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Monday, September 30, 2013

Elliott Wave Update ~ 30 September 2013

Its a very fractured market at the moment.
On the squiggle scale, the decline looks non-impulsive for now which would characterize the decline as corrective. However support was broken, so we'll see what tomorrow brings. If its a developing impulse down, then a third wave of hard selling would be the next wave that is due.  
Monthly picture:

E-minis


Thursday, September 26, 2013

Elliott Wave Update ~ 26 September 2013

Still holding support for now. Adjusted the squiggle count.

E-minis


Wednesday, September 25, 2013

Elliott Wave Update ~ 25 September 2013

There is a prominent short-term support neckline that has developed in the Wilshire5000. It has nearly 6 touch points so likely the market deems it important upper level support.

If the neckline holds, we will probably get a very nice price rebound. If the neckline breaks, selling should intensify and the price decline of the past 5 days should, as a minimum, at least double. 

E-minis


Tuesday, September 24, 2013

Elliott Wave Update ~ 24 September 2013

There is a continuing heavy bias in the options markets toward more upside. Both the CPCE and CPC are registering significant lows in the 5 day moving average.
Possible squiggle count shows a very decent 5 wave pattern down on both the Wilshire5000 and SPX (not shown)
Again the big picture weekly SPX. This is the best EW count that we have. Its a "three"  (hence corrective) since the 2009 low by all rules and guidelines known to EW theory. I didn't invent this count, nor the trendlines, nor the symmetry between [W] and {Y]. The market produced it.  Will it be the correct one in the end? Only time will tell.


E-minis


Friday, September 20, 2013

Elliott Wave Update ~ 20 September 2013

REASONS A TOP MAY HAVE OCCURRED (See SPX weekly)

1. Considering March 9th, 2009 was a cycle wave low, September 10th of this month kicked off the 55 month of rally.  55 is of course a Fibonacci number.  The 55th month of rally ends October 9th.  The market topped at a full moon and near the fall equinox.

2. Wave [W] took 103 weeks to its orthodox price peak to complete. Wave [Y] also has peaked in its 103th week of rally. The time ratio between the 2 are identical.

3. Price ratio between wave [W] (677 points) and wave [Y] (655 points) comes in at nearly a perfect 1:1 ratio (.967)

4. Wave [W]'s topping process took 21 weeks and produced a triple top. Weekly RSI produced a significant double negative divergence which displayed a slowing of momentum.  Wave [Y] has also triple-topped (in a fashion) in a span of 18 weeks and has produced an even more negative double weekly RSI divergence also showing signs of rolling over momentum.

5. MACD histogram since the entire 2009 low has downloaded and waned. It currently is negative on the weekly and shows a simple long term loss of momentum over the entire 55 months of rally..

6. Channeling between waves [W] and [Y] is nearly perfect.  The giant cycle-wave "three" pattern has produced this channel just as EW theory would predict. This channel and the large corrective in the :"middle" indicates a three wave pattern not an impulse. A three wave pattern - yes even a 1000 point rally - is a corrective pattern to the larger trend - which is down. 

7. Total volume has waned for 4+ years.

The above reasons are rather simple reasons but sometimes technicians and wave counters try and make things too complex. This is one time when perhaps all the signals are flashing a perfect warning sign.
On a squiggle scale, we have a nearly perfect - and appears completed - 5 wave move from the recent pivot low. That is also evidence that the current wave has ended.
As a bonus to our bearish setup as described above, the market produced a rising bearish wedge pattern complete with a bit of "overthrow". Now that prices are back inside the wedge, that is a possible indicator that it has completed.
Looking at a long term monthly chart also appears bearish. Note the waning volume. Note that this new all time high has produced the least momentum of the three major peaks.  The entire RSI indicator is flashing waning momentum as measured over decades.  The entire pattern looks ready to rollover.



E-minis


Thursday, September 19, 2013

Elliott Wave Update ~ 19 September 2013

Time marches on yet social mood is sinking ever more on a supercycle long term trend. That negative trending social mood is curbing the exponential growth of the historic credit bubble we find ourselves in.  The urge to curb spending has been gaining strength in the public mood  for at least 5 years - 13 years to be precise - but much stronger in the last 5. But now that urge to slow spending is finally taking hold in government - the last holdout of social mood expression - and that mood should cause the worldwide credit bubble to finally pop.

The Sequester is proof of that. Yes its "small" but first steps usually are.  The credit bubble has already slowed. We are cresting at a multi-month crest but the bubble is so enormous that we hardly even feel that we are perched on the top of the credit bubble wave. But I am convinced we are indeed.

If you count on The Fed being a stalwart against a credit collapse, think again. The Fed's balance sheet is minuscule compared to the overwhelming amount of debt sloshing about in the world. And don't even consider derivatives. Just look at the amount of interest rate derivatives on the books. Its astonishing we lasted this long.

But time marches on and social mood marches on. Greed is good in that it helps mankind advance economically but greed can only reach a certain point until where it becomes its own worst enemy. We are far beyond that stage. The greed is gorging on itself now, eating its own flesh. Nature's laws - of which I propose Elliott Wave theory is a major part of - ensures that greed will reverse.  Oh, don't get me wrong, people don't all of a sudden "see the light" (some do), usually Nature (or the market for our purposes) will take care of things forcefully and the greedy go kicking and screaming.

Unfortunately for us, a collapse of the system will not necessarily bring about a "seeing of the light" and then all becomes healed and for the better. Nay, goodness is not the outcome of social mood collapse. You and I can look forward to not only having our wealth destroyed, but our liberties taken from us and standard of living greatly decreased. For in a social mood collapse it will be a free-for-all in the subsequent power struggles and dark forces usually win out because they are typically more godless, ruthless and willing to go more extreme than the more moderate groups fighting for control. We have far too many examples in history to refute this. Nazism, the brutal communism of Stalin's Russia, Mao's China, etc are but the obvious examples.

So as much as we hate the crony capitalism we have today, there is nothing certain that tomorrow will be better as a result of a collpase of that system. In fact, history has shown us our future will likely be a struggle.

I just wanted my readers to be clear on where I stand on that. Although I can see a collapse coming (math sucks doesn't it?), and I can see (some) justice finally being meted out to the guilty as a result, I also realize that the aftermath is likely not going to be a pretty place.  There will be a power struggle in a society that has become fractured as a result of a collapsing social mood and the "winners" are hardly ever the good guys in a society going through major social upheaval. Such is the way of Nature.

10 Year:
Again the weekly because I think it is an important chart. Remember, Fibonacci 55 months started approx 10 September. We are in the 55th month currently. It ends 9 October.
Dollar chart. Sentiment is low via Sentiment Trader this graph is from before the FOMC announcement so likely bearishness is even lower now. Yet the dollar is still much higher than 5 years ago in 2008. Yet sentiment is nearly as bad.
Incidentally I seen "The Drudge Report" had a prominent display of the dollar as a roll of toilet paper (see the captured pic below) for much of the day on his headlines.  When something like this shows up on a prominent website, it could be a sign of a sentiment bottom.  We'll see. They displayed this 5-6 years ago, yet the dollar is well off the price lows.   Seems to me that we are fast approaching a long-term dollar selling "exhaustion" and a breakout over the neckline of the head and shoulders chart above may be forth coming soon enough.

E-minis


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.


E-minis


Tuesday, September 17, 2013

Elliott Wave Update ~ 17 September 2013

Big picture:
Nice pattern nearly fulfilled:
Tracking what we can at this moment. The rise since early September as an impulse wave. Placing the 38% Fib at the top of wave [i] thereby having the 61.8% Fib at what we have labeled the bottom of wave [iv] implies this up move is nearly over.



E-minis


Monday, September 16, 2013

Elliott Wave Update ~ 16 September 2013

There exists a negative divergence on the NYAD line.
SPX weekly. If new highs come this week, it will fulfill both a time and price relationship in this cycle b wave rally since 2009.
Wilshire possible counts:
If there occurs a new Wilshire 5000 high, then this may be the best way to interpret the subwaves of Minor 4. In effect, it would be an upward flat count with a complex subwave count.
CPCE



E-minis


Saturday, September 14, 2013

Elliott Wave Update ~ 13 September 2013

Better late than never I suppose. Had some internet issues yesterday. Sorry for the late post.

Using the Wilshire, this chart about sums the best counts.


Friday, September 13, 2013

Thursday, September 12, 2013

Elliott Wave Update ~ 12 September 2013

Elliott Wave logic is what I love about wave counting and takes the emotion out of wave patterns.

We can break this logic down to an "if, then" statement.

If this is Minute [ii], then Minute [ii] has reached a sufficient retrace range to be considered "finished".

If Wave [ii] is finished, then wave [iii] comes next.

If wave [iii] comes next, then it will be stronger than wave [i] and take prices lower.

That is where we are in the wave structure as far as EW logic goes.  I did not trace the pattern, the market did. EW theory is a probabilistic theory.  The odds of the pattern is based upon the strength of the underlying subwave structure. And right now the wave pattern has the "right look" of a 5 wave pattern down and a three wave pattern up. In this case the pattern is a Minute [ii] expanded 3-3-5 flat.
And other sentiment measures are right in line with a Minute [ii] peak. AAII and Market Vane  via Sentiment Trader:
II survey also shows appropriate bullishness.  This market is a ripe for a fall. Obama's declining ratings is a reflection of sentiment waning for many, many months. Something has to give.

We have internal evidence that this is a wave [ii] up. Diverging Advance/decline line versus prices and a 5 and 10 day CPCE average that has reached a nearly 3 year extreme despite having prices lower than the all time peak. This shows an excited herd of traders "expecting" the market to continue to even higher highs. 

And that may happen, I don't have a crystal ball. But all we can say is that the wave pattern is "setup" for a nasty wave [iii] down and a waning internals along with strong bullish sentiment gives a good deal of weight to this very scenario.
Despite the immediate bearish setup there may be one more lunge for a final subwave v of (c) of [ii] as shown in the Wilshire chart above.  This would likely correspond to a plunge in the VIX to close - or at least challenge - the last big open gap up.

The 6 month count is blown up. Although the long dated bond count looks good long term, rates on the shortest end appear to be ready to go negative. And that doesn't seem healthy (i.e. - not market bullish) does it?