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Tuesday, April 30, 2013

Elliott Wave Update ~ 30 April 2013

Update 9:45PM: I changed the first chart it was the wrong file uploaded.
In the below 5 minute Wilshire chart, the top middle of the up channel would have made a nice wave [v] spot, but that high was not above the previous Minor 3 high. So the market may have entered an ending diagonal triangle in an attempt to get above the previous high and today's close did just that.
 
The below 15 minute S&P chart shows the same squiggle count.  To confirm this count, we can expect a quick 40-50 point SPX drop to below 1460ish for starters due to exhaustive nature of the ending diagonal triangle.

So that's the call here. Perhaps a quick pop - perhaps hitting 1600 SPX and therefore triggering a secret algo "sell" spot then price collapse based on the potential ED pattern of at least 40-50 SPX points based on the start of the pattern at 1563.

E-minis


Monday, April 29, 2013

Elliott Wave Update ~ 29 April 2013

We are seeing a fairly long-winded positive divergence in the VIX since the VIX low last month. This is a typical indicator of an intermediate sized topping process.
Using the Wilshire for superior form, the squiggle count of the final Minor 5 looks nearly complete.  The S&P equivalent would probably imply that the SPX nips at the 1600 level.
NYAD count. The channeling is the interesting aspect and the 5th wave extension count. Also note the deteriorating technical pattern of the RSI.

E-minis


Friday, April 26, 2013

Elliott Wave Update ~ 26 April 2013

The two E-mini charts below shows that prices are still within channels on two different scales. Until these channels break, the uptrend cannot be confirmed as over yet. But if you have been following charts such as gold for the last 2 years, the handoff from "strong" to "weak" hands above a seemingly solid support shelf took a long time.  Every time prices reached that shelf, buying took place. Yet there was a series of lower highs and the support shelf eventually did not hold.

If stocks have topped, then we could be facing a similar situation in that a protracted topping is occurring (yet the handoff time period would certainly not be as lengthy as gold).

The channel up from November is still intact.
And channeling from the recent low is still also intact.

E-minis


Thursday, April 25, 2013

Elliott Wave Update ~ 25 April 2013

The retrace from the recent 1536 SPX has traced too high probably to be called a second wave up (although technically it can still be called that). Rather the alternate count I have been showing the last few nights may be the correct way of looking at things. And it may end truncated.
Short term squiggles for 5 of (C) would count like this:
We could still label Minute wave [ii]. The problem is it no longer has the "right look" and is stretching things a bit. This count would have looked correct if the high has finished at 1572ish, but it has traveled much higher in price obviously and persisted too long in time for an expanded flat count to look correct. (However the DJIA is lagging and wave [ii] count may be correct for that index).
Long term counts:

E-minis


Tuesday, April 23, 2013

Elliott Wave Update ~ 23 April 2013

Top count has Minute wave [ii] nearly topping (or already so).
If the market makes higher highs, the best overall count would be this. There are some things going for this count that work better. Namely the alternation between waves 2 and 4 and between [ii] of 3 and [iv] of 3.  Channeling would also be superior.

E-minis


Monday, April 22, 2013

Elliott Wave Update ~ 22 April 2013

Primary count is that the current rise is Minute wave [ii] of Minor wave 1 down.

Here is a best guess squiggle count based on time and price Fibonacci ratio levels.  There has been almost a 50% retrace already which puts this wave count firmly in the Minute [ii] camp:
And a bigger picture shows the market is likely making a head and shoulders topping pattern at Minute degree:
A while back I stated that CMG would make a potential excellent short at the $352 -$370 range while noting that $362 was the 61.8% Fib retracement level.

CMG is now back from oversold on the weekly time scale to overbought. The wave pattern seems ripe for a decline again (although if the gap down closes we are looking at a run-up toward $400 first). Note that recent volume to the upside was decent, but that it was dwarfed by the downside volume from its peak.

The open gap down runs up to around $400.  I suppose that's the ultimate target for CMG bulls is to close that gap as best they can for revenge.
Long time since I showed oil. But that's because it has been in a meandering pattern for as long as gold was. The descending pattern may be distributive.  Lower highs describes this pattern.

If oil can get a higher high (which it has been unable to do for 2 years), then we can maybe we can get bullish. But until then, prices are a classic strong hands to weak hands pattern.
CPCE:
The 6 month yield. I contend this count is the key to the entire Ponzi scheme. Should it break resistance to the upside, things will unravel for the economy and the FED very rapidly.  Remember, short terms rates are set by the market not the Fed. The Fed follows the market and not vice versa. Just ask Greenspan who on several occasions has casually talked about how the market actually is in control of rates and that the Fed reacts to that.

(This is why the Fed's Volcker in the early 1980's did not "control" or "had guts" (as the media credit him for) to raise rates. The market forced him to so so. Its a media myth that attributes much to Volker but a rising social mood in the early 1980's allows us to look back on Volker in a good light no mattered what the facts were.)

If the 6 month rises, you can be sure the 3 month yield will rise and you can be sure the Fed will raise interest rates whether they like it or not.

E-minis


Friday, April 19, 2013

Elliott Wave Update ~ 19 April 2013

Its a matter of support, resistance, channeling, possible backtesting, gaps up and/or down that'll help determine the wave structure in the next couple of days.  Monday should add a lot to the current squiggle structure.

First things first, we are assuming the 1597 SPX high was the cycle wave b "top".  Therefore if this is true then we are looking at counting impulse structures to the downside to begin the count on 5 Primary sized cycle "c" waves. That's the beauty of EW count logic.  If these are "corrective waves" since the top, then simply put, there will be a new top in the future at some point. Hurray! We got the bull count covered huh?

But we do seem to be impulsing nicely from our recent top so my count will be skewed toward making sense of it.

SQUIGGLES
The market ended today at the top of the "base" channel today. If the market can gap up over that come next week, then we are looking at a likely Minute [ii] wave. A gap up can cause the market to easily run to next resistance area of 1570-1573.  If that happened we are definitely labeling this as Minute [ii] bounce due to its size and relationship to the previous decline.
Therefore a pop up will likely at least backtest the broken up channel line and also form a nice Head and Shoulders topping pattern.
If Monday obeys the base channel and does yet another gap down, then we could be looking at a [i] - [ii], (i) - (ii) sequence and a break under the base channel and horizontal support at approximately 1538-1539 SPX causing panic and a wave (iii) of [iii] (otherwise known as the "third of a third" wave).  

OUTLOOK:
In this case since e-mini futures are also up against its downtrend line, Sunday night's future movement should perhaps give us an indication.  Either way the basic premise is this: In a bear market cycle wave "c" all rallies are to be sold into.  This was the way the 2007 - 2009 decline progressed.  

I will say this:. Via Sentiment Trader, all of their "intraday" oscillators and sentiment indicators are in or near "overbought" territory, not oversold. This includes their STEM MR and NASDAQ models, cumulative tick,     price oscillators, TRIN, UP volume and Up issues ratios, VIX and VXN strength. However CPCE amd ISE  put/call are not overbought so for that reason alone may cause a Monday "pop" upwards. But for the most part this is how a "sideways" movement can work off deeper oversold conditions while maintaining price and "setup" the market for a ripe decline.  So a somewhat ideal setup for a sharp - and surprising swift - decline is at least in place right now.

We'll see, things are getting interesting.  

E-minis


Thursday, April 18, 2013

Elliott Wave Updare ~ 18 April 2013

From a technical standpoint, major support is being tested:

From a "channeling" standpoint, there exists a very nicely forming "base channel".  If this base channel is broken through , selling should accelerate.

So from a support standpoint - horizontal and channeling technique - there is reason to believe some panic selling is nearing in a "third of a third" wave down.

SHORT TERM SQUIGGLES
If the market is working itself lower in a large impulse pattern, do we see a bounce prior to breaking of support shelf mentioned above?

However, as I said last night, the squiggles will work themselves out. We have a clear major support shelf and a clear "base" channel developing.  All we can logically assume is that if prices break underneath both, then we likely will see our "third of a third" at "Minute" wave degree.

I can also see a count scenario where prices bounce back toward the upper blue channel line but I am too lazy too chart it.  So again, to repeat, all we can really say is that there hasn't yet been any real panic selling at the Minute []  wave level. Thus no (3) of [iii] just yet.

However the evidence shows where we might see that third of a third will occur - i.e - when the base channel and major horizontal support shelf breaks which resides very close.

LONG TERM COUNTS
Again the overall long term count supposes that cycle wave b has topped.  Do I care if the market goes and makes a new high? Not really.  As this point, who really cares?  S&P has set records.  There really is no "upside surprise" ability left if you ask me even if the market were to go up 1000 Dow points straight from here starting tomorrow. There exists the biggest disconnect from market prices from the reality of financial conditions of the entire world. We are living in historic times.

SENTIMENT
Yesterday's Investor's Intelligence report via Sentiment Trader. Sentiment is obviously still quite elevated.  It takes declining prices to turn the mood sour again. The downside potential is great.

E-minis


Wednesday, April 17, 2013

Elliott Wave Update ~ 17 April 2013

Hochberg of EWI had an excellent update tonight. His primary count has wave [i] low today whereas this blog's count has a series of ones and twos down.  But his main point is that the market will figure out the short term squiggles because the overwhelming evidence is that the market has topped in cycle wave b and the trend is down from here. So patience is required.

I can only add that when the bigger "panic" selling moments occur - if they occur - , they will be easy to spot. These major moments of panic selling will help identify key points of the overall larger wave structure based on the level of the selling , technicals, sentiment, and such.  We can only present the short term squiggles as best they fit into the most EW rules and guidelines as each day plays out. In the end, it works itself out.

The primary count is that a big "third of a third" panic of a larger degree Minor 1 is nearer than we suspect. The blue channel is perhaps forming a "base channel". Wave [iii] down would of course crash through this down-sloping  base channel.

The top alternate count is that of course today is Minute [i] low and a significant rebound will occur from here.

E-minis


Tuesday, April 16, 2013

Elliott Wave Update ~ 16 April 2013

Last night's squiggle count had Minuette wave (iii) low and expecting a weak Minuette wave (iv) rebound before Minuette (v) takes the market lower forming the larger Minute wave [i] low.  That count is looking suspect because of the sharpness of today's price rebound and a small intraday ending diagonal at yesterday's price low.

Yesterday's low probably counts better as Minute [i] wave low.  There was a small ending diagonal at yesterday's close which actually I should have heeded as a possible warning to a violent rebound in the opposite direction (up) which did indeed occur today. The violent rebound confirms yesterday's small ED pattern.

ED patterns rarely, if ever, occur on any size wave three's.  This is because typically wave three's are the strongest and wave threes (no matter what degree) shouldn't exhibit any non-impulsive moves within its substructure.

Therefore yesterday's low was unlikely to be wave (iii) low.
The current primary count.

There is much going for this count.
1) "virgin space" in the middle of wave three in price.
2) wave (iii) a Fibonacci 1.618 times wave (i)
3) wave (v) equals wave (i) more or less
4) ending diagonal finishes at the low.

As a side note, I may have the wave degree labels one degree too high.  But I'll correct that if need be in later updates. Its the waves structure that matters at the moment. And although it does not channel well, the sub-waves fit very neatly into 5 wave pattern down from 1597 peak.
My mistake for overlooking the possible ED pattern yesterday.

E-minis


Monday, April 15, 2013

Elliott Wave Update ~ 15 April 2013

Primary count is that cycle wave b has topped out at 1597.  Cycle wave c of supercycle wave (a) would consist of 5 primary waves down.   The market would therefore be in the early stages of Primary [1] of c. Yes there eventually would be a  P3.
Local count:
Support on gold was smashed on record volume.
And yeah, , my long-standing target of sub- $500 for cycle wave II is still the projection. Thats where the "virgin space" resides.

Sentiment:
True Elliott Wavers base many things on sentiment readings both long, medium and short. After all, EW theory is a social mood theory at heart and social mood is sentiment at its most basic.  This is why we pay so much attention to sentiment data. When sentiment gets too extreme one way or another expect social mood (hence stock prices) to go the opposite. Its Nature's Way of not letting things get out of hand on both the upside and downside.   Mass greed (peak) needs correction. Mass dire mood (trough) needs correction. Its what keeps mankind in check. At very large wave degrees, the movements are also huge and potentially deadly. We are likely riding just such a Supercycle (and on a larger scale - Grand Supercycle) wave for the past 13 years.

There is a situation where prices do not rebound on massive negative sentiment. 

Long time readers of this blog have heard me spoken of the "Ponzi sentiment" mentality. Basically this is where sentiment is extreme negative yet prices still sell.  This is basically the point where you realize you are caught in a massive fraud. So despite extreme negative mood in a Ponzi mentality, prices do not rebound, they collapse.

There is another aspect of this theorem that has come to light in recent weeks. Its the "bank run" (Cyprus) mentality. This is where despite massive negative mood, prices will fall and liquidity will dry up. There is no "upside surprise" to a bank run usually nor a Ponzi scheme that has come to light.

Now I am not saying the market is currently experiencing this just yet. However I am saying that for cycle wave c to do all its glorious damage in prices that is projected over the next few years, as some point the Ponzi mentality will come into play on a large scale perhaps and at many stages. We perhaps will see this glimpsed also in things such as gold.

I love gold. I think its real money. But unfortunately the paper market is a massive overleveraged (100 - 1?) fraud.   There is nowhere near enough real gold backing all that paper. And how that affects "real" prices in gold will ultimately be extremely volatile.  I think your seeing some of that today. In the end the market will figure things out.  In EW terms, I project a low to be sub $500 in the years to come. Then once the financial  system "resets", I think you'll see a great inflation and Gold will follow accordingly.

But for now, a great "deflation" must occur first. The credit-based world must deflate first. This is what has always happened in a great credit bubble. Its never failed to deflate. This time will be no different. And this bubble is so big, we will surely say to ourselves in many years time from now: "what the hell were we thinking?"