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Tuesday, February 2, 2021

Elliott Wave Update ~ 2 February 2021


Some random charts. First the CPCE. This is the true gamma-squeeze on the entire market for many, many months. The CPCE's persistent one directional move is historic and has juiced the entire market.  It is all this gamma leverage that is ensuring all dips be bought. But it will end and likely just as spectacularly as a parabolic stock collapse. There really is no difference between gamma squeeze on an individual stock or the entire market, acting in unison, being gamma squeezed higher and higher.

Yes, just another .40 print, these used to be rare but now they happen every other day it seems. This is not "normal". It is why we are at an all-time high and the VIX is 26!!!  The high VIX is also proof of the gamma squeeze.  
I was correct last Spring when I suggested the "new normal" VIX would be above 20. So far that is correct. It is a high state of agitation to be constantly in. And sooner or later it will "snap" just a a person can "snap" when they are agitated for a long time without end. That's where we are: gaslighting every day and the market reflects social mood in that regard.

Sometimes, I think the market will only "peak" until it closes that still-open VIX gap sub - 20. It's almost as if the algorithms in charge are producing the gamma squeeze persistently in an effort to close that gap. If its going to close, it'll likely be on this final wave higher and maybe only momentarily. And then what? Mission accomplished and everything goes in reverese?

NYSE. Revised data, yesterday wasn't an 80 up day for advancing issues. Close.  Today was 75% up day for advancing issues but the up volume was kind of flat.
10 year yield count. Revised the squiggles a bit. All I know is it is still in an uptrend. So we'll keep the count on the aggressive side until things prove otherwise. Its back in the 40 year downchannel...duration risk, duration risk...
All those bonds bought at a lower yield for nearly a year. Most all debt was "flipped" into this zone. Now it has left the zone. Did you know the interest rate derivative market dwarfs everything else by mega far (quadrillions) and is likely the greatest systemic risk to the entire world's financial system?

They have complicated things so much, I am not sure anyone understands it all very well anymore. Certainly not Yellin, she is stupid.
Wilshire Fib relationships. We are hovering around the "dual" 50% (not a Fibonacci % by the way) relationship.  So its a good area to be stopped at (so far that has held true). If prices can close above, we probably get market gamma-squeezed toward the very, very tight 61.8% Fib dual relationships.


Primary count is that the market is in wave [v] of C of (B) up as today was a fairly robust "follow-through" day. The minimum requirement is that the Wilshire makes a new intraday high. At today's peak price, it was just 0.75% from that mark.

From a bearish perspective, the DJIA had a perfect bullish rebound to its proposed leading diagonal triangle down forming a wave (ii) or will do so in the next day or so.

So as I mentioned last night, it is possible for the Wilshire 5000 to make a new intraday all-time high and the DJIA to fall short. 
Of course the most bearish interpretive count on the Wilshire is that an aggressive expanded wave (ii) flat count has finished or will tomorrow shortly after the open. This is not the primary count because this supposes the "ending diagonal" at the peak which doesn't seem to be the case.
or this:
SHORT MANIA COMMENTARY probably over. I suspected as much when I heard the people in the hallway talking last Friday. Shorted stocks got crushed again. Not that they didn't do damage. Apparently, GME's short interest got cut by over half and therefore some $13B of losses was inflicted on Wall Street.

A potential fallout from all of this is that hedge funds may not be as bold and reckless in shorting stocks here. And retail will not be as reckless buying the dips on any and everything. The net effect may be to remove even more potential liquidity from the market on any market collapse move. Simply put, the dip buyers will be wary of buying the dips, the short sellers will be wary of selling the shorts.

And if everyone else is bailing (insiders are selling hand over fist) and if mom and pop eventually find their selling point, and the FED is tired of supporting the whole house of cards, and the new regime doesn't really care about the stock market (they don't)….well, we have perhaps a perfect storm of market conditions that may be very ripe for an historic collapse and VIX shooting to an all-time high.

Just saying, because the nearly over "fake" (B) wave count suggests that very outcome!
Requires a new high to fulfill minimum count.

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