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Tuesday, July 31, 2012

Elliott Wave Update ~ 31 July 2012

Little impulses to the downside versus corrective waves up since the 1391 top.
Overall picture using the Wilshire 5000 for form. Note the alternate count could be labeled a double zigzag or not. Its basically the same structure though either way which is why its labeled "[a] or [w]", etc.
NYAD weekly. Doesn't the RSI look ripe for a major decline?
China could be breaking under support:




E-minis


Monday, July 30, 2012

Elliott Wave Update ~ 30 July 2012

Kind of expected the way the day played out. A new burst to a higher high then some (seemingly) consolidation.

Top two squiggle counts:
Or Minor 2 could be over:
Daily:
A lot of non-confirmations going on at the moment:
Using the Wilshire 5000 for the overall count:


Sunday, July 29, 2012

E-minis

Friday's price hit the 78.6% Fib retrace.

Friday, July 27, 2012

Elliott Wave Update ~ 27 July 2012 [Update 7:53PM]

[Update 7:53PM]
SOME COMMENTARY ON THE FEDERAL RESERVE
1. The most troubling aspect of all the Fed "buying" (that I never see mentioned anywhere) is that the Federal Reserve has a "claim" to at least almost 20% of the United States and by 2014 that could be as high as 25%. By buying more MBS - open-ended no less - the FED may just wind up being your landlord.  If the shit hits the fan like I think it will, the Federal Reserve will simply take possession of whats on their books.  How did it go from a bank with nothing to owning 25% of the United States in 100 years? Yet we continue to be clueless and they count on that. Does no one see this for what it is? I posit that social mood will win out in the end and the Fed has sewn the seeds of its own destruction.

2.  Regardless, I tend to think that the Fed did panic today. They basically bet big and went "all in". After all, how much more can you expect now that debt purchases have been declared as "open-ended"? When do you stop front-running? When it is a one-sided traded is my guess. We are about there.

Me and Mish are not the only ones who think it shows panic today. Ron Paul does too.

3. Another Zero Hedge link and this one on the hubris of Ben Bernanke and the stated intentions to affect social mood to stimulate the economy. This snippet pointed out by Zero Hedge is just amazing in its honesty by Big Ben to finally admit what they are trying to do.  They are trying to goose social mood! He said it outright in several ways. He is trying to blow a housing bubble (damn the middle class who has to pay 4-5-6 times price/income ratio). He said it!

Who knew Ben was such an advocate of social mood to affect markets? We knew Greenspan was a bit of one. But Ben? However the hubris comes in here in spades.  That they think they can manipulate social mood is like thinking they can play God or bypass Nature's Laws.  A top tick moment above the wedgeline to make this admission? Is Ben now comfortable with the apparent trend that he feels ok to open up like this and admit this?


ORIGINAL POST
The market has spoken. Minor 2 is still on and the ascending triangle turned out to be correct. Congrats bulls. Even the 1390 mark that a lot of people have chattered about was about touched.

Measured move target for Wilshire 5000:

Slight negative divergence on the NYAD line:
SPX daily:
NASDAQ 100 (and composite) has not yet confirmed the move of the DJIA and S&P500.
GDOW at a mere 38% retrace of the March high.
Transports have not confirmed either:







E-minis


Thursday, July 26, 2012

Elliott Wave Update ~ 26 July 2012

Its my birthday so this post is short for now.....probably be back later though. Having some Capt' Morgon and accepting birthday donations! yeah! hehe!

Up volume ratio ended the day at 81% - not bad. Up issues ratio ended at 74%. These internals are consistent with a short covering rally shaking out weak hands, not the "kickoff" to a major wave up.

SPY gap up is ridiculous and wide open. A close under this gap is bearish. It will happen. But when?

Count is Wave (ii) of [i] of Minor 3 down but hey we'll let the market work out what it wants to do.

SPY gap down was covered.

Sunday's gap down was perfectly covered also.




E-minis


Wednesday, July 25, 2012

Elliott Wave Update ~ 25 July 2012

It is apparent how important the support zone from the 1325 - to the lower 1330's area is to the market. Yet another bounce today from that zone.  Usually we hear about seller's exhaustion but in this case it could be buyer's exhaustion setting in at these levels (see NYAD Count for possible confirmation).  If of course this is Minor 3 down - which is the primary count - that should prove to be the case resulting in a selloff that takes markets lower in a  small panic burst.

If there is one thing I learned over the years of viewing market price and wave action is that the market will take its own time in doing things. Although it seems like forever for bears in waiting for Minor 3 to show its true self, these things cannot be rushed. Its either Minor 3 - or its not. Yes that seems simplistic and even a slightly retarded thing to say but that is the pure logic that I love about EW theory.  The wave theory is solid. Even casual wavers can see the wave 3's, etc. 

Counting and anticipating the next wave of course is where it becomes fun...and frustrating at the same time. 

The daily shows that the market tested in 2011 and fought hard in 2012 to attain prices above the 1330 SPX area.  Another loss of this price support as mentioned above is a not good for market bulls. But again, if this is Minor 3 down, it is inevitable. The wave count since the 1266 low is upward choppy and looks like overlapping corrective waves. That is basic EW theory which means sooner or later than trend should switch back to solidly down.
Squiggle count is kinda up in the air. Could be more up action to complete wave (ii) of [i] of Minor 3.  That big SPY gap down might be a target if the market can muster another buying spasm. A mere 62% retrace of the decline since the 1380 high is approx 1360 SPX which would about cover the gap down. Note the top ALT that (i) and (ii) are complete.
The best medium term bullish count is an ascending triangle argument. This is a weak pattern on the S&P500 but a more viable pattern on the Wilshire 5000. But the pattern is not strong for several reasons 1) The internal wave structures do not count well as triangle legs.  2) Price action and market internals do not work well as triangle legs. This count is a remote possibility but only if 1325 SPX pivot can hold and the 1380 mark is taken out to the upside. At this stage wave, price and technicals do not strongly support this count.

E-minis


Tuesday, July 24, 2012

Elliott Wave Update ~ 24 July 2012

Primary count is Minor 3 down.

The market knows it is nearing important support.  The bounce today at 1329 was logical. A loss of key support - say 1325 - 1333 SPX roughly - should result in the market testing 1266 pivot lows.  I don;t think 1300 is going to be much support if 1325 is taken out. Closing beneath 1325 SPX would confirm a trend change to the downside as this would result in lower lows and eliminate the ascending triangle alternate count.

SPX 30 minute. Wave (i) low or are we looking at a possible wave (iii) of [i]?  That count would result in a bearish selloff.

CPCE still remarkably complacent. It has plenty of room to soar in a Minor 3 wave down.
NYAD count seems complete. Its amazing how well this chart makes wave counts.

And according to Sentiment Trader, the market has triggered a Hindenburg Omen.

Even to a casual Elliott Waver, one can see the NDX does not display any kind of impulse since the recent 2443 June low. Its all very overlapping since and "three-ish".  And that means the trend should resume down. You can see how prices are trying to maintain a "higher low" stance, with the bulls knowing how important that is. If the count is Minor 3 down, prices won't be able to maintain. And once the pivot support breaks, there could be some nasty selling. After all, thats what Minor 3 is all about.

A reminder about the historic DOW THEORY divergence non-confirmation that has existed for quite some time.

E-minis


Monday, July 23, 2012

Elliott Wave Update ~ 23 July 2012

Prices hit trendline support after the negative open and managed to rally somewhat.
The bulls can claim a bullish ascending triangle is forming at least on the Wilshire 5000. I won't argue against it. Until 1325 SPX is taken out to the downside, the ascending triangle is a legitimate pattern. Its the top alternate count.
SPX 30 minute chart. So far the count is a double zigzag. The ascending triangle doesn't work as well on the SPX as it does the Wilshire 5000 because the 1380 pivot is much higher than the 1374 price point.  In a proper ascending triangle these 2 prices are supposed to be about equal. So buyer beware.

Sunday, July 22, 2012

Friday, July 20, 2012

Elliott Wave Update ~ 20 July 2012

A break of 1357 would likely confirm that Minor 2's double zigzag pattern is complete. This is where wave i of (c) price peak resides.

Thursday, July 19, 2012

Elliott Wave Update ~ 19 July 2012

The market is creeping toward the last resistance as shown in the daily below. Prices have closed over the bigger resistance line.  The market looks tired though with only a 1:1 advance ratio and 1:1 up volume ratio on the NYSE today.

Also note how time-wise, Minor 2 is now more than adequate in time. In fact it is more than a .618/.382 ratio so its primed.  
We have a cluster of Fib relationships coming up from 1389 - 1405 SPX. 

Squiggles shows the count is perhaps missing wave (v) of [y] of 2.
I'm going away for the weekend, there is a slight chance I won't have internet tomorrow morning to post an E-mini daily conversation post.   If there is no update tomorrow then that means I really got hosed on a no internet connection for the weekend.  I don't expect that to be the case however.

NYAD count is very mature.
Weekly NYAD count:
Things are getting exciting.  The market is back up to being pretty expensively priced in my opinion.  There is a creeping negative divergence setting up on flat up volume ratios. The NYAD counts as "complete" or nearly so. The double zigzag is nearly complete.

SPX weekly.  Prechter's 7 - 7 1/2 year cycle is waning. The approximate midpoint of the cycle is October. It is now almost August. It makes sense that the cycle weakens prior to its midpoint. Thus Minor 2 up is still the call here with Minor 3 due to come shortly.

E-minis


Wednesday, July 18, 2012

Elliott Wave Update ~ 18 July 2012

Double zigzag is the primary count. Could be missing a few subwaves.
NYAD count looks better and is falling into place.
SPX daily


E-minis


Tuesday, July 17, 2012

Elliott Wave Update ~ 17 July 2012

The best count(s) continues in either wave (ii) of [i] of Minor 3 down, or Minor 2 double zigzag with an SPX price high above the previous 1374 pivot is coming. My guess would be 1390ish if the double zigzag is in play or even a stab at 1400 again.
Sentiment is again a mixed bag. Via Sentiment Trader, we have 8% bearish extremes versus only 1% bullish extremes. So one cannot say that there are too many bears. That is simply not supported by the data as there exists more of a bullish sentiment rather than not. Even the  "smart money", "dumb money" confidence data is split evenly at 50% each.  One could surmise if the market creeps higher than 1374, sentiment data will get more positive and move toward some bullish extremes.

Here are some Sentiment data charts that support the bullishness in sentiment (and thus eventually bearish for prices).

Small Spec positions. Note the Stochastic


Short Term Extreme Model (STEM)
SPY Liquidity
Investor's Intelligence Bear %. (where are the bears?)
Hulbert's.  Extreme bullish territory.
Rydex Mutual fund ratio. 

So the above charts prove that there does not exist excess bearishness to "climb the wall of worry". There are really no worries it seems. The bearish sentiment data that existed as a result of the decline to 1266 SPX in Minor 1 down has been shaken out and then some.

So as we yet do not know if Minor 2 has ended or not, time and math is on the bears' side.

Even the VIX reflects complacency.  This complacency makes for a perfect setup for Minor 3 down.
Yet the NASDAQ 100 seems a bit muted since its pivot low.  Overlapping wave structure ever since.
CONCLUSION:
The primary wave count and sentiment data supports the notion of Minor wave 3 down to either continue with a big downside surprise day or Minor 2 will top and the market will turn down sharply.  In either case, the longer term count is bearish.