systemic debt gets bigger.

[Update 5:10PM: Some Minor 4 potential counts. We have three down and so far clearly three up.]
ORIGINAL POST
The Wilshire5000, or the total market, rose to touch 13,350.68 intra day. This is where Intermediate wave (C) = .618 times the price length of Intermediate wave (A). The exact ratio price is 13,350.98 so it came within 1/3 of a point.  The market then fell back from this spot in what could arguably be 5 small intra-day waves down.

The SPX came within 2 points of its .618 x (A) relationship when it almost hit 1350 SPX.

A very powerful wave relationship of at least Intermediate or even Primary size has been fulfilled.
In fact you can say our .618 x (A) chart has panned out incredibly accurate as of today at least. the DJIA has "caught up" in fulfilling this (A) = .618 (C) ratio where the last time I showed this chart, it was lagging.
IYR in weekly mode upon long term resistance.

E-minis

Looking for a viable chart pattern. The only thing that stands out is a potential ascending triangle.  This actually makes sense as the rise from the low could not match the previous high, thus prices try and triangulate and eat the bid in order to again challenge and take out the highs. 

This is partly often why triangles occur in the fourth wave position.  Bullish sentiment typically is still running very high, yet prices begin to show signs of fatigue in an eventual fifth wave weakening rise.  The mismatch between aggressive bullish sentiment (everyone is "in" at that point and nothing left to sustain prices) and weakening internals results in a correction that corrects at least the entire five wave rise for starters.  

If this pattern is correct, I would expect prices again to stall out here and fall away back down eventually to the ascending lower line and likely even a break under the line in a false bearish break which typically happens with E waves. 

So as related to the cash index SPX, I would suspect that huge 6.5 point gap up last week will be closed or at least partially closed.  It would be the approximate next "dip buy" spot I guess if you want to call it that.(although I dislike that term) and may mark wave "[e]" in an ascending triangle.

The nice thing about triangles from a bear point of view is that the new high breakout, if it comes, is all that is required. We can set a triangle price target but if all the buying power was "used up" in both forming the triangle and the subsequent breakout, the price target of the triangle can be lower than anyone expects.
The DJIA is another story.  We have again seen it stall/fall away at the proposed Supercycle line.  We have a breadth divergence locally occurring also which may portend a wave down in prices to come.
Good Luck today. Fed worship is no doubt running at a fever pitch.

Monday, April 25, 2011

Elliott Wave Update ~25 April 2011 [Update 6:04PM]

[Update 6:04PM: 30 year yield still on track for my wave (2) count]
[Update 5:37PM: Probably too early to project a huge falling wedge on the dollar for a cycle wave II, but at the moment, nothing else stands out as a better count.   This count implies we get a wave (4) correction upwards to above wave (1) price low and then down in (5) of [C] of cycle II.  This would make the dollar's ultimate cycle II low in a few months time.  All in all, this count obviously has the 2008 low holding firm.]
[Update 4:47PM: Oil's count would look better with yet another squiggle higher. It too may be wedging and with calls of $175 oil, sentiment is running high as it was back in 2008.]]
ORIGINAL POST
Its probably best to step back and look at the daily on the overall market.  We have some potential clues so far (using the Wilshire 5000):

1. What we see is that proposed Intermediate wave (C) is still well within its up channel.  
2. We have 3 waves down from price peak to the lower part of the up channel. That is corrective by EW standards.
3. If Minor 5 had ended in truncation, last week's rise back upwards does not fit well just yet with "price exhaustion" that a truncation is supposed to signal. So we must assume for now it was not a truncated 5.
4. Minor wave 2 and Minor wave 4 within (C) are both zigzag corrections which does not adhere to the guideline of alternation.

Taken altogether, therefore the logical conclusion is that the market is either working on a continued Minor 4 correction, best guess ascending triangle to get over resistance or working on Minor 5 up itself.

The bottom line? Got to let things continue to clarify until a clearer picture emerges. Sentiment is very bullish, or at least no one is willing to short this market.  The VIX closed back inside its daily BB today so the trigger has been tripped for some short-term volatility. We have a huge gap up from last week that makes a nice first downside target.
Haven't given up on the idea of a huge wedge move in IYR:


E-minis