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Friday, April 30, 2010

Weekend Charts and Stuff [Update Sat 1:20AM]

[Update Sat 1:20AM:  It just dawned on me: The entire world is kiting checks.

(And for those who were raised in the age of the internet online billpay and CC plastic don't know what check kiting is )

But anyways, thats about the gist of our entire financial crisis in a nutshell.

[Update Friday 10:30 PM: Australia's real estate bubble will pop.  Price of the ASX is already below the high of October.]

[Update Friday 10PM: Earlier someone asked about the "1-2", "1-2" count and why and what it may mean. The end of day ended very bearishly as you can see on this NASDAQ count. Remember, the peak on Friday would have been a wave (ii) or [ii] wave peak and the move lower today was the front part of a power wave three down.

The waves support this speculation because the two major correctives up on Friday do not display the guideline of alternation.  They both appear to be zizgag corrections which are typical wave two-type corrections.

Also the end of the low may mean the "snap point" is close at hand. A huge gap down Monday would be the "third of a third" and the Head and Shoulder pattern would follow through in a wave three down.

Why would this happen? Well, big bear moves don't wait around for anyone to get in.  To gap down some 120 points in the DOW on Monday would be appropriate and not let anyone get an "easy" in and profit unless you held shorts through the weekend. Thats the way the MM's like to yank it around.

If the opposite happens and we get a bullish open, then indeed this would be a nice 5 wave down and then a corrective wave two Monday up would occur. But I like the big bear count. Why should we ponder a Head and Shoulder pattern as the market did last July? It would make sense to do something different this time and go "BAM" right down hard on Monday and leave everyone slack-jawed.

Guideline of alternation says this H&S pattern will resolve differently than the July 2009 pattern.  A big crap down Monday would be one possible surprising outcome.

The great thing is we'll know Monday prior to market open.  If this is a 1-2, 1-2 as described, it should gap down big Monday. If futures are way up Monday, then we know the 1-2, 1-2 cannot be the case. Yes obvious, but pattern recognition first thing on  a Monday prior to market open is a big bonus.
We'll start with some common charts I have posted on my Stockcharts page.

First, Crapple. We have two possible counts at the moment and the count should resolve one way or another early next week. My primary count is that it has topped (for all-time).
The alternate has it instead in a wave 4 of (5).  It could be a wave 4 triangle. We'll see early next week. If it moves down through the gap up, its a pretty good argument that exhaustion has set in.

And with Steve Jobs getting nasty with Adobe and sending in a swat team overkill for his precious f'kin i-phone, even Jon Stewart ripped on Apple and called them "Appholes" (Google it on YouTube). Seems appropriate stuff to mark an all-time high. Arrogance. All that cash and they still tightly control and charge $$$ too much if you ask me.

And as EWI says about being "on top of the world", the populace will grow tired of them (jealous) and the government will take a whack at them because they have money.  That and I think the i-Pad is a big loser that won't have staying power like the iPod.
And the daily shows the alternate count labeled.  
Next up is Google. At important $525 support as you can see.
Amazon also has some choice waves. It appears to be breaking down.  Peaked and then earnings it loses interest.  It too has a big gap up that will likely be filled in the near future. The count looks good.
XOM may have made its (E) wave. Way too early to tell. But for the near term, another stock with a key trendline break.
Visa is one I have on the backburner. I was plotting an ending diagonal wedge with overthrow and it appeared to have played out that way.
Priceline. One long trendline. Technicals don't look great. Possible top. ROC is waning and breaking under zero line. It doesn't report until May 10th.

I'll have more this weekend.

Elliott Wave Update ~ 30 April

Big daily reversal candle on the indexes. Stair-stepped its way down today and big volume dump at the end of day.  A prominent head and shoulder pattern is now in place on the indexes.

The wave (ii) count I showed from yesterday has certainly held up so far

The key I think is that it is nicely impulsing down in 5 wave patterns and correcting back up in three. The tone of the waves seems to be purifying to a more impulse state to the downside as occurred often in P1.
The market is wide open for the short term direction for Monday's open and early plays.  Could bounce up at the neckline, in a double shoulder pattern or could blast down through after a headfake up or gap down.  There is no clear-cut thing wave-wise at the moment that I can see. We'll see how the weekend goes.

The one bearish item is that perhaps the market is impulsing down in 1-2, 1-2 pattern as there was not much alternation between correction during the intraday.
The RUT broke under yesterday's low and broke its tight channel. Bearish.
Some negative divergence between Transports and the Industrials to top things off.

E-minis [Update 3:25PM]

[Update 3:25PM: This is one nice impulse wave that seems to have all the subwaves in place. I wouldn't be surprised if it rallies although its not assured by any means.]
Some negative divergence on the overnight high. I'm off today so might post some intra-day stuff.

Thursday, April 29, 2010

Elliott Wave Update ~ 29 April [Update 8:45PM]

[Update 8:45PM: Although the DOW did not make a new high today, the Price and Volume Trend indicator is setting itself up for yet another negative divergence. In fact you can probably interpolate that it is diverging again already.
You can see the entire rally that this is the first time this diverging behavior is rearing its ugly head.

[Update 8:27PM: Still always looking for the (E) wave of a massive primary-sized [B] wave triangle playing out for XOM. So far we may have only seen the top of A of (E).  One thing that gives a strong leg of validity to this pattern is that the (D) wave is exactly, to the penny, a Fibonnnaci .618 times the length of wave (B).

Quote Elliott Wave Principle (Prechter) page 139 on contracting triangles: " We have found that at least two of the alternate waves are typically related to each other by .618. I.e., in a contracting triangle, wave e = .618 times wave c or wave d = .618 times wave b."

The math:  Price length of (B) = $20.85  Price length of (D) = $12.89        $20.85 x .618 = $12.8852

That is indeed the case here with (D) = .618(B) to the very penny after a year's length of time has gone on with the waves!

At any rate, I figure that C of (E) will close the gap down finally above $70.  Usually (E) waves break over the (A) - (C) barrier trendline in a false break upwards.   Another aspect that makes this a nice triangle is that usually one interior wave is a complex pattern and that is usually the (C) wave which is the case here.

However e waves can be tricky and can (and usually does) turn when it can catch the most off guard that it is able.   So in that regard, the (E) wave has probably already formed a sufficient price length and time length. The last confirmation is the requirement that it be a zigzag in form. That is hard to tell on this weekly.

Why is XOM such a good candidate for waves and why is it important? 1) It holds a big weighting (#1 market cap) in the SPX  2) It is widely held by institutions and pretty impossible to manipulate.

[Update 5:23 PM: IYR made a new recovery high. I don't have a count for it but the pattern makes for a nice overlapping wedge. Gap up today. RSI on this hourly shows negative divergence.]

Market retraced to the 62% Fib back up from the yesterday's low and slightly beyond that Fib marker.  This is not unusual.  However the SPX closed above 1205 which is probably bullish for the algo's.  Nasdaq and RUT caught a serious bid by midday.  It would still all make for a nice wave (ii) but prices must head down fairly soon for the ideal wave structure. But topping processes are probably never that "neat" and I feel we are in a topping process. To have some intra-index divergences would be actually ideal.

Other than the first few minutes of the open, the Wilshire and SPX didn't look particularly impulsive. Even the opening bum rush from yesterday afternoon's dip lacks any kind of micro up/down impulse moves.

We do have a possible squiggle count for the bearish wave (ii).
The market internals were nothing to write home about.  Certainly the up volume ratio and advancers were less than the when the market was running up a week ago. And now there is yet again another unclosed gap up and total volume contracted. For such so-so market internals, its got to make an overnight bull nervous particularly since the "Greek" thing and contagion just seems to be warming up and is nowhere near resolved.

That is how wave two's resolve to be wave two's.  The trend blinks somewhere on the retrace to the high (usually on waning market internals) and the market decides its had enough and sells hard in a wave three. Where that blink occurs is an educated guess because yes, it can retrace deeply particularly for a very small wave. I did one quick study of P1 and found Minute waves averaged over a 72% retrace. However 78.6% Fib is about the max it should go. So far the Wilshire has retraced 68.6% so we are running out of room. Yet we do have room still.

The ROC is limping too and just barely crossed the zero line again. And check out the negative RSI divergence and impending weakness.  Yes the market has been rolling those over as of late, but this one looks like a good indication at this moment in showing weakness.
Well, EWI (and many others) suggested that the big sideways move of the past week or so was a wave four expanded flat of some kind. It doesn't work for my SPX and Wilshire count so much but it certainly works for my DJIA count: It need only squeak to a new high. However I drew wave [v] up to a more "perfect" wave manner which targets the inverted H&S target area of around 11380-11400 at least.

I am throwing this count out there for info in case it works. We'll see how it works out.
All in all, I am not too worried about the waves at this second because the topping processes are probably messy affairs. We're just going to have to go with what we can count. If the DOW makes a new high, then we have a solid wave pattern to account for it and we'll follow that for a bit to see what transpires.

E-minis [Update 3:25PM]

[Update 3:25PM: Well a bear can dream huh?]

Minimum retrace is between the green lines and is being met. Expected retrace is between the upper green and lower purple.  Challenging, attaining and holding the upper purple is of course the goal for the bulls.

Wednesday, April 28, 2010

Elliott Wave Update ~ 28 April

The market was raring to go out of the starting gate today and it looked like, "Here we go again" but something happened: The market hesitated and showed weakness. There was no relentless "ramp and go" buying as the market has seen nearly every day for a few weeks after every pullback. In fact new lows were eventually made and the SPX gap up was closed.

So something seemed different indeed.  The bulls blinked. It may be to the point where every dip buyer is now fully exposed and out of dip-buying ammo. Now people are waiting for others to do the lifting. Bullishness is still very high and expectations are high.

But regardless, if this is a wave (ii) retrace in progress, it has yet to hit my blue box minimum target area. Remember, the general rule of wave (ii)'s are that if it can challenge, conquer and then hold the major wave (i) resistance area, it will likely not be a wave (ii) naturally. In this instance the low of subwave i of (i) marks where the heavier resistance will likely conspire to stop a wave (ii). This perfectly matches the 61.8 Fib marker and the blue box minimum target area is solidly below resistance.


It makes nice impulsing down even on the e-minis. New low for SP and DOW but not yet on NDX. France is down over 6% since yesterday.  Something is on fire under all that smoke. Greece banned all shorting.

Tuesday, April 27, 2010

Elliott Wave Update ~ 27 April [Update 10:07PM]

[Update 10:07PM: The Chinese market I have been tracking a triangle which looked unusually large and goofy. Assuming Stockcharts don't have any wrong price lows, the triangle is no longer a triangle as [e] violated [c] price low. That failure is, long term, bearish more so than bullish I suppose although I cannot make out any collective down impulsing since its 2009 bear rally high.

[Update 9:27PM: Here is a closer 10 minute Wilshire. I show the expanded form of the expanding trendlines. My earlier chart shows how I was looking for a wave [iv] low today to form a contracting ending diagonal triangle. That didn't materialize and the market sold very hard.

Also you can see why the "expanded flat" doesn't work on my charts at the moment. It just doesn't fit the count I have been tracking for over a month now (final ABC intermediate zigzag out of a massive triangle)

So I have no choice but to mark a P2 at the high. If the market spasms higher yet still?  I dunno, we'll figure something out.

[Update 9PM:  Is it a wave four expanded flat in the works and then to new highs? I am a little puzzled why anyone, after pointing out for weeks/months that this P2 sucker is more than ripe, would finally hesitate to say more downside is probable and suggest that not only is a wave five perhaps coming after a flat but a wave B and then another entire wave C to boot! This after the DJIA finally almost exactly marked its 61.8% Fib marker yesterday (a mere 6 points over) and the market is showing signs of strain. The selloff spikes downward remind me of the buying spikes at the sub-700 area in 2009. The market seemed to be warning then as it is now.

I am inclined to mark the 11251 top as a P2 top for many reasons some of which I outlined in recent posts. 61.8% was 11145.  But to recap, basically because it has to top out near here or it will cease to be a primary wave two.   But as I allude in yesterday's intraday DJIA chart, the inverse H&S pattern has been effectively hit (you can hang around to quibble the higher 11380 target.).

Is this a simple interpretation? Well hasn't the market, in painful retrospect, traded rather simply in that any and all dips have been bought continuously for 13 months? Hasn't all Mondays been nearly green? Are not tight trendlines bought?

Also I pointed out yesterday that the Wilshire 5000, the entire market, finally got a close over "Lehman BK Day" as explained in this post
As pointed out in that post, if the market can retake the last (and first real bear day of P1) bear day and hold it, then P2 may no longer be a wave two but become something else entirely (X wave?) So in that respect the Wilshire got its "one close" above that Sep 15th day, and now the market slapped it down under today as much as it could. Its seems entirely appropriate.

That is all of course a presumption. But a wave two confirms itself as a wave two when it fails to retake the key resistance zone of P1. After said failure, it then progresses into a wave three. If it could retake the big resistance and hold, it would likely make a run to new highs. So here we are. The market has indeed been pushing into the key resistance zone of P1 during 2010 and we arrived at the unbelievable 62% Fib of the DOW and just shy for the SPX.  Shall the market display a need to go higher?

The next chart is a simple one.  A clear EW pattern has manifested itself in the advance/decline chart of the NYSE.  But if your a technician purely, disregard the wave count and check out the clear negative divergence patterns of the RSI versus price and then check out the Ultimate Oscillator lows after this divergence begins to play out in the form of weakness in declining issues.

This chart, all by itself in all its simplicity, suggests the probabilities are for more bearish moves to be done prior to the "next wave up", if indeed there are new highs to be had. In that regard, for one to presume that an expanded flat is playing out should at least expect that at the end of that pattern it should somehow "square" with the indicators on this chart.  Being that its the most negative divergence so far and has not followed through to a minimum target, there is likely more selling to be done this week.

Nice bear day that seems to have "broken" the relentless uptrend since February. At least for starters. The market experienced a 17.63 ratio volume down day and decliners were solidly 5.2 bearish across the board. Closes under the 11000 level in the DJIA and the everything closed under its 10/20 DMA's pretty much which they hadn't done in like forever.

Using my candle map of the up move, the market landed at the top of support candle number #23. This is an important candle for the market in these upper ranges as this was the triangle "breakout" day for the markets.  There is an open gap created by that up day.  So needless to say, the market needs to close under that gap to confirm an even larger bearish trend change.
The overall count? I was looking for some down action today to complete wave [iv] of a possible ending contracting diagonal. That of course assumed there was one more push into the 1220's. But that pattern is pretty much shot from a wave standpoint.  What works? The expanding ending diagonal that I have been tracking the last week or so.

We can put this back up for now and see what happens.  It has a nice symmetry to it.  The down pattern looks nicely impulsive on this chart. Also the time and price ratios between A-B-C are solid. Again, ending diagonals suggest a violent price move in the opposite direction. So far that is indeed the case. So in that respect, its looking decent. Also the price should fall below the "start" of the ending diagonal move. So that would take it under the triangle breakout. But we need a close under that key horizontal support line and then under [e] of B (where the gap is on the SPX).
Looking at the Wilshire daily, the apex works out near perfectly on marking time aspects.  Also the price targets work out nicely for the breakout was just about equal the width of the triangle. Also C almost = A.

The ROC finally slipped below the zero line on this daily chart indicating a trend change. As I had been saying, the stochs didn't look particularly healthy and the ROC was waning as time went on.
Here is a quick squiggle count on the SPX.  Its a decent 5 wave move for now. It might just be getting warmed up in a 1-2, 1-2 fashion, but for now give the bull the benefit of the doubt and we'll assume a wave (ii) bounce up is coming. Target box is set.
So hey, we finally got a nasty down day. Thats what I've been saying is that it would likely happen quick not to allow anyone on board that wasn't already on board. The end of day selling is bearish and likely surprised some people as the market had been recovering any and all selling after initial daily lows had been set early. Not today.

March to new highs? Yawn.  Wouldn't be a surprise to most if that happened. It would be a surprise if it didn't happen though.

But for now, the tape is painting a bearish picture overall when looking at the wave structure, the extent of the rally, and supreme bullishness in place.

Finally you can see this DJIA prohet chart and the "Price and Volume Trend" indicator. There was a double negative divergence and today's healthy down volume drove the indicator down a good bit.


Monday, April 26, 2010

Elliott Wave Update ~ 26 Apr [Update 4:32PM]

[Update 4:42PM: Here is an update of the possible Ending Diagonal triangle pattern. Its wedging on two different degrees.]

[Update 4:32PM: Ending at a high for this chart going back 20 years]

Could be a nice ending diagonal triangle occurring. It's one of the top counts (for now). We need more weakness so that [iv] retraces into [i]'s price range.

So far the move off the high looks mostly corrective but a new low early tomorrow under today's move would help things.

E-minis [Update 11:13 AM]

[Update 11:13AM: Possible squiggle count for the SPX covering the 3 day push]
[Update 10:15PM: Interesting pattern on the hourly VIX. 50/200 ready to cross in a bullish manner which means it might thrust down in the opposite manner as per the potential wave [iv] triangle setup.]

[Update 9:52AM: Just wanted to point out the CPCE reading that is way low. It opened at like .39. Yet the VIX is very much up.]  
[Update 9:47AM: The RUT monthly jamming through its upper BB.]
The DJIA hitting its 61.8% Fib retrace and inverted H&S target using closing prices]

I'm off today and will probably post some charts

Friday, April 23, 2010

Elliott Wave Update ~ 23 April [Update 10:05PM]

[Update 10:05PM: Seven banks failed Friday. Nothing unusual (LOL), but all from Illinois.  You think the FDIC has a huge backlog of banks to where they are doing them now geographically for ease of service? Is this a switch of weekend strategy to save money, time, expenses for the FDIC?  

It indicates to me they have a HUGE backlog and they know it. They let the cat out of the bag...

[Update 9:20 PM: Playing around with the (X) wave triangle.  If we do get a ramp up on Monday, 12,880-12922 is the close/open/peak resistance   of the 19-22 Sep 2008 rally high Minute [ii] of 3 of (3) of P1 resistance.

For the Wilshire this would match the 1) triangle breakout target - shown by blue bars 2) C = A on the last (Z) zigzag - shown with black bars 3) Apex time target for triangle  4) 66.6% or 2/3rds retrace of P1 (12,880 exactly)

Now lets hope we get that Monday ramp job. If not we have a count for a gap down

Negative daily divergence on the RSI big time and this time I think it will payoff. This would be in-line with the RSI negative divergence on the accumulation

MACD lines still look garbled. ROC is continuously waning since last August.  It hasn't touched the zero line in quite a while, but it will again, of that I am sure it will.

[Update 6PM: The market seems to have a target in mind and its relentless effort to get there seems to be unstoppable.  The top of September 19th, 2008 rally high just before the big crash seems to be the magnet (using the Wilshire that is). That and the inverted H&S and 61.8% Fib markers for the SPX and DJIA perhaps and the 200 weekly SPX 200 MA. These all reside in the 1220's range and seems logical (except I think inverted H&S is like 1243). So we have a crapload of spots the market just seems to be lunging for.

One problem is that earnings season is producing some exceptional leviation on various stocks. They are all floating on air waiting for their turn in the sun. One more solid week of earnings and we'll have been through a good bulk of them so another scraggly week may be in store; buy the earnings reports on select stocks seems to be the case this season. There seems to be no logic actually and indeed that kind of proves that there never was.

If Monday is for some reason a gap down and weakness instead of a gap and run-up surge, we have a pattern to account for that if the decline appears to be yet another (a)(b)(c) that gets bought at trendlines etc.

This ending diagonal pattern that has thrust out of a triangle pattern is a most bearish setup that we saw for the DJIA in January 2010. This time however, its virtually the entire market of 5000 stocks which could indicate a more significant pullback to come.

I like the ending contracting diagonal pattern more than the expanding because the expanding is really an unheard of pattern using EW guidelines via EWP by Prechter.

This pattern would account for a choppy week and take us to the end of April.  And of course then comes "sell in May." If we end up with an ED pattern the follow through to the downside would be selling.

One thing for sure is that the market seems to be pushing up in "threes" or zigzags which is generally a bearish wave sign at this stage of an extended rally.  I do not believe the high today is a (b) wave in a developing triangle. The market just came out of a triangle so I rather think exhaustion is setting in and this is a potential ED pattern if Monday shows immediate weakness.
The market has pretty much tracked my expanding ending diagonal pattern, so I see no reason to change things. (a)(b)(c)-looking moves and it appears its going into a parabolic blowoff peak.  It feels like an early blowoff Monday surge is coming and then reversal of some kind. Surely some bull pigs will be taking profit if the market surges in a gap up open Monday into the low to mid 1220's near the 61.8% Fib marker of the SPX and the inverse head and shoulder pattern of the DJIA (approx 11330+) and the 200 weekly MA of the SPX at 1224.

Volume remains elevated in ETF's such as SRS. Some divergences occurred today. New market peaks in just about everything except Dow transports and financials. The NDX100 is at its June 2008 peak of 2055 and held under that.  VIX did not make a new low nor really come close (yet) so that is diverging.
The Wilshire has now closed over Lehman BK Day at 11800+.  Gunning it to the Sep 19-22 resistance seems logical. It should hold at least on the first push. (yeah sure heh)
Once upon a time in P2 I suggested this chart would make a new high before P2 was over. Almost....
Advance/decline count looks pretty much complete.  Notice the divergence patterns in the RSI indicating pullbacks.  We are having the biggest and longest divergence so far of P2.
Apple is an example of how things may be going parabolic. Not only did it jump back in its tight up channel, it jumped to the upper channel line!  Amazing. I labeled it as an extended 5th wave.
And finally, if this Wilshire apex is going to work marking a significant peak, we are about there.