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Wednesday, September 18, 2013

Elliott Wave Update ~ 18 September 2013

[Update 8:25 PM: Long term take on Gold has not changed in years. I know this chart makes a lot of people groan, but if you view it in terms of a great deflation event - which must happen prior to any hyperinflation in my opinion - it makes perfect sense.

Hyperinflation is more a political event. Hyperinflation is a political choice to "break" your monetary system because things got out of control. I repeat - things must get out of control first.  In our case, for things to get out of control there must be a great panic first. A massive decline in social mood on a scale larger than that of the Great Depression.  And the likely result will be the absolute bursting of the historic credit bubble
we find ourselves in.

At some point in the future, near a social mood low no doubt, the choice will be made to change our credit based system into something else. When the credit system has collapsed and is at a low (every thing has cleared by default and bankruptcy) we ironically will probably decide to politically shitcan the credit system as a whole and adopt something....likely even more insane!

In other words just when our credit-based system is finally "cleared" and back on solid footing (healthier) again and all the malinvestments have been largely cleared out, that is probably when we'll abandon it. Ironic, yes, but that's the way human emotions at long term extremes works.

And then we'll have our hyperinflation under our "new" way of doing things.

But not as long as the system is functioning "normally".  The system must break first.

Why $475? Because that is the "virgin spot" - middle of wave [iii] of 3 of (3) of [3] - of the entire cycle wave I advance.

ORIGINAL POST
Somehow I just knew today's Fed announcement would not go "as expected" (i.e - taper confirm).  Having the market's 4+ year rally end on a "tapering announcement" and then the market goes down from there in a historic cycle wave c price drop just never seemed the likely scenario. So it is with great relief that the Fed announced "no taper for now" and the market got jubilant. That is how the market should top. When every last bear is resigned to the "power of the Fed".  Stocks can only go up from here right? Isn't that the thinking?

And about that "no taper"?  My take is that the FED will indeed taper - maybe even beginning tomorrow probably! Ben is a liar at this stage he has no choice.  He thinks the market reacted too negatively to his previous taper announcement and his hubris thinks he can control the "emotions" of market players. But taper they must start soon and probably will - and of course they will not announce it.

If this week's advance reverses and closes lower next week, there would likely be a lot of "buying climaxes" produced. What evidence do we have that this may happen and signal the end of cycle wave b?

SPX weekly chart shows amazing symmetry.  The chart speaks for itself.
Very nice impulse count for what could be Minor wave 5 (using Wilshire5000 for form)
VIX has almost closed that last big gap.  Note that the VIX is higher in price despite the higher market prices. That is typical at a major turning point.
How is that a minor 4 count? Well, the best I can do is be creative. It is apparently a complex corrective. It "looks right" on the DJIA however (not shown).
Yes and the NYSE cumulative line still has not confirmed the move on the daily.
Conclusion:

Today was an emotional day for the market.  Yet it was not quite a 90% up day. In fact, according to Sentiment Trader's intraday indicators, the NASDAQ had only 63% up issues versus declining issues at the end of the day. The NYSE had 85%.   The DJIA was up less than 1%.  Yet, it seems much much more "wild" due to speed of the"knee-jerk" rise.

The weekly chart above says a lot.  Major channel lines are being hit. Time and price ratios are at an amazing juncture.   And the Fed "announced" the market must continue to rise.  

But will it?  Good Luck.


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