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Tuesday, June 30, 2020

Elliott Wave Update ~ 30 June 2030

Wow, what a day. So many thoughts how to organize them in a blog post?

Internally, the market was kind of weak.  For instance on the NYSE advancers vs. decliners 1.9 to 1 ratio. Up volume vs. down volume ended 2.2 to 1 ratio.  These ratios have steadily declined over the last 2 days as the market rose. So instead of increasing, it decreased.

Wave ii counts very well as an expanded flat. This was anticipated and it happened. If the market sells off terribly from here and breaks beneath yesterday's low, we can say we had the perfect count.(however....)
What was a bit disconcerting was the "blowoff" surge in prices at end of day.  Prices were trying to reach the upper base blue channel of Minute wave [i]-[ii]. They almost made it. A small little up tomorrow would finish the touch.

The market has now justifiably formed a [d] wave of a Minor 4 triangle which has been shown for well over a month as a possible pattern for Minor 4.

A selloff from here would fulfill the potential [e] wave of Minor 4. Remember, [e] waves in triangles are supposed to make you feel that the price direction has finally reversed and in this case headed down for good. But that's the emotion of an [e] wave. Ifs its a true [e] wave of a triangle, it'll head in the direction everyone things it should go (in this case down) and then find hard support and reverse hard the other way (in this case upwards). That's how triangles yank us around.

This price action can also make you think the triangle is valid and that a breakout above the previous (2) high is surely coming. However as much as [e] waves can fool us, so can fake triangles.

And that brings us to our secondary primary count. This count forms a new wave [ii] peak in an upward flat but leaves the wave (2) peak in place.  The only price requirement is that (c) of [ii] is higher than (a) and less than (2). So there is a narrow place for this count to land.
Where have we seen this price action before? Oh it just happened to be the last market Intermediate wave (2) peak in May - June 2008.  In that case Minute [ii] took twice as long as the Minute [i] drop, retraced quite deep, and also broke upwards out of a fake Minor 4 triangle.

Prices went higher than (a) - and also less than (2). And it did not strike the big downtrend line from the 2007 peak connecting to the top of (2).
 
Or just a modest higher high. Not enough to touch the "island" top, but enough to form a new [ii] high. This chart actually omits any further fake triangle action and supposes prices just continuing upwards maybe even a gap up tomorrow to finish out.
If we go "gap up and go" tomorrow this is the count to have in hand. Again, this bypasses the silly triangle [e] wave and just heads straight to [ii]. If this happened, the market would be so stretched thin that the selloff may be an amazing sight to behold.
And just so your not confused here is in fact the count for Minor 4 triangle which does imply higher prices than (2). [d] wave would have to count as some kind of double zigzag internally. Since [b] wave is the complex wave (and arguably [c] also), [d] and [e] should be simple affairs.

But the primary count has this as a fake triangle.  If this triangle pattern gets to be well-seen and finds it's way to Marketwatch, buyer beware.
The crew at MarketWatch expresses confusion.  That's because prices are in an apparent triangle action and we have now approached a supposed [d] peak.  Selloff to [e] will really have them bearish and then "BAM" prices thrust upwards and then possibly form a new wave [ii] peak (or fails to break higher than (a) and BLAM! its over, Minute [iii] down asserts itself. See I'm ready for anything!

Monday, June 29, 2020

Elliott Wave Update ~ 29 June 2020 [Update 8:50PM EST]

[UPDATE 8:50PM EST]  Here is the chart from the 7:50 update zoomed in. Lots of thing going on tomorrow. End of month, end of quarter, and a potential meeting point for it all.

Could be the greatest call(s) evah, or just more bear porn.  Either way this chart was too good not to post. Too many things happening. The guys at Goldman and the New York Fed might see this tonight and say, "nah, screw it, we can't handle that, just dump it all now."
[UPDATE 7:55PM EST] Ok, this is why you keep peeking at this blog. Its quality charts like this! The market may be testing four resistance lines and an open breakaway gap all at the same moment.

This should occur in the morning is where everything meets. Say, 11ish...

Hey what better way to assert yourself than to destroy all resistance at once? If its going to happen, tomorrow is lining up to be quite the day either way.  I'll say this, if this resistance matrix cannot hold, then the market deserves to go higher, it will have earned it.

[UPDATE 7:20PM EST] They tacked on some data on the VIX for some reason I didn't get at the end of day. Updated VIX chart and count. VIX prices are already into the VIX gap, but not closed all the way. It probably shouldn't go lower than 29.98, the previous VIX recovery low, or there is something else going on.

It did finish lower than (iii) on the VIX count. We'll see what overnight brings. It suggests a gap up open tomorrow that holds and runs higher to resistance. This resistance is formidable. The price channel line is formidable. Prices may go above it for a while (much like Intermediate (2) has been above the 2010 - 2020 price channel), but they should eventually puke back down. This market is like the Terminator. Just keeps coming at you.
Or it really is just a bunch of (a)-(b)-(c)'s (like the market) and it capitulated at the end of day thrust out of a triangle. Nah, market isn't going down easy. I fully expect the 1st VIX count above to continue playing out.
[UPDATE 6:30pm EST] Just seen via Marketwatch. Curious they post a race analogy picture of the market(s). And the NASDAQ may have had its first day that showed weakness (see volume candle on chart further down).

This is very bullish market sentiment and very bullish NASDAQ sentiment.  This is a very comfortable position to trumpet out to your readers. And this is after the NASDAQ is now nearly 400 points from its intraday high. So the first day NASDAQ may = weakness is the very day MarketWatch trumpets a picture showing its racing strength against all other indexes. Very curious.

NASDAQ made new highs and its been since February since other indexes of significance did the same.  This is not bullish in my opinion.


ORIGINAL POST
Today's end of day burst high could have counted as Minuscule wave C of Submicro (Y) of Micro [2] of Subminuette iii of Minuette (i) of Minute [iii] of Minor 1 of Intermediate (3) or (C) of Primary [1] or [A] of Cycle a or w of Supercycle [a] or [w] of Grand Supercycle [IV].

How's that for a count? That implies it all falls apart tomorrow. (Lol!)
The green price channel has yet to be backtested. If its coming, it will likely gap up open tomorrow to do so.

To me, it looks like distribution from three distinct price levels. 4 days at the top, 6 days at the middle between (a) and (b) of [ii], and now going on 5 days at the next lower level between i and ii of [iii]. Viewed in that light, the next move should be a big break lower (after ii has a confirmed peak) in iii of (i) of [iii] and then they'll distribute some more at (i) and (ii) of [iii].  Just a hunch...

In the meantime, JP Morgan, GS, Morgan Stanley, and the usual crew will have everything "upgraded" and on a buy recommendation. lol!
The Wilshire is shown underneath showing a possible gap open for wave [C] - 5 waves - or wave [Y] - 3 waves - of wave ii.

VIX theory is holding up somewhat. Stretching the rules, but the only requirement on this chart is that (v) VIX price is lower than (iii) VIX price.
Another look. Today's bum rush high at the end may be [2]. This implies yet another breakaway gap down is coming tomorrow.  Our counts are ready either way.  However, again, the price channel may require a strong backtest. This would imply wave ii (and not [2]) is still finishing out.

Strong horizontal resistance shown on the red line. Couple that with price channel resistance.
Now that Wilshire volume (total market) has exploded, its actually possible to do simple volume candle technical analysis that can either aid or refute the overall wave count.  In all ways so far, it has been aiding the count(s).

A proper analysis of today's volume candle is that volume was not enough to overcome the previous day's volume candle.  Even though market prices advanced nicely, volume betrays the move (as of now). This suggests a corrective "up". If prices are to recapture lost support, tomorrow will likely require a bigger "green" candle than the red candle that took prices beneath both horizontal and price channel support.

This is the kind of data that would support (or refute) the idea of a Minor wave 4 is playing out. Simply put, if Minor 4 is playing out, it likely needs a very big green volume candle to assert itself.  Tomorrow would be a good day to do it if you have Minor 4 as your primary count.
Look at the NASDAQ volume candle.  Very little interest to accumulate.  NASDAQ might be finally showing some leadership to the downside. UPDATED CHART - was missing data. Volume candle is not as small.

And the SPX. Despite the up day, we had a lower low this morning and a lower high at end of day.  The candle(s) are walking downward. Its the same on the DJIA despite the 580 point up day.
And finally total market volume, weekly. Again, just ask yourself what's going on here?
And if Wilshire finishes tomorrow at 30,874, the monthly candle will be a huge DOJI.  (It opened at 30,874 on June 1st) That would suggest an up open tomorrow, eventual reversal and a close well beneath horizontal support.

Sunday, June 28, 2020

Elliott Wave Sunday Night Futures, Charts and Stuff

With a renewed focus on a possibly unfolding Minor wave 1 of Intermediate wave (3) down, there should be robust count(s) that take into account the inevitable robust market rebounds.  I always do this in my head, but I'm going to start charting it and providing it in daily updates.

Its best to anticipate possible gap up opens, maybe even big gap opens, and take that into account on the larger wave count. We seen in (1) down it was incredibly volatile with both rip-your-face-off rallies and maniacal market plunges.

We have several pathing options for Monday's trading in the context of Minor wave 1 of (3) down.

1. Gap down. Would likely be near the "third of a third" down for wave (i) of [iii] of 1.

2. Gap open that forms a 3-3-5 expanded flat [2] and is rejected at the possible down trendline.

3. Gap open that runs higher and backtests the broken price channel.  Would be wave [C] of ii in a downward 3-3-5 flat.
A closer look. The 1 minute chart shows 4 pathing options (alight variation on the upper most)
This is the all-hours e-minis. It has its own price channel line which is of course a bit different from the cash index.  Prices are currently engaged with it.
Looks like it made it over just fine.  Heading to bed, I would expect prices will continue to work their way up as the night goes on.
One more. Accelerating over the base channel.  I'm thinking option 3. above. Backtest of the broken price channel.
SPX from the context of the Wilshire.






Saturday, June 27, 2020

Anatomy of a Bear Wave, 2008 vs 2020 [Update Sat 10PM]

[Update at end of post]

This blog (me) has been a bit unfocused lately. An 87.3% rally in the Wilshire 5000 was unnerving to bulls and bears alike. I expected 62%. We got that with wave A. Still, the rally best counts as 3 waves.

Is the market working on wave 4 and then wave 5 to challenge all-time highs? For many reasons that have been presented over the last few weeks on this blog, that is a much lower probability.  I'll list the top reasons here why proposed wave (2) has likely peaked:

1. Its a very fractured market. The NASDAQ made a new all-time high (twice) and all its subwaves count as complete. We have a wide range of indices in between. From the banks showing serious weakness, to the NYSE also showing weakness, The DJIA lagging, these things are not bullish when viewed through the lens of a 3 wave rally that has peaked. The NYSE has already overlapped multiple times with its wave "A" peak and shows no signs of strengthening after topping in 2018.

2. Retail is very much involved. People have insisted that needed to happen and it did. So you cannot go back on that after beating that drum for 10 years!

3. Total volume on the Wilshire 5000 (total market) has exploded in 2020. This points to a market peak having occurred and now its in a viscous struggle to maintain a bull market. This is not normal. This is very bearish. Ask yourself this question, "Just what's going on?"

4.  We had a proposed "kick-off" day for Intermediate (3) down.  The internals were very bad and a 90%++ down day in an impulse move from peak occurred all-around. If this is Minor 4, an intense 90% down day probably should not have occurred as its probably too difficult to overcome within a Minor wave 4 context. Plus, the move down counts nicely as an impulse, not a 3 wave corrective.

5. The market tried for six days to close the island gaps created at (2). It could only manage making the NASDAQ another all-time high, thereby  fracturing the market even further.  Then it lost a lot of price ground in heavy down trading over the past week on impulsive, heavy volume internals (big red candles) . There are now multiple layers of resistance between here and the (2) peak. These resistance layers were produced by signs of heavy selling. Simply put, the path of least resistance is probably down. The primary count is down.

6. Anecdotal evidence. I have been doing informal sentiment checks on family, friends, neighbors and co-workers who have significant amounts in their 401K's and near retirement. They all show signs of greed that is to be expected at a Grand Supercycle peak and in wave (2). Here are some testimonials that I am paraphrasing:

a. 60+ year old manager. Wants to retire at 62.  Uses a Fund Manager option. I asked if he considered cashing out and go to cash (money market) considering all that is going on and evidence economy is unravelling.  He was indifferent and said he had 2 more years and anyway he wasn't quite back to where he was in prices after his nest egg took a hit in March.

b. 65 year old. 401K all in company stock (which did well last 10 years). Self manages. Quote "got out" on wave (1) down, went half back in somewhere in wave [b] of B (60% fib retrace or so).  Says "If the stock drops a bit lower, I'll go 100% all in if it happens". These fund transfers have 90 day holds. So once your all in, yes you are.

c. 62 year old. Big 401K. Uses fund manager.  Also says, "I need it to get back to where it was."  Indifferent otherwise.

d. 57 year old. Doesn't care, he lets his wife handle the money.

I could go on and on but you get the picture. Can they all be correct?  Is there truly nothing to worry about? These people cannot see the danger of having their entire life nest egg at the mercy of the market with all the bad social mood evidence glaring all around? Granted, at some point even the money markets will likely go wobbly, but not at first.

The same theme over and over was 100% pervasively greedy and surprisingly indifferent. Either they trusted some fund manager (who probably does worse than a simple SPX index fund) or they really didn't have a clue. Mostly they were downright greedy.  They all have been ingrained for 10 years that the market only goes up. They all did very well, but yet they refuse to take safeguards. That is amazing, but expected.

I think if you were to bet me $100 if I could convince even just 1 in 100 to "cash out" of the market, I am sure I would lose that bet!

Is this evidence? In the context of everything that is going on in 2020, in my opinion, yes its evidence. But everyone has their selling point. Everyone.  The market has a way of finding out where that is for each and every person. That will be fascinating to watch.

This is why the Fed wants to keep the markets goosed.  Pension and 401K Funds, period.  And they need bonds goosed because rising interest rates will blow everything up. Its not necessarily to keep the rich "rich", its to keep our entire economic system from imploding. But implode it will, the Fed will soon be pushing on a string.

So going forward, this blog will spend more effort in the proposed primary count of (3) down starting with the rest of this post. Yes, the NASDAQ made it to new all-time highs, but that's vast evidence of the retail presence in the market.

Perhaps we get a big opening come Monday (primary count actually suggests a possible down open). If so, we'll deal with it and see how it would fit into the overall count. If the market produces strong evidence that Minor 4 should be the primary count, I'll be the first to tell you and why.  So far that hasn't been the case, its been the opposite. Evidence is mounting that 1 of (3) down is starting to unfold. Once price overlap with wave A occurs, the Minor 4 count is eliminated. Price overlap has occurred on the NYSE and Russell 2000.

Onto the bear waves portion of the post, that's what this blog likes to do anyway.

BEAR WAVES
The 2007 - 2009 bear wave is very instructive. Its a textbook 5 wave nested Elliott Wave bear move.

One of the themes is about how the end of bear wave one's form a tiny trendline which can be used to project prices for wave three (Kenny taught me this).  The current market has evidence of these trendlines in place already.

Additionally, the first sub waves of a 5 wave move form what's known as a "base channel" by drawing a trendline from the peak market price and the top of wave two, then make a parallel trendline under wave one low. That's your base channel. This is where most of your slow-rolling "ones" and "twos" form. Then the "acceleration channel" blasts through the bottom of the base channel and this is where you get to the middle or "third of a third". Once this gets rolling, panic sets in and then you get all your subwave "threes" lows, "fours" peaks, and "fives" lows until the complete nested 5 wave move is done unfolding.

That is basic anatomy of a true impulsive bear wave.

Currently, we have the base channel "set" formed by [i] and [ii]. We have a potential trendline pointing to a Minute [iii] low in prices, and now we have little "ones" and "twos" occurring from recent minute [ii] peak.

Also note that subwave ones always strive to take prices lower than the previous higher degree wave one. The reason last week isn't labeled as pink (i) down is because it likely hasn't occurred yet. Once prices are under [i], we can look to label (i).
Proposed base channel for Intermediate (1) and (2). Also note that 1 of (3) is proposed to be lower in price to (1) as its the first subwave 1 of (3).
Now for the 2007-2009 chart.

Note, the 2 spots on the chart of where we are in relation to the current 2020 bear wave market. 

The first spot is the "true" spot. We are just coming off of (2), but not yet under [i] and headed toward (i) of [iii].

The second spot is where we are on how we may "feel" since everything is magnified in 2020, your going to get a tinge of the plunge that occurred in 2009. (Our real plunge in the current market is in 3 of (3) down, not 1 of (3) down although that's kinda scary also). Get it? Hope no one got confused.

Note that in 2007, there was a proposed trendline created but it did not pan out! This indicated higher market highs were coming. Same applies to the current market. If the proposed trendline becomes impossible to achieve, then something else is probably going on and it'll have to be reevaluated.
Well, there ya go. This was a good time to roll out this post since we have proposed that the base channel of [i] and [ii] of 1 of (3) down may now be set and we have a proposed nifty little trendline pointing to where prices may be heading. Good luck!

[UPDATE SAT 10PM]

Here is a reworked wave (1) down based on principles outlined above.  Looking back, it originally got a lot of things right after the wave broke at the correctly identified "virgin space". This blog confirmed wave (1) low on March 26th, much earlier than anyone else. Was too much in a hurry to finish wave (2). But who honestly thought at the time the market would have new highs in the NASDAQ and the total market retrace of 87.3%??!! in 3 months no less....

Now we can't seem to get anyone to say its headed back to March lows (for starters).  Babbling about "V's" and "W's" and "L's" and such.  As if the March low is a floor never to be tested and broken through. When will we hear some talking head say we are headed back to 2007 peak prices? Is that out of bounds? My gosh it was only 13 years ago, surely we can't be so fragile can we?

Notes on the chart. If prices backtest the broken base channel, label it the main wave four peak. - In this case Minor 4.

Also see how the wave one lows bounced along the lower base channel. Yes I cheated and used (ii) of [i] but it was nearly same price so it works better.






Friday, June 26, 2020

Elliott Wave Update ~ 26 June 2020

There is no panic (yet) in the market. Prices are dropping nonetheless. Today was not a 90% down day, but it was another solid down day all around. Stair-stepping in "ones" and "twos". And that implies a "third of a third" may be soon upon the markets.

Solid close under the price channel.
Solid close under the 200 DMA (for those that are DMA watchers) for the SPX, but the Wilshire did not close under (by 5 points). Whatever.
NYSE showing leadership.
NASDAQ. That Doji candle over the top trendline looks ominous.
GDOW is a leader also.  
And of course the banks are the true leaders to the downside.  We all know what happened in the great deflation scare in 2008-2009. Its remarkable they are not on the radar yet as far as the talking heads go. But they will be.
The bullish alternate. They would have to announce a Corona cure I imagine.  People still have hope, but its tough... there are 47 Million out of work.  There is no cure coming I'm sorry to say. And this triangle is just a mirage in my opinion, but its not dead yet and people want to see it so here it is. I mean look how far wave 5 would have to travel, almost the distance of wave 3, and wave 3 was a herculean effort!


Elliott Wave Intraday ~ 26 June 2020

Primary count. Resistance was rejected right off the bat this morning. Trading has been very negatively heavy from the open.  Very negative compared to anything that occurred inside of [ii]...Wilshire has also lost the lower channel line.
Total count from (2) so far. Note how also (2) itself took a lot of time compared to (1) (not shown). This pattern seems to be repeating. I liken it to Robinhooders and other retail buying the market that the insiders are clearly dumping. 
Wave (3) is brought about by social mood. We, as a society are choosing to contract economically. We will make the government lock ourselves down again.  But they'll do it at the end of a trend. Probably at wave 1 of (3) down price low. 

Its already too late for the virus anyway. There is no "containing", there never was. 

Updated chart. New resistance line possibly.


Thursday, June 25, 2020

Elliott Wave Update ~ 25 June 2020 [UPDATE 7:30PM]

[UPDATE 7:30PM]  I'm really trying this VIX theory of ONE five wave nested count from VIX surge peak back to VIX pivot low for significant corrections. As pointed out yesterday, it helped us to find Intermediate (2), and it helped us to find Minute [ii]. Now we can see if it helps us find ii - or (ii) if you prefer.

My rules for counting the VIX are generally these: 1) Nothing is generally "truncated". Start the count and end the count wherever it is.  2)  The VIX is surging to a new spot, then settling back down in a 5 wave move - then surging to a higher spot after the 5 wave move is over.  3) Generally I think you can count each settlement back to a low in its own context.   4) The new low settlement spot shouldn't be lower than the previous count low (for a bear market wave such as the one I am proposing we have started down in).  5) Don't include after-hours VIX other than to anticipate how it will open.

Again, my theory is that we get agitated and fearful and we don't "correct" this agitation and fearfulness back down in 3 waves we impulse it down in a nested 5 wave move. The great thing is the VIX counts almost always starts prior to prices actually hitting their lows. Our max fear is somewhere in a market wave 3 down.

But all the same, our overall state of agitation is getting steadily higher. Strike prices get further and further out on both sides of the bet. We are less certain. Everyone is all over the map with their emotions.  The once homogenous, calm steady state is no longer calm.  Once a surge is momentarily peaked, we strive to impulse back to a calmer state.

The wave degree labels don't really mean anything. I just used whatever to convey the meaning. I tried to keep it relatively tied-in to the market count so you get the idea.

Using the VIX count, may help us predict the market count.

Even though I showed the "MAX mega gap up" count below as a possible alt, the mega gap up probably wouldn't fit into my VIX theory count below unless I am labeling things too early.  But who knows.

Lets just see if a few ups and downs finish it off nicely.  I just developed this theory so it's still being tested. Tomorrow is a big test. This is one chart to count intraday.
Another Wilshire count.  Fun with trendlines.
ORIGINAL POST
Primary count is that wave ii of (i) of [iii] down is retracing back up. Once its done, a strong wave iii of (i) of [iii] down should commence.
There could be enough retrace to consider wave ii over but this is not an easy market.
However, the bulls managed to hold the bottom channel line as shown on the chart(s) above. And it snuck prices just over the resistance line at end of day. I just knew that would happen!

Therefore here is the top variation of the bearish count, well, just because. I tried to think of the most surprising move for everyone (bulls and bears alike) and here is what  I came up with. 

This is the scenario where the market has a mega-mega-gap up  that once it opens it keeps driving and not only covers the open gap from yesterday but covers the open gap from the mega "kickoff" wave down from 2 weeks ago.

But no worries mate! At the end, it all falls apart in an about face downwards. Fake breakout!
This would give us the second strike on the down trendline. I cannot believe that won't be tested.  This would produce repeating fractals at differing scales. And both wave two retraces would be deep. And both retraces will have taken a lot of time versus the wave ones down.
Would likely gap right up through the previous distribution zone not allowing any dip buyers at all!
LOL cruel market! First you mercilessly eat all their stops, now you make 'em dip back in at much higher prices!
Another possible wedge forming on the Composite if it surges again.  Price target is posted.  This would have to happen within a day or so. 10,264.
Apple would probably count better also.
I'll post more down here later. I'm gonna look like an idiot if futures do opposite.

And here is the Minor wave 4 count. It also would take  some significant price gain to form a final triangle in an [w]-[x]-[y] formation.
Or if you prefer a simple contracting triangle. Wave [a] was a very bearish wave though.  "Kickoff" for wave (3) down. Usually wave [a] of a triangle coming from peak does not produce a 33-1 down stock ratio and 90% down day all-around.   Wave [e] is starting from a deep spot also in this chart.  Its not a favorable count for this and other reasons.