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Thursday, October 31, 2013

Elliott Wave Update ~ 31 October 2013

The charts are updated from yesterday.

I use Wilshire versus SPX for superior wave form and channeling. But consider the SPX in the same count.

I suspect the market has topped. We had a touch of the upper channel and an attempt to get above it. It has closed back under. RSI is waning.
However being that the market may be missing a wave, our count of Minute [iv] of 5 of (C) of [Y] is thus.

Our "control" price is the wave [i] of 5 of (C) high of 18409. However if prices move below the previous wave (iv) of [iii] pivot of 18,588, then I suspect they won't be able to hold 18409 either and it would help confirm a market peak may be in place.

If we do get another wave up to [v] of 5, 18998 is the target.

And here is the squiggle count. I'm not in love any of these counts, however, they'll suit us for now.
10 year count. Since wave (2) was a sideways wave flat, then the current zigzag of wave (4) looks good and fulfills nicely the guideline of alternation.
Still big bets being placed on more upside.
Sentiment is again at extreme levels in just about every survey. AAII, II, NAAIM.

Wednesday, October 30, 2013

Elliott Wave Update ~ 30 October 2013

The best counts are shown below.

Big picture of course we have [Y] now only 70 points shy of being equal to wave [W]. The timeline is nearly equal also.
On the next scale we have what could be a topping wave [iii] of 5.
And the smaller scale could prove that wave [iii] is over and wave [iv] has begun. Please note the wave label degrees on the chart below. They should be one degree smaller. I originally made them a degree higher and realized they probably shouldn't be. I'll correct the chart later so its not confusing,

Tuesday, October 29, 2013

Elliott Wave Update ~ 29 October 2013

The market is about 100 Wilshire points from where [Y] = [W] @ 18998. Today's high was 18895..
Possible squiggle count.

Monday, October 28, 2013

Elliott Wave Update ~ 28 October 2013

We have a pretty decent squiggle count on the Wilshire5000 (SPX would of course be the same).
Weekly. Price equality between waves [W] and [Y] has almost been equal.

Thursday, October 24, 2013

Elliott Wave Update ~ 24 October 2013

No clear squiggle count has emerged. The general thesis is that Minor wave 5 is playing out.

An updated SPXweekly. I have been told another Zweig Breadth Thrust has fired but I cannot confirm that as I do not have access to my Think or Swim software for the next couple of weeks.  (Hence no E-mini threads)
Investor's Intelligence Bull ratio has been never been below 55 % for over 2 full years. Its currently back at 73%. The AAII ratio is a whopping 73%.

And everyone hates the dollar again despite it being well above its all time low in 2008.  Via Sentiment Trader: 

Wednesday, October 23, 2013

Tuesday, October 22, 2013

Elliott Wave Update ~ 22 October 2013

I have been travelling last week, this week and the next 2 after. Postings are light for now.

The Wilshire 5000 weekly has reached the top of the channel.

Monday, October 21, 2013

Elliott Wave Update ~ 21 October 2013

Primary count is that Minor wave 5 of Intermediate (C) of Primary [Y] of cycle wave b is in progress.
Squiggle count has not yet revealed itself. At the moment the market is wedging. However, there could be other options such as the count shown below.
USD has major support at 78.60. It still looks good in positioning itself for a major long term breakout and bullish advance.

Thursday, October 17, 2013

Elliott Wave Update ~ 17 October 2013

Ending diagonal is the primary count.
NYAD seems to be confirming the ED pattern.  Slightly negative divergence.

Wednesday, October 16, 2013

Elliott Wave Update ~ 16 October 2013

Probably the best count involves some kind of ending diagonal triangles. And like all triangles, they can be tricky to predict their endpoint. Triangles disguise their intentions well.

Tuesday, October 15, 2013

Elliott Wave Update ~ 15 October 2013

6 month chart shows a technical double bottom and a break over the neckline. That's bullish for yields. 
Weekly:
BPSPX:

Monday, October 14, 2013

Elliott Wave Update ~ 14 October 2013

I don't have a real good squiggle count at the moment.  However, overall, a wedge is developing.

Sunday, October 13, 2013

Friday, October 11, 2013

Elliott Wave Update ~ 11 October 2013

Republicans launched Pickett's Charge so to speak in their "Gettysburg" battle versus President Obama and the Democrats.  And like the outcome of so long ago, they got (are getting) slaughtered, limping off the field, and hope they can maintain their army to fight another day....

That's the general sentiment if you read the talking heads consensus and what the Republicans themselves are saying. What happened in so short a time? Was it not just a bit more than a week ago that they voted unanimously to shutdown the government over Obamacare?

My thesis here is that they launched this attack at the end of a long decline in a down channeling social mood versus President Obama. You can see here on Real Clear Politics polling the down channel since the post-election bounce (December 2012) is ready to be breached in a bounce upward in favor of Obama.

It was no coincidence they committed to their Gettysburg battle at the end of a long downturn in social mood.  They felt confident in the trend.   

This is unfortunate yet proof of how social mood dictates the news and not the other way around.  They had everything going for them. The disastrous rollout of Obamacare. They had bad optics of the National Park Service acting as a Gestapo. They had an intransient Obama declaring he will never negotiate.  They had Harry Reid as the face of the opposition party. They have a majority of Americans that does not want the debt ceiling raised. They had a simple message that they somehow let slip through their fingers that even Jon Stewart hammered HHS Secreteary Sebelius on: Why the Obamacare corporate waver and not the individual mandate?  

They bungled a simple message they could have hammered home to America - Why do individuals have to pay  - on a system that is broken no less! - when corporations are completely excused?

They had all this going for them and yet they seemingly are bungling it so badly.  Why? Social mood waves give us a clue.  They bungled it because they reacted to a change in social mood from a long 9 month downtrend for the President to a slight uptick. They "shorted" President Obama at a likely Intermediate term mood "bottom" and now are feeling the squeeze.  Again that's unfortunate because in the long run, the waves will probably favor the Republicans efforts once this uptick bounce is over. They are showing "weak hands". Social mood is struggling to stay afloat. It may be due for a bounce for Obama and such, but the odds are that things are not going to get better long term mood-wise.

Healthcare is going to be broken for a lot of Americans and a long term mood slide will eventually amplify this to the negative for the President.  Yet the Republican party does not have a Socionomics consultant. If they had a team of such individuals, and heeded their advice, they may have had a different message thereby mitigating and focusing any damage they were to take.

Americans still heavily favor against spending more money. Enormous debt loads make people feel uncomfortable. Its a natural turn of events after blowing such a huge credit bubble. That's why I am a very confident this gargantuan historic credit bubble will collapse. I cannot wish it so, only social mood can make it happen. It has taken 40 years to build this bubble and it didn't rollover in a flash. Its rounding at the top like a slowing train before it can go into reverse. But reverse it surely will. 

The budget fights are not going to go away.  The FED will not likely inflate much past $4-$5 Trillion versus a still-leveraged credit market of some many, many times multiple tens or hundreds of trillions nor derivatives in the many hundreds of trillions.  They too will feel the mood influence and already are. It is an inevitable as the march of time.

Only when mood sinks to its very lowest of lows will we say the "darkest is before the dawn". Are we there yet? I hardly think so. You know it and I know. We feel it. Everyone feels it. There is a dark journey to be made and no one wants to take that journey. I don't blame them. We fight it with all our might. We sense that it will not go well yet we cannot replicate the "good" time of the rising mood of the 1980's and 1990's even though The FED is desperately trying to.  All we can do is try and tread water and we know it is not working. Something has to give. It is inevitable as the setting sun.

WAVE PATTERNS:
Where are we in the wave pattern? Well, even if the market makes a new high (certainly not assured by any means), we can still say this: The big rally from 2009 is still a giant "three" pattern and is still likely in some kind of price/time ratio that makes for a lovely synergy:

And yes we are wedging.





E-minis

Republicans started their "Gettysburg" moment stumbling into a big fight with the Democrats and President Obama at the end of a long downtrend in social mood as reflected in Obama's average tracking poll numbers which have been channeling down for over 9 months. At the bottom is when the Republicans were finally "comfortable" in the lousy poll numbers that they went headlong into this fight. But guess what? Obama was due for a bounce! And bounce is what he is getting. Its not external events controlling mood, its just the opposite. If only Republicans understood social mood waves. Click on the RCP "Presidential Approval" link embedded in the chart below to get a better view of the down channel in approval ratings that was technically ripe for a bounce. Poor Republicans. They had every advantage, but social mood timing couldn't have been worse. Had they done this near the middle of the long down channel, they would be likely in better shape and more on message. But they were not in control of the timing of social mood waves. And they will misunderstand the loss of the battle loss as a result of events not the dumb luck of mood waves. That's too bad. Maybe the mood bounce will be short-lived and they will regain the advantage. I do not have a crystal ball but the Republicans will likely break if they cannot weather the bounce.

Thursday, October 10, 2013

Elliott Wave Update ~ 10 October 2013 [Update 11:13PM]

[Update:11:05 PM: If prices on the 5 minute Wilshire squiggle count (see middle chart of original post below) pass above wave (ii) - or even wave a of (ii) - then its likely the market makes new highs yet again. The reason is that the decline counts best as three waves down so far. It is not an impulse as of now so it really can only be a series of 1's and 2's for a bearish count.  And if it is not a series of one's and two's, then new market highs need to be accounted for. (such is EW logic of counting)

If that would be the case, the next best count (perhaps) is that Minor 5 of (C) of [Y] has not yet finished and will trace a (maddening) EW contracting triangle bearish wedge.  The Wilshire 5000 2-hour chart below is what that could look like. Time and price-wise would coincide with the last chart (Wilshire 5000 weekly) in this post -with a mid to late November time frame for topping.
ORIGINAL POST:
Today was a key marker day. A close beneath yesterday's closing price of 1656.40 would likely signal a significant price drop to come.

Squiggle count implies today's mighty rally will reverse completely.
Wilshire weekly. If the market wants to continue making all-time highs, it would still look like a bearish wedge pattern. This chart shows where equal time and price between waves [W] and [Y] would be using price high within wave [X] versus the orthodox top of [W] which I have been showing on the SPX weekly.
 

E-minis


Wednesday, October 9, 2013

Elliott Wave Update ~ 9 October 2013

Lots of short term intraday options for our squiggle counts. But no matter if the market bounces hard or not - and the wave count certainly can account for a hard bounce -  the premise is that prices are now in a wave (iiii) down.

Perhaps a backtest of broken support (horizontal line) is forthcoming.
On a larger scale, the lower channel line (green) was solidly breached. So perhaps a backtest of the underside of that is in order.  In other words, support was broken in both the horizontal plane and the lower green channel line. A rise in prices would "backtest" both support definitions at the same time.

If that were to occur, and a failure to regain support, then expect a solid wave iii of (iii) selloff point to come. Thats the primary count.

E-minis


Tuesday, October 8, 2013

Elliott Wave Update ~ 8 October 2013

Our basic counts haven't changed. The premise is that cycle wave b of supercycle wave (a) has topped and we are in the beginning stages of cycle wave c down.

This wave count is based solidly in EW theory. The pattern since 2009 counts best as a "three" pattern nearly equally divided in both price and time. This would indicate that the pattern is corrective in nature and suggests strongly the larger degree trend (supercycle) is down.

"B" waves of any degree are also known as "bullshit" waves. They are false waves based on shaky foundations. All corrective waves to the larger trend are deemed as such by EW rule. The fact that a corrective cycle wave of such immense cycle proportions is a clue that the subsequent down wave of cycle c of supecycle wave (a) should, in theory, be horrendously and historically the worst in 250 years.

The fact that it may have "kicked off" with already a horrendous underlying mood is a bigger warning that indeed, the shit is perhaps ready to hit the fan. Robert Prechter of EWI recently discussed this in a monthly EW Theorist newsletter and called it the "uh-oh" moment when investors recognize the precarious positions they have found themselves in.

His description aligns with my theory of when a Ponzi scheme gets recognized for what it is.  In other words there is no "upside surprise" in a Ponzi scheme scenario. Once the scheme is recognized as such, sentiment drops to 100% negative and it collapses rather quickly. There simply is no "contrarian" bullish play to such an event. This is also an analogy of a modern day "bank run".  For truly all modern banks are insolvent due to the nature of fractional reserve lending.  It is only the lack of a "ponzi moment" by the depositors that keeps them afloat day in and day out.

Will society have an "oh-oh" moment (as Prechter suggests) with a twist of Ponzi scheme mentality mixed in for good measure?  I suggest probably it will sometime in cycle wave c. That is the kind of sentiment that can bring rapid price declines that "break" all technicals and expectations.

Some also refer to this as a "financial heart attack" which disrupts the overly complex financial systems in most likely "simple" ways (for instance sudden interest rate shocks) that prove mortal.

The wave pattern below suggest a very neatly traced "three" (corrective) pattern has occurred over a perfect Fibonacci 55 months. At the very least, we should respect the time, price and Fib relationships. EW theory suggests cycle wave c is upon us. And cycle wave c is not supposed to be friendly at all and is supposed to be stronger and longer than the 2007-2009 collapse.

I didn't make this pattern, the market did.
Squiggle count suggests we are in wave (iii) down.


E-minis


Monday, October 7, 2013

Elliott Wave Update ~ 7 October 2013

SPX weekly is approaching an important lower channel line. It would be a good place for yet another bounce if that's the case.
However, if wave (ii) has ended in a downward flat, we are in wave (iii) down which implies the market is getting near a "point of recognition".
Time and long-term negative trending social mood has gotten us where we are today: grappling with the huge debt loads of not only the US but the entire world.  The march toward deflation is occurring no matter what the FED does. $85B/month is simply dwarfed by the $60T-70T total debt market.

Negative social mood has finally crept into Congress. A fiscal fight like this is a sure sign.  Its not about to return to "normal".  Sure we may get a deal, but something will be cut.  And that would be deflationary.

And the risk of upsetting the "system" which has become so complex and intertwined, that even merely a mild financial heart attack could be a mortal wound to the modern financial and economic system of the world. Indeed that is what cycle wave c of Supercycle (A) predicts.

This article nicely summarizes what the political parties have seemed to stumbled into is a "Gettysburg" moment.  It wasn't completely planned, but neither side is backing down and both sides were itching for a major fight.  Both sides have scrapped a bit and bloodied each other and are now maneuvering for the major battles to come. Well its here, and I don't think anyone has a real clue on how its going to play out any more than they did at the real Battle of Gettysburg.  

And make no mistake, Americans want this fight, despite what you might hear on TV or some bullshit poll. The left was always willing to take the fight to the limit. The difference now is the right is willing to also. The squishy "middle" is caught in between but they are part of the problem anyway. We get the government we deserve. We are a nation right now with declining long term mood. This fight was going to happen either way.  EW theory predicts the polarizing and fracturing of society in a declining social mood environment. The fact that it has finally crept into our Congress is no mistake, its proof of the theory in action.

E-minis


Friday, October 4, 2013

Thursday, October 3, 2013

Elliott Wave Update ~ 3 October 2013

Top squiggle counts:
Today's Investor's Intelligence Bull?bear ratio via Sentiment Trader:
The bears have scattered to the wind. Incredible considering the real dangers facing the market due to social mood.
US dollar public sentiment. This survey was dated 1 October. 
Dollar is therefore in excellent position to rally when sentiment hits extreme which it is close to being. Technically, the neckline shown on this chart is a big deal if broken over if the dollar can rally eventually. It will be bullish in a nutshell. Major support at 78.60 and it might take a move to that level.