E-minis

Elliott Wave Update ~ 20 August 2012 [Update 6:10PM]

UPDATE 6:10PM: Its been a while since I showed the long term Supercycle channel line of the DJIA.

Is the INDU wedging into the top of the channel? (Note the large Breadth Thrust divergence). If it cannot break above the channel as it did in the early 90's will it exhaust and fall to the lower side of the channel?  (the lower side of the Supercycle channel is many thousands of points away.)

ORIGINAL POST:
Robert Prechter said it best in his latest Elliott Wave Theorist:

 "I am not sure I have ever seen the technical condition of the market look this immediately bearish."

He was referring to having so many markets and indexes providing non-confirmation divergences at many degrees of trend and on many timescales.

SIDENOTE:
<-----(Click on links to left to get FREE CLUB ELLIOTT WAVE membership.  I get $3 for each member I sign up and if you go on and buy a service at a later date I get a small commission if you had become an CLUB EWI member through my links. Its really is a lot of free stuff provided no bullshit involved.)

Back to the markets. I have never seen a bearish wedge potential as large as we have right now in the markets even if the indexes DO NOT confirm a "higher high", the wedge is there regardless. It is in place. Unable to confirm a higher high makes it even more bearish.

Technically, the internals "match" what we'd expect in a wedge. Each up leg of the wedge sports lessening momentum measures.  We could even expect to see sentiment measures diverge at the top. After all a wedge is "heavy" price action when looked at in context of the overall wedge.  So sentiment does not need be the most absolutely exuberant at the top of the wedge. In fact I would expect it not to be.

The S&P500 sports a lesser RSI peak, OBV divergence, a declining advancer vs. decliner, lesser overall volume just for starters.

NOTE: SPX count shown as a triple zigzag in this chart.

SPX shown as an (A)(B)(C) rally:

SPX weekly sports a double negative RSI divergence and lesser volume.

Ultimately the Wilshire 5000 is the final arbiter in my view. Note the subwaves seem almost finsished.

And investors are more than comfortable at the moment. QQQQ liquidity premium via Sentiment Trader. The most comfortable since the 2009 low. 

This "comfort" with the market is reflected in the low VIX hitting the lowest levels in many years. Depsite the "wedge" action in stocks!

Yet the CRB has topped out long ago:

The GDOW actually looks nice labeled [1], [2] when compared to how it rose to its 2007 peak.

Stocks in a wedge? Bonds in a wedge? Whats going on here?

If thats the case, King Dollar will win!

Conveniently the NYAD count looks "finished" with the end of the wedge in the markets. And yes the NYSE sports a double negative divergence. Are both a coincidence?

Long term INDU count. REMEMBER NO MATTER IF ITS PRIMARY WAVE [2] OR A CYCLE WAVE B OR X ITS ALL THE SAME - A BEARISH "THREE" SINCE THE 2009 LOW. 

Even Apple has lost its impulsiveness despite a new high. Looks almost like an expanding diagonal triangle at the moment.

CONCLUSION:
More and more likley does the market look like its setting up for a major crash that will dwarf 2008.  If this is a WEDGE, a crash is almost assured since wedges signal exhaustion in price action. 

After hitting above 1200 SPX in April 2010, the market has managed to add a mere  200+ points in 28 months. And people call this a bull market?  Thats 7 points a month since.  Yet the market psychology is more than ripe to take it all back and more in a flash. Trapping as many investors as possible is what wedges can do.

E-minis

Elliott Wave Update ~ 17 August 2012

Little early today, leaving town for a night.

If this is the biggest rising bearish wedge ever, then the subsequent price collapse will be too.

E-minis

Elliott Wave Update ~ 16 August 2012

I consider the Wilshire 5000 the ultimate arbiter of the overall wave form of the markets.  For now it is 200 points below its previous peak.

S&P daily. Bearish rising wedge? Its internal wave structures count better as "threes" rather than impulses. That is a trait of an ending diagonal triangle (although I have this chart labeled as a triple zigzag). And this would probably be the biggest one ever.

SPX 30 minute.

NYAD count:

INDUSTRIALS count long term.

IMPORTANT POINTS TO CONSIDER:
1.) Note how the 2007 high is considered a "B" wave no matter what the count. The only question is at what degree.

2.) Note that the rise since 2009 is considered a "three" no matter what the degree outcome turns out to be.

The two points above are important to consider in the overall count since the 2000 orthodox social mood peak.   Whether or not the rally since 2009 is a Primary wave (2) or a cycle wave b (or even cycle x) is a moot point at this junction. Because both counts say the same thing: A nasty primary wave [3] down of cycle c or a complete cycle wave c itself is coming around the corner.  

There will be no great distinction between a wave [3] of cycle c or an outright complete cycle wave  c itself.  Both will involve intense selling.

BONDS:
Were bonds in a wedge? A subsequent price collapse is a clue and so far prices are cooperating. Wedges are signs of exhaustion and occur only at endpoints.

NDX:

Well at least the GDOW is cooperating with the overall count:

Ask China if they are in the grip of a bear market.

Or Japan:

CPC (yesterday's close)

Uh Oh. Rising 10Y yields are not bullish due to the record debt that needs to be serviced. And if mortgage rates take a hit, watch out for housing again.

E-minis

Yesterday's volume was the lowest non-holiday volume in the past year.