Elliott Wave Update ~ 24 February 2021

UPDATE:

Nasdaq Composite. Note how the internal pressure volume ratios relives itself in a price downturn.  It is still highly elevated but not as extreme. In other words, if prices are to again attain an all-time high, the ratios would probably start to rise in a more extreme manner again.

Big divergence also. DJIA tagging 32,000 on a "breakout" and the Composite floundering a bit way beneath its high.

The way to "fix" all this craziness is to sell, sell, sell and find true price discovery and not a gamma-induced frenzy mania high.

UPDATE:

Tonight's CPCE print; 0.35! Madness!

UPDATE: 

Bonds. Puking. I suggested there was not much support on this chart until much lower. It has headed down that way ever since.

UPDATE:

LOL! GME rallying again and good for it! I hope it can finish the job and make it to the moon! (ala $1000/share).

(AMC and others rallying also)

MACERICH UPDATE:

It hasn't popped back up (yet), but it may have found support.  It still probably has 25% or more of its float shorted, I just don't have updated numbers, but MarketWatch has a 25.62% as of 2/12/21.

UPDATE:

One of the more perplexing things is trying to figure out the DJIA count. This has factored into the overall theme of things. 

Back on 5 January, I emailed Mr. Robert Prechter with a (unpublished on this blog) DJIA count with a target of 32,248 based on where the rise from March 2020 to the ultimate peak would be a Fibonacci 1.236 times the drop of the Feb to March 2020 low. In other words, a "false [B] wave peak". I labeled this as 1 degree higher in that it would match Mr. Prechter's DOW/PPI (DOW divided by Producers Price Index) all-time count wave labeling.  I also generally  predicted a late February high if you look closely...

The proposed squiggles of that email doesn't quite exactly match up with what has occurred since that early 2021 date, but it is very similar nonetheless.  Will we reach DOW 32,248 after all? It seems it could be likely. This would strengthen the overall (B) wave count I have been showing in the Wilshire 5000....

And today's actual DJIA structure in which I have not labeled it completely yet (and labeled as (5) of [5] no less), only showing wave patterns; No longer very far from that 32,248 target in late February no less....

ORIGINAL POST

More extreme and extremer is now the general theme for the stock market. As alluded to in last night's update, the stock market is likely trading in the "death zone". In mountains that have a height above 8,000 meters, generally the "death zone" is anything above 26,000 feet.  In my stock market allegory, anything above DJIA of 26,000 can be described as the death zone. I would even venture to say that anything above Wilshire 5000 average above 26,000 is also probably the death zone. But whatever, you get the point. And the theme is that it cannot last for a long time because death of the entire market will occur if too much time is spent above these extreme levels.

The market reacted to a swift downdraft yesterday morning by getting bid up again in a very aggressive bid - a historic "gamma squeeze" bid yet again.  

Last Monday's holiday trading and Tuesday morning overnight/premarket trading saw the S&P e-minis (and extrapolated to the Wilshire5000 for which the S&P500 is so closely associated) traded at approximately Wilshire 42,450 which I had identified as a possible stopping point for the all-time peak. The market never traded that high in the day session. Having an all-time peak occur in overnight trading is probably not agreeable with the market. It is perhaps attempting to make up for that price in the regular session.

THE COUNTS

The rise from early November to last week's high counts as a completed structure. Therefore if any new high occurs we have to use the November low as a wave [ii] marker. I have shown this variation of the overall count off and on over the last many months. It comes front and center as a result of today's trading because it represents the best interpretation of the overall structure at this point in time.

This is still the "false peak" count. 42,485 is now probably the ideal target. 

There is another way to label thing since the March 2020 low...as a 5 wave structure with a wave 5 that keeps delaying the inevitable slaughter that is yet to come. 

Both major wave counts can be considered correct for now. The important point is that subwaves of either wave C of (B) or wave 5 of [5] are aligned in the same sub-wave degree. So in essence, what we count from here on out is the same thing on a medium term scale. We would have either wave [v] of C or wave [v] of 5. Same wave degree structure(s) terminating in the same manner in either count.

BEARISH COUNT

The top bearish count is that the market is simply gaslighting us all yet again with the biggest subwave ii bounce ever recorded in the history of subwave bounces....

This count doesn't even "look" right because of the extremity of it all. Yet we cannot rule it out because this is now a market that is hyper-gamma-fied to the point where waves are extreme in every direction.

What this count suggests is that the coming downdraft may well set a record for the biggest downdraft crash yet to occur in this twisted market. For wave iii of (iii) would need to collapse in such a historic fashion to "catch up" to the count that it would leave a wave of technical damage that would be very hard to recover from.

Yet this count is not the top count. Prices have regained major support and are within spitting distance of new all-time highs for the Wilshire 5000. Indeed the DJIA topped again and reached the magical 32000 mark today. Again, we are at a major divergence perhaps. 

Elliott Wave Update ~ 23 February 2021

Today's violent downdraft negated our other alternate squiggle counts.

Looks good

CPCE. Basically the same setup at the Feb 2020 high, just more extremer-er.

Elliott Wave Update ~ 22 February 2021

The stock market is seemingly at a crossroads. The DJIA topped in a new intraday all-time high at the same time the broad-based Wilshire 5000 index finished the day in a bearish break of a key wave pivot seemingly confirming that a downtrend pattern has possibly started.  And the Nasdaq got hammered even harder. These are complete opposite outlooks. Yet that is to be expected at a historic all-time high situation. The hour is late. 

I have been watching and reading a lot about Mt. Everest expeditions lately as it is a subject that fascinates me. I cannot help but think the stock market is trading in the "death zone".  It cannot last forever.

The bond market continues to puke up yield as the amount of debt in the system is completely unfathomable. Everyone knows the debt will never be repaid.

Think about that statement again. Do you agree that the debt will never be repaid ever? Of course you do! So what is the endgame of that outcome?

Well that is the question. I happen to think the entire financial system is on the verge of a complete collapse.  The stock market should lead the way down.

POSSIBLE WAVE SQUIGGLE COUNTS:

 Finishing lower at the end of day is more bearish than not as it broke the previous low. 

Bonds

Elliott Wave Update ~ 19 February 2021

Cross-currents going on here. 

Bullish count:

If we get the typical futures up Monday open then its possible to break back above. There has been no major pivots lost therefore we respect the count to higher highs.

Bearish Count:

Changed up the squiggles to a leading diagonal expanding triangle count. The entire structure looks great, the rebound looks correct....lets see what Monday brings!

Decent upside internals for the NYSE...again, we await Monday...

Weekly, we are getting close if not there already.

Bond yields just surging. Again, not good for stocks in the long run. I have no solid count really, just kinda making things up as we go. The main point is that the trendline is up and its intact.

Elliott Wave Update ~ 18 February 2021

Next few days are crucial for the overall count. Although a lower low was made today, the case for a rise to Wilshire 42,450 is not quite yet dead.   However, another lower low would pretty much invalidate this count.

If the market can manage to make a new Wilshire high, maybe the VIX finally closes the gap.

BEARISH COUNTS

What we can say about the bearish counts is this: If this is a (i)-(ii), i-ii "setup" then the next wave should crash down very hard lower.

NYSE bearish internals.

Yesterday's CPCE. Again, if prices can no longer get juiced by gamma juice....then we are in for a bearish reversal in market prices.

Also note the possible similar setup in divergence with the 10 day Moving average and the daily spike lows. Not much to hang your hat on, but it might be the ticket. Note how much lower the averages are compared to February 2020. This is historic extreme territory!

Elliott Wave Update ~ 17 February 2021

In last night's update, I explained that the Wilshire 5000 had essentially traded in the futures of premarket to our ideal target range of 42,441 - 42,485.  The futures traded about 0.4% higher than the cash (SPX) index yesterday. That is a decent significant difference.  So I am going to assume (and give the count the benefit of the doubt) that the market will continue to strive to make Wilshire 42,450 in the cash session(s).  Today's session was a bit bearish at times but the major pivot point on the Wilshire was not breeched.

Therefore we have some counts that projects the Wilshire 5000 to make our target range high:

Variation #1 actually is nice in that it ensures wave (iii) is longer than wave (i) which is preferred.

The hourly chart shows a significant trendline in log scale which must be paid attention to. 5 hits so far (purple arrows). 

BEARISH COUNT:

On the flipside, we have the "it's over" count. It works quite well for now as we have had a small 5 waves from peak.

And thus on the hourly we have this:

VIX:

The VIX has not yet closed the open sore chart gap. Again, we'll assume it will try, try again. Like the little train that could.

CONCLUSION:

The Wilshire has yet to break a bearish pivot lower and has not yet reached our ideal range above.  The VIX open chart gap is not yet closed. The CPCE is still gamma squeeze mode probably (don't have data yet).  Therefore we'll give the market the benefit of the doubt. 

The  Gamestop/short squeeze fiasco will be "front and center" in the news tomorrow due to Congressional hearings.  Should be a lot of fireworks (volatility) either way. 

Elliott Wave Update ~ 16 February 2021

Our ideal target range for the Wilshire 5000 is 42,441 - 42,485. This is a dual Fiboannaci relationship between waves of differing degrees as shown below. We are not quite there yet.

However, in the premarket this morning, the S&P e-minis were trading (and peaked) about .38% higher than the cash open high of the SPX (and hence Wilshire).  Today's Wilshire 5000 cash open high of 42,290 was about 160 points below the ideal target of 42,450. However if we extrapolate the pre-market all-time high of the e-minis to the Wilshire 5000, we can surmise that the Wilshire, in essence, was trading at 42,450 in premarket.

Thus one can say that the Wilshire 5000 reached our ideal 42,450 marker but in premarket trading only. 

In light of this, I'll give the Wilshire the benefit of the doubt here and suppose it will attempt to match (and the SPX cash index for that matter) the new all-time high of the futures market. 

With that in mind, we have a couple of counts that may work:

Otherwise the best count is actually the "it's over" count.

Weekly. Solid hit on the upper channel line.

Another NYSE all-time high, yet internals are weakening still.

10 year Yields exploding. Now the bond market seems to be getting gamma-squeezed. This is not good! I'll have more charts later when the data updates....

10 year note price. Lots of ways to label the squiggles but the best is to simply draw a channel and until that is broken one way or another, the trend is down.