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Tuesday, July 21, 2020

Elliott Wave Update ~ 21 July 2020 [Update 8:30 PM EST]

[Update 8:30PM EST]
CPCE.  More jostling of the moving averages. An incredibly low print of .39. The third sub .40 print in the recent past. Incredible and the Composite was down 87 points!

The stack order of moving averages now exactly match the stack that occurred at the February 19th peak.  Don't know if it portends anything, but its pretty neat anyways.

I know I keep harping on this chart, but it could be historic you may never see these low prints like this. So we are capturing the mania in real time every day.
[Update 6:25PM EST]
New total volume ratio numbers are out and everything has spiked considerably higher. The Composite was down 86 points today, but the sheer total volume ratios required to keep it that high is at the most extreme ever.

These outsized total volume ratios may be a result of the computers reacting to flows and prices. The Composite should not get "out of whack" with the NASDAQ 100 so the computers are perhaps adjusting volume flows to achieve this as a natural outcome of the algorithms.  Maybe instead of "spoofing" "x" times per bid (yeah I know, I know,.... they surely don't do that) it is being doubled and tripled to create even more fake volume so that prices react accordingly and move the way the computers think they should be moving (or want them to move).

Something is causing it and its most likely computer-trading algorithm related. And its likely to crash if they get even more extreme.

This is just a guess, but no one has suggested otherwise and likely no one cares.

They are literally spoofing diverting as much volume flow as possible to keep "1-800-FLOWERS.com" at a P/E ratio of 43. This can't last forever.
Weekly:
Top alternate count if the wedge count is false. Not projected to make new highs, but should close the gap down.

ORIGINAL POST
Here is some Elliott Wave logic:

If the ending diagonal triangle (EDT) is an ending diagonal triangle, then;

1.  Prices have "overthrown" the upper wedgeline and closed back under.  Check.

2.  Much exuberance was evident during the overthrow. Check.

3.  All subwaves of the EDT are 5-3-5 zigzags. Check.

4. Prices struggled during the entire EDT on weakening internals, overlapping waves at many spots. Could not form an impulse other than the "five" of a 5-3-5 (a)(b)(c) zigzag. Check.

Unfinished items:

1. Prices break back through the bottom wedgeline.

2. If prices break under bottom wedgeline, prices go back to start of wedge at least (usually deeper).

So that is the situation we have at the close today. What's really interesting is that the Wilshire formed a long-winded intraday triangle to try and break back over the upper wedgeline but was rejected.

In other words, if it is a wedge, today's close likely "triggered" the post-wedge outcome. For instance if we get another burst up open through the top tomorrow, then likely its not a wedge. You probably don't get two overthrow chances.  But hey, tomorrow is a key day I suppose.

Again, it would be real funny if the market tore another huge gap down from right here.

Here is another weird thing. NASDAQ 100 futures failed to make an all-time high last night by .50 and they were far above the cash outcome.  Looking at the close: Composite down -86. Futures down -105. Weird and perhaps telling.  Major non-confirmation?
 
Here is more precise price action showing the intraday triangle and then attempt to break higher. In the context of a possible wedge, its bearish price action.
Realigned the composite a smidgen to account for this new peak. This actually now matches the "single line" mode chart in last night's post.  Classic waning RSI pattern at a 5th wave peak.
More in a bit.

Ok here is more.
Lockheed Martin.  50% retrace of the recent drop. This is forming nice waves, which is why I keep it on my list. This stock is telling a story perhaps of the underlying forward sentiment on the gargantuan defense industrial complex. As far as we actually build anything big in this country anymore it is largely defense-related or government-connected in some ways. 

Reported earnings today. Crushed it. But the defense industry moves like a leviathan. The Defense industry has yet to shed any jobs really. These are the higher paying jobs with fat 401k's and many are afforded the ability to work from home during the pandemic. But social mood has a way of drying up future contracts.  

Government can be finicky during social mood downturn's.  Keep an eye on it.
Bonds still aren't buying the rally. Intraday rates dipped below .60.
Our updated SPX chart from last Thursday's post.
Lately, I have been seeing nothing but stories on "bubbles" and technicals from Marketwatch. Also the occasional "hope". Hope is a bear market emotion. (Haven't heard "Wall of Worry")

They gave up the "V" thing mostly. Now its all about "technicals" and why stocks can keep moving higher.

But technicals are fine and dandy up until a down wave is due and they don't work and they shut off a computer or 2 and prices just smash through stuff and wreck your charts.

Technicals support wave theory, not the other way around.

This technician cited used the VIX which isn't bad really. 
Updated Wilshire squiggle chart from last night. Note the attempted triangle during the day and break higher but it failed. "Stick" save at the end.
The Wilshire is hugging this line. It means something. 
Gold breaking higher.
Dollar looking for a trendline hit.  

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