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Tuesday, September 1, 2020

Elliott Wave Update ~ 1 September 2020

Ok lets see if we can connect all the puzzle pieces together in this post in some kind of logical manner.

Our primary count has the Wilshire 5000 striving to make a wave [v] of 5 of (5) peak. Our secondary count uses the other option for Minor wave 4 orthodox endpoint and has us in wave [iii] of 5 of (5).

Primary Wilshire Count. 

Adjusted some minor squiggle markers so that everything looks nice. That's the problem with wave counting, rushing the squiggles and therefore when you do, you can't be stubborn and not adjust as it goes.  You have to adjust to be an honest wave counter. But overall, the larger count is not affected. 
SPX version:
Possible squiggle count to match the above:
The bigger picture has prices striving for the expanding triangle upper trendline and/or the price channel line for (3) - (5) which is very close in price to the triangle upper line.
Remember, one reason I use the Wilshire is that it has superior trend and channel lines vs the SPX (in my opinion). Plus its the entire market.
Zoomed in:
And using the Daily, we can see RSI is strongest since January 2018 where we have (3) marked, It peaked almost on the day prices peak then prices fell around 12%.

This supports our primary count in that wave (5) might peak at peak RSI.
Ok. Back on 15th August I had an Apple post that suggested the market won't top until Apple does. Then we found a very decent count which has been following that count for the past 2 weeks. Not bad!

So here is the updated charts. Striving for the trendline which this week is around $141.
The wave count may look "funny" with wave 4 so small to wave 1 and 2 however things are going exponential and that is the way it works with things speeding up in price and time.
Finishing this squiggle count would put prices very near the 20 year trendline that we hope is the ultimate target.
NASDAQ Composite also looks like it wants to pop up toward a price channel line. Its close.
NDX Weekly. Its out of control. 
Secondary Wilshire Count
This is the second wave 4 orthodox endpoint. This one works very well in that all prices are contained with the blue price channel. The primary count above is not. So I have a feeling we may be switching over to this soon.  We need a wave [iv] correction first though which, if it occurs, should be a very sharp zigzag down maybe even a large gap down that closes on wave [v] up.  

Keep your eyes on this count, these trendlines and price channel. This count is looking better and better each day.  The blue channel is key I suppose.
The market is being fueled at this point by a few big names of course TESLA being one of them Announced a stock dilution today and was down a bit. Cracking finally?  They all have to crack which is why we are counting the big cheese of them all Apple.
YIELD counts. This might be a futile effort counting the 3 month yield but we'll give it a go and see how it shakes out. 

1% of  $30 Trillion (soon to be total public debt?) is $300B.  If the government has to pay 2% interest its $600B.

Now imagine a "normal" 4% Fed Funds rate and the government is on the hook for $1.2T in interest payments a year.  Sustainable? Probably not for long! Because if rates went that high, they probably wouldn't be magically stopping there either and would go higher until it all blows sky high.

10% interest rate (a complete bond rout) would be, hrmmm, $3T just in interest per year. You can see why I have been blogging this is probably the end of our financial system "as we know it". Obviously only $1T in interest per year would start to really crowd out the rest of the budget fairly quickly.  That's only a 3.3% Fed funds rate.  Last time rates were that high was late 2007.  
Calls are driving this market as much, if not more, than the underlying stocks.  Its getting more extremely extreme.  The unwinding is going to be fantastic to behold.  There are no shorts left in the market to speak of building positions because it is viewed as too dangerous. 

High Frequency Trading computers all front running the same set of narrow trading (Robinhooders mostly) and in effect, front running the calls too. When the rest of the market is locked into passive investing (regular injections of weekly stocks funding such things as pensions and 401Ks), then it doesn't take much input to produce this irregularity. 

Is it any wonder only the American markets are experiencing new market highs when the rest of the world indexes, which are all doing well, but none are yet to challenge new highs? The American market is the most heavily traded via (fraudulent) means of the HFT's.  It'll all end in total disaster.
Here is the 90 day moving average cleaned up with a trendline added.  It'll probably blow right through that. Again, the persistence is cluing us in that this is no normal cycle-type peak.  
Its not just equities being bullish. All options. The CPC total put/call ratio has a 30 day moving average that is lowest its been in like forever. Everything is completely and recklessly bid higher. Stocks, Bonds, Metals, you name it.


In other words, this is not your average market cycle peak. Its a peak of all-time and it is going out with a bang.

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