Elliott Wave Update ~ 20 October 2020

 Best guess squiggle count. Again, the theme is (i) should ideally finish lower than [i].

Finally some movement off the bullishness of the CPCE toward a more bearish stance.

10 Year yields on the move again. This is not good when the entire American both public, private and corporate debt is just insanely high.  Remember, a gargantuan amount of debt has been piled on in the last 8 months alone.  Therefore it probably won't take much of a yield increase to compound it and blow it all sky high. Duration risk is historic.

Elliott Wave Update ~ 29 October 2020

 Best guess squiggle count. the main theme is that pink (i) finishes lower than green [i].

I could have shown this yesterday (the data comes in later though) but the NYSE experienced what I consider a negative "breadth event" in the last 14 days on the heels of a significant positive breadth event. This is highly unusual. Again, this market is reaching more "abnormal" conditions than what has gone on in the past. This is to be expected in my view.  The ultimate crash, in my opinion,  will not follow any "expected" or "normal" technicals.  For instance we expect huge gaps (talking about down in this case) to be eventually filled but that may not happen at all. 

They should however, follow solid EW guidelines.

Expect the unexpected! When market participants have been "conditioned" for decades on technicals, when retail are now studiously employing technicals at the end game of the financial mania, we can expect technicals are going to go crazy and "fail" in many ways that will wipe out retail.  Retail should have discovered "technicals" in the 1990's or 2000's not in 2019 and 2020. That's my thinking here and has been. They are, as usual,  late to the game and the game is about to change.

Elliott Wave Update ~ 28 October 2020

The break lower out of a small "base' channel since the recent high seems to fit our primary wave count. Pink Minuette wave (i) of [iii] should finish lower than green Minute wave [i], hence our labeling of the squiggles.

Both the Dow and Transports have had significant declines.

Elliott Wave Update ~ 27 October 2020

 There is something different about the decline from the recent peak where we have [ii]. It has been a steady progression versus the declines from 1,3 and 5 which were violent and steep. So far we have true "stair-stepping" in EW fashion perhaps.

The CPCE is incredibly, stubbornly bullish. This is real money betting big on continued upside. But look at that elevated VIX. As was suggested earlier this year, a sub-20 VIX may be unattainable for years to come.  Perhaps a higher state of agitation exists within  the population and the VIX perfectly reflects that.

Note the sub-20 in the runup to February 2020. I think that calmer state of being is gone. This higher state of agitation can result in huge market moves. We've seen our share of huge moves to the upside this year (and of course to the downside). But it is not a calm market. SPX at 3400+ and VIX at 30+!! Not your father's market.

Elliott Wave Update ~ 26 October 2020

Today's lower low overlapped what I had labeled as a possible count of wave [i] high - where we have wave pink (a) marked - therefore the bearish count wins out for now.

Prices however are forming a potential "cup and handle" pattern, and if so, prices should react soon to the upside if this is the case as the "handle" is getting long in the tooth. How that would fit into the overall count is not clear at this moment so none is shown at this time.

The overall weekly count is holding for now.

Bearish outcomes are still eventually favored and one reason is the 90 day average of the CPCE. It has reached levels probably not seen before.  This is not an exact timing indicator but more of a long term indicator. Piling huge amounts of $$ long into the market with this at the extreme just seems not a wise move. You might win in the short term, but some kind of reset seems in order. Perhaps that is starting now.

And we are likely heading to a Great Depression.  My thoughts on that have not changed. It has been a weird year, everything in denial and delay. But credit is slowing contracting, the willingness of lenders to extend credit to borrowers is drying up. I always figured this depression would be "delayed" due to the COVID delay effects but that seems to be wearing off. And now the election is coming up.

I would say a huge market crash is coming even if new all-time highs come briefly before or after the election.  The long term count supports that notion.

Elliott Wave Update ~ 22 October 2020

 

Elliott Wave Update ~ 21 October 2020

Waiting on the election I guess. I suppose everyone figures they will have time to dump if they need to. Or buy.  Its ballsy either way. Prices are fantastic in my opinion. If you been on a 10 - 15 year ride in a 401K, my goodness, take some off the table.

10 Year yield on the move

Elliott Wave Update ~ 20 October 2020

 A small series of ones and twos down?

Last night's CPCE data. 

Elliott Wave Update ~ 19 October 2020

I wasn't able to update Friday so lets see where things stand.

Well, we'll post the potential squiggle counts. If [ii] topped, its generally downhill. If 5 still requires a new all-time high , well, then we haven't topped (duh). So far, neither count has been outright eliminated.

However, if its [iv], we have about reached the limit of decline in which the count would still make sense.

Elliott Wave Update ~ 15 October 2020

 That's a decent impulse down from the recent high and a gap-covering wave ii rebound. We'll see.

Elliott Wave Update ~ 14 October 2020

The squiggle count is at its most ambiguous on the 5 minute chart which probably means the market is going to collapse straight to hell. 

This was yesterday's CPCE data (I won't get new data until much later). Its insane.

Elliott Wave Update ~ 13 October 2020

Tonight's chart combines last night's top two counts into one squiggle chart because I'm feeling lazy and its a pretty clear picture regardless. Consider them both "primary" counts at this stage because both counts suggest that even if new highs come, this wave up is almost over.

The first count is that the market does not make new highs and and its counted as Minute [ii]. 

The second count assumes new highs in the Wilshire and wave [iv] and [v] of 5 will trace out.

We are at SPX 3500 and the VIX keeps diverging higher ending the day at a 25.99. This is not a calm market. There is a lot of tension underneath. Its like playing craps and you think the dice is hot, you can't be beat, and you keep going "all in" on the bet. Sooner or later the house wins. Always.

Elliott Wave Update ~ 12 October 2020

Primary count is that wave 5 of (5) is tracing higher and will eventually become new all-time highs. It almost made it today. The count below is not ideal, however, there is alternation between waves 2 and 4 (flat versus zigzag) and breaks no rules. 

Of course our old count is not quite dead yet...

There was a very significant breadth thrust event triggered on the NYSE after last Thursday's close. It was not a Zweig event, as that requires a thrust from below .40 to above .615 in 10 trading days or less.  After crossing back up over .40 line, it made it on the 11th day.  This is the second breadth thrust event on the NYSE since March. the first event took 13 days to trigger. 

Thus you could argue that this event is "stronger" than the first because it did it in less time. However, looking at the 2 events there is a huge disparity between gains. 26.9% in the first event from close to close. This last event? 6.7% from close to close. I don't know if that's a significance, but its something to keep in mind.

Of course, if the breadth event ensures the market will continue higher into 2021, we would have to consider the following count in play. This would keep our count that the early September high was a 5 wave move just like I counted, however its only wave 1 of (5). 3, 4 and 5 would be much smaller most likely.

But its way too early for this speculation. I'm throwing it out here for those who consider the breadth event a long-term game-changer.

Ellliott Wave Update ~ 9 October 2020

Well, as suggested the last few days, the primary count probably suggest the market will incur new highs eventually or at least challenge them which you could say is already happening.

However its likely a fleeting moment in time. A last charge up the hill before final defeat. There are open gaps up all over the place on the Wilshire 5000 and these should be filled in due time. 

 

Elliott Wave Update ~ 8 October 2020

 The waves are impulsing up in 5 wave moves. I can assume this may be the true primary count. 

I mean look, they managed to relight the fire under the CPCE...calls going through the roof again. Its simply stunning. Hey, if the market reversed course and simply collapsed from here, we wouldn't be surprised. The bets are all still very one-sided.

Not sure if the fires can be relit for bonds though, and that's what really matters in the long run. 

Elliott Wave Update ~ 7 October 2020

 This is what's probably going to happen. If not, its going to go down.

Elliott Wave Update ~ 6 October 2020

We have an ideal wave [ii] zigzag structure which has retraced a tad of Fibonacci 61.8%. 

Yields finally snapped higher confirming that we suspect the all-time low in yields is "in".

Elliott Wave Update ~ 5 October 2020

 Not yet a higher high. Probably will happen though.

Squiggle count:

Elliott Wave Update ~ 2 October 2020

This about sums it up for the moment. Either [ii] topped or it didn't. That's the immediate challenge anyway. Lots of squiggle options for the intraday possibilities.

And the alternate count that the market has not yet peaked.

Elliott Wave Update ~ 1 October 2020

Primary count is the market is tracing Minute [ii]. There are a lot of potential variations of how this would take shape. Below shows just a couple of potential variations. There is also a gap down variation but you get the idea.


Yet, stripping away all the labels and we are left with a bearish pattern of lower lows and lower highs in an expanding downward-looking megaphone that really has yet to be broken. The pattern below is not a bullish pattern, it is generally a bearish one. Something still must occur to break the bearish pattern in order to become a bullish pattern.

That seems simplistic but sometimes you have to just look at structures how they exist right now, not how they may exist. The way this pattern exists right now, is that prices will get slammed downward hard to even lower lows. Now of course that may very well not happen at all - and we are fine with that - however, buyer beware of what exists...