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Wednesday, December 11, 2013

Elliott Wave Update ~ 11 December 2013

The wave count supports the notion that cycle wave b has topped.  We have been trying to confirm the end of Minor 5 of (C) of [Y] of cycle b.  The waves were getting sloppy as noted the last few days. Today's price action helps our bearish case.

After closing above the upper cycle channel line for 4 weeks, the Wilshire 5000 has solidly closed back beneath it.   You can see other nearby supports. The big one is the purple arrow where horizontal meets a lower Intermediate -sized channel line. 
Our squiggle count shows a close beneath a head and shoulders formation. Downside minimum target shown.
Yet bets have never been bigger. Yes this is the obligatory (via Sentiment Trader) chart showing Investor's Intelligence highest bullish reading since that infamous year of 1987.  Chart came out tonight.
Nikkei. Keeping it simple. The key point is the wave (4) triangle indicates the upside move is on its last legs. A triangle such as this is always in the final corrective position of a wave structure. This implies the impulse move since the Primary B low is nearly over.
6 month yield is working itself into position to break a huge resistance. If that occurs, I expect short term yields to spike big time. Of course a big price move higher on short term rates would be "unexpected" by the talking pundits. I won't be surprised one bit should it happen.
NYAD cumulative. Beneath May's peak.  Breadth could start leading to the downside versus leading to the upside as it so often has during the bull run since 2009.
No panic here yet.
Very nice wave channel. And wave 5 hit the middle of the channel as so often happens. Proportions are excellent between waves.  It has the "right look".  And really, even if cycle wave b is not over, we can say that this Intermediate-sized 5 wave move should be over based on a simple channel and simple count.  That at least calls for a correction of decent size at the very least. Coupled with historic bullish extremes, it all seems to fit. Now we await the tape over the next few days and weeks.
Make or break time for the CRB index. Nearing horizontal support. Yet the little bounce relieved "oversold" on the RSI once again .  Still obeying the down trendline. Eventually in a deflationary environment (which I predict when the credit bubble is finally burst for good), prices should work lower than the low in 2009. 

Things are aligning for a historical cycle wave b top. Sentiment extremes coupled with wave counts and channeling point toward the markets on the verge of a cycle wave c down that will finally burst the credit bubble once and for all. 
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