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Thursday, July 23, 2020

Elliott Wave Update ~ 23 July 2020

Last night's primary count had wave [c] of the second zigzag possibly terminating at [c]=[a] @ 33,525 on the Wilshire 5000.

Tesla opened at $1679.   And then it finished the day down almost 5% after popping 5% in the A/H's after last night's "earnings" report. Does anyone really care anymore? Its all insane and everyone knows it. Just like what's happening in the country everyone is in denial about something and peddling lies.  The market is one big greedy lie and it perfectly reflects social mood at a Grand Supercycle peaking process.

This must be a wave (2) because we are now in the "head in sand" phase of society. Its all around us.

Electric cars are a bull market "luxury" and what better way to top it all off on fake earnings? They are not even "green", as that is a big lie also. The amount of toxic waste to produce the batteries is far and above environmentally damaging than a simple gas engine. And you have to plug it into...drumroll electric grid powered by oil!

How many trillions is the world in debt? In liabilities? In promises? You know what's insane? 100% of (sane) people know it will never be paid back. The entire financial system is a gargantuan Ponzi that is almost out of new suckers.  There will be a day of reckoning for the entire system yet we seem to think that will "never happen in my lifetime"...or something. Well guess what? The clues are staring us in the face. Another 1.3 million first time unemployed on the debt rolls....18 weeks of 1 million +.... 52.69 Million total...

I digress again. And when the Robinhooders finally pile in bonds as a last ditch effort (trust that it's coming) we can know that the end is very near.....


Then at about 11:30 this morning, the Wilshire 5000 went to 33,520.3 in what looked like wave (v) of [c] of Y and 4 minutes later this popped up on Marketwatch:

Yes everyone is feeling comfortable again.

Obviously it didn't "crash", but it may be cracking.  Prices dipped under the June peaks and there was a battle for almost 2 hours to make sure it finished above support. It did in both the SPX and Wilshire 5000.

It lost the blue price channel line. Was saved by the wedgline.
Top alternate count (5 waves to challenge all-time highs) from last night is ruined due to the prices overlapping the June/July peaks(s).  The best alternate right now is that this "Terminator" market (keeps coming at you and won't die) will try and still close the February gap.

But it has to do so now as it cannot afford to lose June peak support or its over and it knows it. We see that price action clearly at the end of day of how important the June resistance needs to now be support. There is a lot of money spent in the long sideways trading range.

So maybe it tries and reforms yet another ending diagonal and this would very much be a valid one, 5 waves in wave (c) position. Its the best alternate count we can do for now.
Gold hit the trendline on the weekly. Like the stock market, there is a very sense of bullishness that Gold will most definitely take out its former high. We'll see.
Best guess at the moment. We have identified the virgin space though.
Spicing up the CPCE chart. Finally the daily crossed up over the 30 day.

Extraordinary Popular Delusions and The Madness of Crowds.
Updated Ratios chart. As expected, when there are good market price drops, 2 of the 3 ratios get somewhat relieved.  Still elevated though in a historical context.

NASDAQ Composite vs. NYSE is the most persistent partly because the other 2 comparisons (vs. 100 and vs. SPX) share significantly more internal stocks with each other.  So the ratios rise and fall more or less together.  So when you have Apple and Tesla declining for instance, the pressure shows "relief" on the Composite:100 and the Composite:SPX because each side of the ratio measures Apple as part of the basket. Tesla is in the 100 so that is on both sides of the Comp:100 ratio (just an example there are many others).

The NASDAQ Composite and NYSE do not share any stocks. And that ratio is persistently high which tells you there is something still very wrong despite the down days in both.

I'm no stock market guru by any means but having studied some of the mechanics over the years, everything seems "amplified" and the computers are most likely responsible.  That could be why these ratios are so outsized. If the big trading houses of Wall Street are all front-running buying and trading the order flows from all the retail trading houses (Schwab, E-trade, Robinhood, etc.) then small retail "pile-on's" can have outsized effect on market moves.  Like scratching a record doesn't make much sound but if the amplifiers are on its very loud. Same thing here.

But eventually the market will turn against what everyone is doing (trading the bull).

You must also consider the other investing is almost all "passive". Regular injections from Pension funds, retirement accounts, you name it, are only buying things such as an S & P  index fund for example. The pension funds are not very active investors anymore.

The outsized ratios are also counterintuitively a warning that real liquidity is dangerously low. If these ratio's can balloon and retract so much every day, then how much real liquidity is there in the stock market other than billions and billions of spoofing fake volume?

One other thing to consider is this: What if retail suddenly decides it needs to go short? What if the Robinhood armies start buying QID by the bucket load? Will these order flows be amplified to the downside?   At the moment, popular day traders such as Portney says "stocks can only go up!", but what if he realizes that no longer has to be true? What if they all do? Sure, a lot of retail will get crushed in the end, it was meant that way.  Yet having Wall Street giggling with glee on their continued fortunes of "sticking it to the little guy" may actually backfire very badly.

What if they all plug in their fancy high speed computers programmed and run by 30 year old whiz kids, turn them on, and seed their own destruction? It's bound to happen. I think we are seeing the seeds sown every day in real time.
I'll end this post saying this on negative social mood;

Despite racial issues being the #1 news story day after day, this is really a class "thing".  The "have nots" vs. the "haves". Everyone may be distracted now, but eventually the anger will be turned squarely against the rich. And now particularly the old, white rich which is well, a lot of rich people.

"Occupy Wall Street" was not forgotten. It was merely delayed. Once mood really turns sour, being a jet-setter, high-flyer will probably no longer be an envious position to be in.  Nor being a Politician.

I wish it wasn't like this.  I miss rising social mood.

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