Custom Search

Monday, August 31, 2020

Elliott Wave Update ~ 31 August 2020

An extremely satisfying day for the primary wave counts. The market had room for some upward final squiggles and Apple had completed a week long triangle and was expected to make a new all-time high. These things both happened.  So we can say there are enough squiggles in place to consider wave [v] of 5 of (5) over. 

For all practical purposes, the Wilshire has touched the green trendline.
Zooming in we can see there is an excellent overall wave pattern. 
And zooming in even further...
And yet even further zooming. The potential ending diagonal triangle only really manifests itself here on the Wilshire 5000.  Every other index is showing something slightly different but we'll go with this today.
Dow Transports in addition to Friday's closing high since 2018, it now has an official intraday high since 2018.  "DOW THEORY" clock has now restarted. the Industrials have to match the efforts soon(er) or later or else its a big negative for the market considering the total market moves involved over the past 8 months.
SPX 10 minute. I tried to count it like the Wilshire for the last couple of days. Not as neat an ED pattern...
VIX. Vix is trying to tell us that society is really, really agitated underneath all the bullshit. Yet we keep ignoring the warning signs.
Apple wave 5 has enough squiggle in place.
However, it didn't yet meet our ideal trendline hit. Which is about $140 or so. But this is not a trendline that is "set in stone".  So it could top right here no problem.
I'll have more later.
Dollar. At support with extremely bearish sentiment,
CPCE 90 Day moving average. This exemplifies persistent.
US 3 Month T-bill count. Looking for a closing lower than .09 for wave 2, A break over the down trendline is bullish for yields going higher. Obviously I don't have intraday spikes on here but this should suffice for now.
Ratios. Something changed. Is this indicative of a major change of direction and flow???
SPX all-time intraday high today on sucky internals.

Friday, August 28, 2020

Elliott Wave Update ~ 28 August 2020

Powell's speech really was a change in direction for the Fed. The speech was very clever in the way he presented and the jackass analysts received it just as the Fed hoped they would. But it really was a bait and switch speech.  The whole point of the speech was to announce The Fed "officially" decoupled interest rates from the unemployment mandate. Why did they do this and why now?

Well, 20 straight weeks of 1 Million+ first time unemployed (54 million total) with rock-bottom rates every step of the way. So basically the rates are as low as they can be and unemployment really hasn't budged much. Allowing the entire yield curve to go negative won't help like Europe and Japan already tried. So #1, they have to state the obvious. Unemployment cycles are not necessarily tied to interest rate cycles. Duh.

#2. The garbage about allowing inflation to run above 2% is just (cover) talk. What they are actually saying is that they will raise interest rates if the market demands despite if high unemployment exists or not. They again stated their primary mission is to save the banks. So if the market demands a fed fund rate to be set higher, they will have to do it to save the banks. They cannot allow the 1 to 3 month T-bill(s) to price a yield at 2% and keep the Fed funding rate at the zero bound range of 0.10 - 0.25%. It just won't work for long and I don't understand the voodoo of it all but suffice to say, it would likely create very unexpected distortions that would have deleterious effects on the entire private banking system, mainly themselves. 

And all I read all day long on every article from every analyst is that the Fed will keep rates low forever. As if the Fed has control. They don't and they know it. There is a bond glut and they are being stuffed in every corner of the market worldwide. And every other country is in the same bond glut boat.  Yes real bond rates are signaling massive deflation and are negative.  But that is because bond prices are high.

When someone claims "The Fed will keep rates low forever", they are really saying, "The Fed will keep bond prices high forever."  And maybe Bond prices will stay high for a while, but the Fed has no control over it. Particularly since the Fed is the biggest passive investor on the planet and announces what they will be buying more or less ahead of time.

So think about. Will Bond prices stay high forever when we are now running a $3.7T deficit just this year alone? Will cutting that to $2T next near help at this stage?

Remember when people were scared of deficits? Remember the 1980's under Reagan and he ran supposedly huge deficits? And Ross Perot ran in the 1990's for President on deficits and made a good showing. We even had the Tea Party not too many years ago which was a focus on fiscal restraint. But now? Nothing! Absolutely nothing! Why?

I'll tell you why! Because we are now numb to bonds because the bull market has been going on for 40 years. And we issue them like candy without a care in the world. Its really amazing. Everyone is so focused on the stock market as a barometer for things (and now every friggin Robinhooder is doing technical analysis or selling their services for same!) that we are overlooking the real bear in the room.

So it dawned on me as I saw article after article cautioning against the stock market is in a bubble (it is). But I have yet to see anyone say the same of the bond market. It is amazing! 

People associate interest rates so closely with inflation, stagflation, deflation, disinflation that they forget that interest rates real purpose is to manage the risk of issuing the loan (bond) in the first place. I loan you $1000 cash, I want 10% interest in return.  I take a risk lending you money and I lose the ability to use or invest the money therefore I want $1100 in return because you may default! Simple yes?  Well that's all you really need to know.  Nothing has changed. Its always been like this until fractional reserve banking was allowed to rear its ugly head.

Can I lend you $1000 and hey, I think prices will be lower in the future therefore only give me back $950 in the future ok? Would you or I ever make a loan like this???  Of course not! Its silly games! 

Its no different with the US Treasury auctioning off debt by the boatload. People buy it, (taking a risk) and yet demand hardly any yield in return. And they think there is absolutely no risk at all and demand no yield. Their mindset is trapped in the bond bubble. They may all be well aware of the stock bubble, but the entire planet is snoozing on the debt bomb bond bubble (DBBB - try saying that 10 times fast!). But its coming.

Anyways, I digress. Yes the stock market has 100 million eyes glued to it, but the bond market is snoozing.  And that's probably where the shock is going to come from. Therefore I will try and chart the 3 month yield, its the best we can do I guess. After hitting an all-time low in March, it hasn't matched it. Maybe we can find a count...

There are enough squiggles in place to consider the count over or nearly so. Since we had the big sideways triangle last couple days, made sense to re-label a bit. Instead of extended (v) of [v], we have a normal long wave (iii), with triangle (iv) and pop above was confirmed by end of day. Ity might pop a bit Monday and then it should be over (in theory).
I put the expanding triangle back in place cause it looks awesome-o!
Close up of the near-term trendlines in daily mode:
Same chart with trendlines. Do we surge toward the black line again Monday?
Of course its all about getting the DJIA over the hump, or at least through the open gap for now. Not all the way through just yet.
Danger exists though. Dow theory is in play again. Transports highest close since 2018.
I have 2 potential wave 4 endpoints as I have shown before. I went with the lower 4 endpoint that coincided with the DJIA's triangle wave 4 endpoint.  It made sense in that regard.

The alternative wave 4 endpoint is of course much higher. I haven't shown this in a while, but that endpoint is the secondary count. But really, at the moment this is the top secondary count. I call it secondary because it largely aligns with the primary and is just a tweak on where wave 5 starts the count. It allows more rally in case the DJIA needs to also make a new all-time high and head toward that magic 30,000. I think this secondary count would allow for that.
Apple. If this triangle fails, its very bearish. The count perhaps calls for a huge thrust upwards Monday. of course Apple will be re-priced Monday with their 4-1 split. We'll see.

Thursday, August 27, 2020

Elliott Wave Update ~ 27 August 2020

The Fed has no clothes. They just admitted today they have no control over interest rates (always been true). They just admitted that the "dual mandate" of moderating interest rates to encourage/influence the employment rate is no longer working.  They admitted with rates at the zero bound and 10's of millions of unemployed has glaringly exposed the Fed as charlatans. They just stated that the two can no longer be linked (they never were anyway). They just admitted that when the market forces interest rates to rise they will be forced to follow despite the high unemployment rate. They just admitted that a stable financial system (i.e. the banks) trumps everything and they will raise rates if the market demands it to keep the banks from going under. They just admitted they will continue to follow the market despite high unemployment and raise the Fed rate if the market says it needs to be raised. Oh and they said it wasn't their fault anyway.

They just admitted they know interest rates will rise (they are not stupid, they can read charts too) and that they can't do anything about it. They just admitted that when rates do rise, they will follow and raise the FED rate along with whatever the market sets the 3 month T-bill as they always have. And also they said hey its not their fault anyways, they never could control unemployment. The are "prepping" the market for the inevitable great washout of excess debt.  Bullish for the market? HAH! Idiots won't know what hit them.

The Fed knows there is so much debt in the system that rates will rise and they cannot create more lending "programs" to hide the pea in the shell game.  They can't kite anymore checks, it is growing wearisome. the Fed are humans too! They grow weary and when the shit hits the fan, they will hunker down like everyone else. They have stuffed the debt everywhere possible and with the need for ever more debt, even the Fed knows that with an excess amount of bonds, prices will drop, and rates will rise. And there is nothing they can do about it. And did I say they said it wasn't their fault anyway?

So that is what the Fed admitted today.  That they are powerless and you should be prepared for pain.  The system is coming unfuckingglued and they can't do anything about it.

Ok here some charts...

Maybe a possible 233 year Grand Supercycle top your looking at? yeah these multi-century wave structures can be hard to nail down....
As was suggested last night, prices went back to the black line which is the line where wave 5 started on.
And just the black channel
And they went to the green containment line also on the weekly
That's it. The work is done for now. (ok I'll post some more in a bit if anyone cares)

Ok well, everyone is fixated on the stock market and that is the wrong market to be looking at. The bond market is the story at this stage.  Everyone and their brother are now posting technical charts on Stocks. Its kind of stupid.  And boring. Tesla at $2100! Tesla at $2200! Its got momentum, it might go to $2500! Who cares? Its all going to come unglued and everyone with half a brain knows it. 

But they are looking at the wrong market. They may be nervous about stocks, but they are absolutely oblivious to a potential bond shock. And that means everyone.  There is so much "comfort" with bonds worldwide it made me realize that the stock market has gotten so much focus that it has become self-perpetuating.

But not bonds. It is a sleeping giant.  NO ONE can see the pain coming in a coming bond panic.

Look at that UK10 year yield run! Inflation? Its deflation when "assets" get dumped and bond prices go down!

Rising yield deflation!
In NASCAR they call it "racing back to the line".
Japan. FIFO. They should experience the first sovereign bond shock.  UK is not far behind and maybe Italy.
The DJIA may have another squiggle. Apple has been quite last few days maybe they are saving that for tomorrow to power the DOW through the gap.
CPCE. Persistent.

Wednesday, August 26, 2020

Elliott Wave Update ~ 26 August 2020

I borrowed this idea from Steven Hochberg of EWI.  His channel connects a bit different at the low end but its similar. Its a way of showing a parallel channel that connects major points in the wave structure.  I had to relabel the expanding triangle as an A-B-C 3-3-5 flat which is perfectly fine because that means we get to keep our 5 wave count from Feb 2020 high to the March 23rd low.  

Note that a small rally would take prices to the secondary containment green line.  That would be the target I suppose.

Third wave surge? Or peaking process? Well you know where I stand on that, my count is calling for a top.  They are just rotating about 5-10 stocks. Today Netflix was up 11.6%. Did they report or something? I don't know, but their P/E of 92 is screaming a STRONG BUY! Adobe is up 9% today. Why? Because their P/E isn't yet 100, its only at 70 or so.

The big news is SALESBLOWMEFORCE is up some 26% on "BLOWOUT" earnings. And oh yeah, they are going to fire 1000 workers. Their P/E is only 106, and less workers should earn it a 120 P/E. And of course it joins the DOW club next week. Why was Salesforce chosen? Is it because they are based in San Francisco and are the wokest of the woke? Is that why they were added to the DJIA? And booted out Exxon (evil oil diggers!)? A corporation that has literally powered America for the last how many decades? 

Tesla only has a 1,120 P/E ratio. So the others have some catching up to do.  The woke don't know what to make of Tesla. On the one hand, Elon Musk is a bit of a rogue and unlikable by a lot.  But he makes great electric cars which are apparently the wave of the future when the government bans the gasoline engine which you can be sure there is a big group of people who would do just that.

And then it dawned on me today is that the market is now a woke market!  All the wokest of corporations are being bid in a frenzied mania and the old dinosaurs are being kicked to the curb. This is why the venerable NYSE is kicked to the curb also. Some say the FED is woke also.  Well, you know what they say? "Get woke, go broke!" 

We are seeing that play out in the big cities yes? With woke riots rampaging through New York and Chicago, just two examples, they are certainly going broke at a record pace! What if they try and reenact Occupy Wall Street? How would that go you suppose?

Anyways, looks like we may have our blowoff top in the works. Last week of August. Its perfect. Its what I imagined could happen back in late May. We'll soon find out!
More up counting to do tomorrow? It counts well as an extended fifth wave and we have a bit more room for squiggles if that's the case.
What's interesting about this channel chart, is that prices seem to be heading back to the black trendline where we have wave "4" labeled (start of 5). A kiss of this trendline and then down, down down!
Same chart, no trendlines.
Arithmetic scale. And no, wave 3 is not the shortest. Our start point for 5 is where we start counting for the length of wave 5, not the very price low of the June harsh collapse. We have a lot of room to spare.
The DOW needs Apple to come through in the next 2 days. SALESFORCE spent itself already with a 30% rally this week (way to go assholes you were added so you could rally AFTER you join the DOW idiots!)

Ok Apple, your up on deck!
UK 10 Year yields. They ain't playing around! When yields get so low, they rally a huge percentage.  So far a 306% rally from the low. 

If yields were at 1% starting point and rally to 2%, that would be a 100% rally.  But not in this case. I am not sure we ever had this situation before and I have no idea of how this would affect all THE gazillions of interest rate derivatives market.  But it can't be good!
The VIX refuses to play along with the market. This is a reflection of the current insanity going on in society today. Certainly our financial system has gone insane. The debt loads are unfathomabominal (yes I just made that word up)
SPX volume ratios, advancers, etc. Self explanatory. A lot of days lately where there are more declining stocks than advancing including the last 2 days.  

Seven out of last eight days had more declining issues than advancing. The one big day was an overnight ramp job that pushed over 3400 and did not close the gap nor was there a "test" of the 3400 level.  Just running up price on thin air. There will be a test of 3400 (or the Feb peak of 3393), but they are trying to test it from 20,000 feet so that when prices hit they bounce hard. Or so they hope.
The complete rally since March and this shows the volume ratio between up volume and down volume. A volume ratio above 1.00 means there is more volume to the upside than downside. This has been steadily getting weaker. And despite the daily RSI fooling everyone that this is some kind of strong wave 3 action going on to much greater pastures above, the internals don't necessarily support that assumption.
CPCE. The CPCE and stock market is stuck in a (positive) feedback loop. When calls become larger than the market volume itself or ETF's outnumber the actual underlying stcoks and what not (they do), the extreme leverage creates a nasty feedback loop. Calls are moving the stocks. Basically you have computers spoofing the other computers mixed in with retail traders buying calls and stocks and having their order flow frontran. But the computers are in effect front running all the same ghosts.  Thats why the same 10-20-30 stocks are getting boosted to the moon. 

Passive investing has become so common, that regular injections of company stocks being issued out to the 401k's on a regular, weekly basis are not the things being amplified on. The "active" traders (Robinhooders) are mainly the "voltage" input that is feeding the transistor amplifier circuits. (Hey I took electronics in high school!) Anyways, I digress. Its a dangerous market to be playing in.

Volume is actually very sparse.  "Spoofing" is not volume. Spoofing another computer is like having two sex robots...well...having sex. Its not real. But the market structure is way past the point of no return in that regard. Until the day they turn many of the HFT machines off and try to do more things manually again.