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Friday, July 31, 2020

Elliott Wave Update ~ 31 July 2020

The contrarian in me wants to think the market is going to rip a huge open Monday gap down right from near the spot where it did it in February and create yet another unclosable gap down.

WILSHIRE COUNTS:
Three preferred squiggle counts. 

1. Most bearish. The reason there may be a mega-gap down Monday is because Europe may be breaking down very bearishly.  This was shown on yesterday's post on the DAX and CAC and today's Europe action seemed like a small relief rally. If selling picks up in earnest that will likely effect Sunday/Monday futures. Or not. But its a concern if your long into the weekend here.
2. This count is a Monday effort to close the February gap down. Remember it has been stated on this blog many times that if this is wave (2) the February gap down shouldn't close all the way. So far that has been true.
3. The 5 wave count to challenge new highs. The "start" for 4 would be the recent channel line hit.
How many realized this is the highest monthly close ever for the Wilshire 5000 and SPX? Yup. And its July so its the highest quarterly high ever also. duh! brainfart, nevermind.
VIX. Never seen a more stubborn VIX! The bearish pattern comes to an end one way or another Monday. 
DAX. Again, if that was an ending wedge, prices likely need to collapse quite a bit more. 
INTRADAY
Caught the bid at the last price channel trendline. Probably upside surprise coming Monday.
Facecrook and Crapple. FB looks like a wedge with overthrow.
Apple probably missing a squiggle or 2. Looking for a channel line strike (or 2).
 
POSSIBLE NDX COUNT. This would match any final squiggles up in Apple come next week. There are lots of ways to label the NDX but if we get another high, I'll go with this due to channeling and because it makes the most sense.
CPCE and Ratios. The last "selloff" was very relaxed. 
Ratios. The ratios dropped.  That could be a clue that a storm is coming. Or not. Just thought I'd throw that in there for excitement. But seriously, the computers shifted a bit over the last several days....Probably just confirms a lot of the total volume occurred in Apple and a select few other NDX 100 stocks that doubles up in 2 ratios (NDX and SPX) was getting the bulk of the volume action today, and hence the ratios dropped.  But so did the NYSE finally. 

Probably a bearish sign all around!
GOLD. Still like the $2020 mark. 

10 YEAR YIELD
I had assumed yields would collapse when equity prices collapsed but that's not the case. This "bull" market mania is buying everything in sight.  Stocks, Bonds, Bullion, Digital Currency, Select Real Estate...

The only thing that is selling is...King Dollar.  And guess what registered an 8% Daily Sentiment Reading according to Elliott Wave International? Yes the dollar. Guess what's ready to rally?

OMG, this market is so dangerous. If equities AND bonds AND Bullion AND Digital Currency AND real estate ALL sell in the coming collapse its surely game over.  A cascade effect could occur in the bond market and interest rates could get extremely volatile. This volatility may even trigger the quadrillion? ($250 Trillion ok?) dollar interest rate derivative markets ...Holy crap!  And with many bonds worldwide in negative territory, things could get squirrely. 

Intraday we had a lower low today in the 10 day yield. 

Elliott Wave International just reported today that the ICE BofA MOVE Index, a measure of implied bond market volatility, just reached a record low. This is an extremely "calm" bond market and it implies a "relaxed" sentiment as if bonds would never sell. After all they have been in a 40 year bull market, probably everything is just hunky dory and Fed has our back huh? LOL!
Ok this goes back as far as Stockcharts lets me. You can pretty much see the top of yields in 1980ish. Elliott Wave International mentioned the "duration risk" and I had to look it up to better understand. 

Based on what I read, my assumption is all the debt issued since March is at extreme duration risk due to the low yield it was issued at. Basically anything under the channel. But that amount since March (and its a lot of debt piled on!) might act like a trigger to the entire debt bomb. Which may set off the interest rate derivative bomb (you do remember those from 2008 yes? - they are still there!). There is a reason banks are selling below book value...

I'm just a regular Joe Schmoe here, but this chart looks like a "buy" for yields pretty freaking soon.

 

Thursday, July 30, 2020

Elliott Wave Update ~ 30 July 2020

Elliott Wave logic is thus:

1. If wave (2) peaked, then the market may be in the death throes of giving up the Grand Supercycle chase. It is reluctant, it struggles.

2. If wave (ii) peaked, it may be just as stubborn as its much larger cousin wave (2).

Something cool anyway, quick, which is which?
Regardless the counts is that Intermediate wave (2) has peaked and the first small squiggle wave (ii) has peaked or is peaking.

As stated above, the first squiggle wave (ii), a very tiny, tiny wave two in the scheme of things, may be just as stubborn as the Intermediate sized (or Primary as EWI has it).  So, we'll count it as such until it proves otherwise. 
Alternate count(s) is that wave (2) still has kick in it but will finish things soon.  
Some interesting lines and intersections. Algorithms work in a lot of ways just by finding a trendline (or price channel) and testing it for support or resistance. 

Computer --- prices hit trendline = BUY MODE = EXECUTE! = Sustainable? Spoof and frontrun!

Find new trendline -- prices hit - BUY MODE = EXECUTE! = Spoof and frontrun!

Cannot find new trendline - BUY MODE sustainable? = No!, SELL (spoof to the downside - FLASHCRASH!) until prices find a new trendline!

I think we give these things way too much credit, that's probably in a nutshell how they work. Remember these things were designed by kids with rulers (scales for you engineering types).

Since June 8th that has been largely happening. Computers finding a lower channel or price line and following it. When it can't be followed anymore they found others. There are not many support lines left though.
Ok, a bunch of FANGGGLE (whatever they are) stocks just reported. What if that's all this market has got? I mean ok, e-minis are up 1/2% at 6:24PM, but what if that's all they got?

Who buys these things after a 4 month 50% run-up in post earnings afterhours? Wouldn't you at least buy a few days prior if you're gambling its going to pop?

4 - 1 stock split? Is that the ultimate hubris of Apple? Why else to split the stock other than you want it to go up more or expect it to?  I just think the A/H's runup is more a bearish sign of overexuberance exhaustion move rather than anything else.

THE LAST TRENDLINE?

It's probably the last possible price channel line from the March lows. I gave it the ol' [w]-[x]-[y] formation with a triangle in the final position to mark an especially long-winded wave 4. You know how triangles like to reform if they can. Well it's a valid count so now or never Mr. Market!
 A closer look at the above. So many interesting ways to connect these patterns since the March low. The final act is ready to play out either way! Its exciting yes?

I know I throw a lot of counts out here, but that's what this blog is about counting waves. If there are numerous ways to connect the patterns so be it.

However they all basically show the same thing. Either wave (2) is ended, will end soon or wave 5 will attempt new market highs and that will fail, or maybe be successful. 

The final act is almost upon us. It's almost August and the narrow window for rally is closing fast!!
There are enough waves in place to consider GOLD count finished. The expected $2000 price hasn't come yet and that's what happened 10 years ago also.

But I'm rooting for it! I guess it depends on the overall market, 

CPCE and RATIOS
Finally all the moving averages on this chart has crossed over the 30 day MA. All are pointing up. 
VIX tried to escape the bearish pattern but just couldn't, at least not today.
Keep your eye on the DAX in the morning. It had a wedge pattern and prices have broken down sharply.  There is no more trendlines to catch that are apparent.  Price low might be (i) down today so maybe it'll bounce in (ii) up.
French CAC also broke down noticeably. Maybe its a wave (i) low and it'll bounce for wave (ii).


Wednesday, July 29, 2020

Elliott Wave Update ~ 29 July 2020

The Wilshire 5000 (and SPX) seem hell bent on closing the February gap down.  The market is showing signs of extreme exhaustion, perhaps the biggest ever created in the history of stocks.

So tonight, we'll start things off by reposting the top alternate count(s).

TOP ALTERNATE COUNTS
Biggest, raggediest, ending diagonal triangle in the Wilshire you may ever see if it comes to fruition. The wave action is no longer crisp in the up moves. They are practically on a forced march being pushed by the computers and the hype of it all.

Would likely close out the week near the high in this count. In fact, closing out the month of July near the high.
And a clearer picture of just the Wilshire.

PRIMARY COUNTS
However, first things, first. The market deemed this line important as prices continue to gravitate toward it.  That explains the midday jump upwards. 

Arithmetic scale from afar:
And now the log scale showing the lower wedgeline which is practically the same line shown  in the arithmetic scale chart above. Prices keep hugging the under side.
Therefore is this is wave (ii), its a great place to stop or nearly so!
Well that's it for now, checking out gold and stuff....

GOLD
Best guess squiggles. $2020 is the minimum target.
Yet another way to view the trendline that the Wilshire is hugging underneath. And this one we threw the 5 wave count back on it (regardless the count, it may be forming a new wedge)

If we do get a gap up and further effort to close the February gap down, this would probably be an acceptable way to label it as a failed 5th wave (because I still don't believe we are going to get new all-time highs in the Wilshire) considering it would be within 2% or so....
CPCE and RATIOS
CPCE. Very tight grouping at the moment of the Daily, 3, 5, 10, and 30 which is probably relatively a rare situation. 10 day still under the 30 and the 3 day plunged back under the 30. The HFT machines are probably confused.

Its like the moving averages are all have a meeting and saying "which way should we go boys?"

By this time (peak +6) in February, the route was on and the NASDAQ Composite was 13% lower. Now we are back within 3% of the Composite highs. To catch up to the February pattern, the Composite will have to plunge around 10% here in a day or so. Not saying its going to happen, just stating that's what it would take.
Ratios eased up today. KODAK (NYSE) was the insane story stock today. NYSE is trying to tag its own open gap down from its June peak.
The VIX may be in a descending triangle situation which is bearish for VIX prices. The final result is a thrust under, possibly to pierce the gap and run stops resulting in one of those mega-VIX spikes.

To break this descending pattern the VIX needs to head to 30 pronto.




Tuesday, July 28, 2020

Elliott Wave Update ~ 28 July 2020

[UPDATE 8:25PM EST]
Gold higher highs. There are enough minimum waves in place to consider the count as complete however let it run out to where it may. Gap up in A/H's.  Remember these are Gold futures (Dec 2020).
ORIGINAL POST
Primary count is wave (ii) peaked today in the Wilshire 5000, tomorrow should bring blahblahblahblah. Whatever.

This market wears you out. And when you step back and realize what you are potentially counting, its staggering to think of.  If (2) has peaked, that implies the quest for Grand Supercycle [III] is over.

And that is a 240+ year rise. So you can see why it refuses to give way. You can see why the (2) count will take us to the bitter end of the debt bubble.  Congress is ready to dump another $1.5 Trillion in our laps for good measure. Will it do anything except seal the fate of the biggest debt bubble in the history of mankind? Issuing credit upon credit? Pushing on strings? There is a reason German 10 year bonds are trading negative...no one wants or can take on any more debt! Sure the bonds get bought but who is taking out loans to spur new economic activity? Anyone starting a real business other than another stupid freaking app or another way to sell more cheap junk we don't need?

The market already carved out a new high in the NASDAQ Composite, but its been since February where every other index refuses to follow so far.

So we are patient regardless. Don't even care about the alternate counts. The alternate counts are thus: Wave (2) ain't over. See? That was easy! (actually nothing changed from yesterday so see that post)
Log scale. It may have peeled away from the lower wedge line, or it may decide it  wants to hug it some more tomorrow or maybe gap up over just for good measure. Wave (2) maybe wants to live forever (but it cannot).

What's that market saying? "A kid and his ruler?". Arithmetic scale. Same result.
GOLD AND SILVER

Hopefully we get another blast up on both. Rooting for ya's!
CPCE and RATIOS charts
We'll keep posting these until its no longer interesting or useful.

CPCE. 10 Day average still hovering under the 30 day.  Tightening pack at the moment.
But today ended with 2 calls bought for every 1 put. This is still very bullish considering a red down day all around and the Composite down 1.27%.
Ratio charts.  Composite:100 ratio ticking way up again. Composite:NYSE is permanently high it seems.