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Thursday, December 31, 2015

Elliott Wave Update ~ 31 December 2015

The Fed has a problem.

3 month yields aren't cooperating with what the Fed wants.

Wednesday, December 30, 2015

Elliott Wave Update ~ 30 December 2015

The late August downdraft created a multi-month trading range in which the market is still squarely in the middle of it. One could also theorize that a huge right shoulder is being formed to match the huge left shoulder of a monster head and shoulder pattern. Time will tell.

Thursday, December 24, 2015

Friday, December 18, 2015

Elliott Wave Update ~ 18 December 2015

Got to Agree with EWI's take that an ending diagonal pattern is occurring in gold.
These rates just don't seem to want to go the way the Fed has deemed them to go. If the Fed backs off on pulling liquidity (and thereby trying to raise the target Fed fund rate), the rate hike will be short-lived and they will be forced to to cut again!  

Thursday, December 17, 2015

Wednesday, December 16, 2015

Elliott Wave Update ~ 16 December 2015

The 3 month yield had been above .25% so the Fed was able to raise rates which is what I had predicted the 3 month yield needed to be at before they would raise rates. Now lets see how much liquidity they need to drain to try and make the Fed Fund rate move the way they said they want it to.

Tuesday, December 15, 2015

Elliott Wave Update ~ 15 December 2015

Still solidly in the middle of the huge trading range created by the late August collapse in prices.  The range won't last forever, but it needs to work itself out.

Monday, December 14, 2015

Elliott Wave Update ~ 14 December 2014

Here is a glaring example of extreme market weakness by examining internals.

The NYSE index closed higher today but the advancers versus decliners were a whopping 1:3 ratio. In other words even though the index closed positive, underneath the rot, there were about 3 stocks down versus every 1 up. I cannot remember the last time the underneath rot was so bad at a close despite the overall positive close. Will it matter?

Additionally the up volume ratio was  a negative .67:1.  Volume was solidly negative despite the positive close.  The market "rally" today was not strong internally.

The last thing of note is that the trading index was a very skewed .52. Which suggests that a lot of buying power was expended today to keep the market overall positive. Was the NY Fed trading desk in overdrive trying to keep the S&P above 2000?

Lastly, the wave formation from today's low to today's final high has taken the wave pattern of 3 waves which suggests corrective.

Thursday, December 10, 2015

Wednesday, December 9, 2015

Tuesday, December 8, 2015

Elliott Wave Update 8 December 2015

Yields on the move. 3 month is above .25 which should be the threshold trigger for raising rates.

Friday, December 4, 2015

Elliott Wave Update ~ 4 December 2015

Today's up volume ratio and advancers versus decliners via the NYSE was rather anemic compared to the actual percentage gain in the major indices.  Usually a DJIA day of +370 results in 3:1 or 4:1 or much higher ratios in both. Today's ending respective ratios were  2.03:1 and 1.91:1, quite muted. And the 2:1 ending of up volume only came about in a surge at the last minute. Most of the day it hovered between 1.1 to 1.8.

The advancing issues actually diverged from this morning.  The high of the day occurred at around 11 A.M. at 2.13:1.  Overall the underlying technical situation can be considered weak despite the 2% up market day. And there is an open gap up left from today's open to boot.
Despite all that, well yeah, we are still trading the the multi-month trading range created by the rapid selloff of late August.
Short term yields are on the rise. A 3 month yield above >.25 is probably what it will take for the Fed to raise interest rates to the .25 - .50 range.
We use the 6 month yield count (which I consider a proxy for the 3 month count) because the 3 month is too noisy being so close to the 0% yield line for so long.  The 6 month count is in wave 3 and it is rising like a wave 3 so we'll go with it.

Thursday, December 3, 2015

Elliott Wave Update ~ 3 December 2015

The upper base channel line rejected prices fairly significantly so far.

Wednesday, December 2, 2015

Tuesday, December 1, 2015

Elliott Wave Update ~ 1 December 2015

Sometimes its useful to look at the wave counts zooming out to get a bigger picture development.  We can guess the probability of squiggles all day long but in this case the Wilshire daily chart may be more instructive.

Logically speaking, the price low of Minute [v] of Minor 1 down was a lower price than [iii] of 5. This is not in dispute. Therefore the count up cannot start at [iii] - unlike the S&P500 and and DJIA which can start there because they did not have a solid 5 waves down.

But the Wilshire surely did.

The underside of the channel rejected prices once recently and it would be a good guess that they are reaching for the underside in another attempt.  This pattern would result in a very deep Minor 2 retrace up but still within the rules of EW counting.  Would the S&P and/or DJIA make new highs under these deep retrace circumstances of the Wilshire5000? There is a very probable chance yes that they would.

A higher Minor 2 as shown on this chart would also "look better" for there would be 3 distinct waves back up as marked [a]-[b]-[c]. Additionally an ominous head and shoulder pattern would be present on the Wilshire (but likely not the S&P) so any pundits would have a difficult time pointing out an overall H&S pattern.
Additionally, likely the GDOW weekly would also form a distinctive [a]-[b]-[c] pattern which would look ideal. The GDOW too has five solid waves down.
Time-wise would also make sense that Minor 2 high peaks in December as opposed to the very short early November marker as Minor 1 took 3 months.
Well that's the best I can do at this stage. The more the waves trace, the better the odds of getting the pattern correct. Yes that may seem stupid, but you need to have a first pattern in place before you can predict the subsequent wave pattern. So far Minor 1 down in the Wilshire5000 traced a solid 5 waves. So far, Minor 2 up has not traced yet a clear 3 wave pattern. It seems intent on at least topping the early November rebound peak so we might as well anticipate that if it happens.

The late August incredibly fast drop has - predictably - created a multi-month trading range. We are still within that range and could be for many more months if long-winded right hand shoulder (see first chart above) needs more time to develop.