Tuesday, March 31, 2015

Quick Gold Intraday Price Action Review

I am trying to squeeze out one more push to the upside with this wave count but it will take very little for this to fail.  There is a good chance that this gold move is a bull trap in the short term, and that gold can still sink below any March 2015 lows.   Time wise gold should create another low before it breaks that gold $1220 price level thrashing my wave count in the process. 

DJIA Intraday Price Action Review: Here We Go Again?

This morning markets took a nosedive and the easy answer would be that it will continue.  We also have something that looks like an impulse is forming which suggests that at least the DJIA can soar to new record highs,  or break 18,200 again. 

For the month of March I have noticed the shape of a part of a wave structure that is absolutely straight with no visible subdivisions indicating that waves have not formed. Both of these straight moves were to the upside but I have noticed them going to the downside as well.  It is just my personal opinion but I think these patterns can only be made by computer programs with the execution of very tight buy orders.   Humans are not that accurate when placing very precise orders. Notice how the down move showed much better wave action indicating humans were in control of that decline. 

Any ways it will not take much for this impulse move to be trashed but one more ride up would make it very interesting. 

Monday, March 30, 2015

Gold Intraday Price Action Review

As the US dollar rallied gold has been correcting downward as well.  This is a good sign that some mythical disconnection between the US dollar and gold are not taking place.  Every rally or correction presents a turning point and I would love to fit this into a completed wave 1-2. If this is true then gold has no choice but to soar upward adding on two  more legs in the process. (wave 3 and wave 5). Anything but a well  formed impulse wave will direct my wave count back into a bearish rally which means that a new bear market low in gold is still to come. 

We were only about $10 from achieving this but gold came along and spoiled this and decided to rally $70 or more instead.  Gold can move violently by $50 in any direction so this bullish wave count can get trashed just as quickly. 

What many do not realize is that the gold/oil ratio has been pushed to such an extreme that gold will have no choice to rally in the future just for the ratio to become normal again.  The compression of the gold/oil ratio can also happen if gold stayed the same but crude oil keeps making an extremely bullish run. 

                                                        April is the time to donate! 

I would like to thank all the readers that have donated funds to this blog as pages viewed have been breaking records in March 2015.  If you have gained some insight by reading my blog for free in the last 3 months then please show your support by donating generously in the month of April. 
The best way to donate is to donate $25 or more Via the Pay Pal button on the right side of the screen after 3 or 4 months of free reading.  Donate for what you have already read and not what you are going to read in the future. 

Again I like to thank Walter.W for his kind comments and donations as he sees the amount of work it takes to keep this blog up and running.   

US Dollar Intraday Bullish Price Action Review

The rally into the March 13 peak contained small diagonal and even and ending diagonal wave structure.   They were very small degree waves that forecasts violent trend changes and we got that as the US dollar plunged into what can be counted as a zigzag. Four days ago the US dollar started into a rally that contained an expanded flat and then broke to newer highs with some pretty choppy waves which again I can count as a diagonal 5th wave or even a "C" wave. 

The short end of it is that we could be getting yet another correction, that could still push the US dollar to a new record high.   There are still options as we could be ending on a small "B" wave soon and we get another 5 waves down ending on a diagonal wave 3. 

Either way we should becoming up to a US dollar correction soon and it may surprise us and keep right on going south ignoring any support price level we can dream up.  At 97 would be one of the first price levels the US dollar can turn at as impulse waves can turn at previous 4th wave structures. 

This would certainly give gold a push up again and may even give crude oil a push as well. 
I am working this with very small degrees which makes all wave counting very sensitive to any move , but it also helps to throw out wave counts very early as well.  My March 13th top is in Subminuette degree so that only gives us three remaining small degrees levels to work with.  Below any smallest degree stack there is always one more set of 3 degree levels as electronic trading would make 18 degree levels show more resolution.  In music that would be the same as increasing the digital sampling rate. 

We have holidays and the full moon on Saturday so my updating will take a break as well when US markets take their breaks. 

Consumers can end up taking lots of cash and dumping it in the streets (called shopping) which can cause gold to rise in price.  It is the velocity of cash moving around that impacts gold, not how much money they have printed.  Trillions of printed money is just sitting offshore not really doing anything except earning  some interest which cannot impact the price of gold, but when that cash comes out into the economy then watch out as something will inflate, stocks or gold. 

Quick SP500 Intraday Review Bull Riders In A Storm!

A small bear trap has been triggered as all the buy orders got triggered along the way.  If this were a true impulse starting out then the waves would find support on the top of my top trend line! 

I am sure somebody will try and pull a big April Fools trick on the public as it is pretty easy to do.  With holidays this week, we could see some wild moves in both directions due to thinner trading. 

Crude Oil Weekly Chart Review: $39.99 Or Bust!

The mainstream media consensus forecasts have been calling for a $40 price to get hit.  Did they make this call when crude oil was at $115 in 2011?  They were calling for oil to never fall below $100 again but yet it did exactly that.  Back in early 2008 they were calling for $200 oil just before oil  crashed down to $34.  Now we are on our third world oil glut and oil has crashed down to the futures chart above to below $44 and they say it will never rise above $100 again. 

Each one of these wild extremes produced an extreme  gold/oil ratio, but since it is not a popular indicator nobody seems to be using it or even know what it means. Making a forecast that is just a bit below the price that everybody already sees is not exactly rocket science but just basic smoke and mirror forecasting. They do this at every major turning be it a top or a bottom. 

Can crude oil still fall to $40? Sure it can! It can fall to $39.99 and turn, but what does it turn into? 
Does $40 crude oil represent the end of a major bear market and oil is destined to $150 or $200 again? The question should not be how much lower it can fall but how high can it go after! 

The wave pattern that has developed seems bigger than anything we have had since the mid 2014 peak at $107, but that may already have completed a wave 3-5 and we are working on an ending diagonal.  This could send crude oil into a "C" wave bull market that will shock many because they never though it could happen.   The markets will always do the opposite of what he majority thinks it will do as the majority will never ride the trend indefinitely. 

After the 2008 crude oil crash bottom it took a little over two years before crude oil hit $100 again. The angle of the 2014 oil  crash compared to the angle in 2008 is almost identical but not quite as steep. 

From my EWP perspective both crushing declines can fit into an "ABC" crash which technically should all get retraced over time.  The 2008 peak could take as long as a decade before it could be completely retraced, but $107 and $115 oil can take a lot less time.  

I am looking at the crude oil pattern to be in a potential ending diagonal 5th wave from which crude oil can still plunge towards the $40 low but can also stop well short and then work back up closer to $107 oil.  

Saturday, March 28, 2015

DJIA Intraday Elliott Wave Count Review: Is The "D" Wave Bull Market Dead Yet?

The last extreme top was in early March 2015 and since then we have been in a correction or what the majority are still calling a correction.  The super wave counting bears are looking for the big one as some economists are saying that the next major decline will be worse than what happened in 2008.  

The thing is that the stock market and the fundamentals of the economy are two different animals, as prices lead the way for fundamentals to follow.  It took from 2009 to now before the majority could see that the economy is getting better and some Elliott Wave analysts blame the Fed why the stock market didn't follow through into a depression. Don't blame the Fed for a bad wave count or why the big crash of 2008 stopped too early.  In 2009 every wave counter on this planet should have been bullish as insiders and contrarians were buying shares like crazy.  Even Warren Buffet screamed "Buy stocks" back in 2008. 

But the majority were selling as fast as they could, to save whats left of their portfolios and did not jump back into the markets for years.  In 2011 the majority were still pulling their monies from the stock market as insiders were still buying.  

This market is top heavy and it is just a matter of time before another bear market starts to happen.  We have been bombarded with fake starts, so just because the markets have declined does not mean that the big one is here just yet.  Little waves lead into bigger waves so my approach is to pick a specific peak and see what we do get after that peak.  My wave counting is all about the process of elimination as there are "always" 5 major patterns at play at any given time. It gets worse, as with every degree you always have a choice of 5 waves as well. 

For the March 2015 peak I will use my "D" wave top in Intermediate degree for now and we have to see if the markets will confirm this.  For any "D" wave to be completed it must be followed by an "E" wave bear market, which the markets will not make easy for us to see. Markets don't hand us wave counts on a golden platter but they will do everything in their power to screw them up.  

For the "E" wave or any "E" wave decline I need a 5-3-5 type pattern and I break this down to the idealized wave count so I know exactly the degrees I need for each leg of the entire move.  I follow an idealized script where I always have 5 choices to make at any turning. 

What I need for the "E" wave is 5 waves down in Minute degree with a corrective counter rally as the "B" wave in Minor degree, and then another 5 waves down in the trailing five waves in the same degree.  By the time this will all  blow over we could be back below or match 2009 price levels. 

All this is not some big SC or GSC degree decline but from my perspective it will only be an Intermediate degree decline which should end on my Primary degree wave 4 bottom.

It may be extremely hard for many readers to understand that a drop from record highs to new historic record lows below those 2009 price levels can only be an Intermediate degree bear market.  I follow the sequential wave counting method where the degrees are part of the mathematical sequence that we can't cheat on or ignore.  As soon as the markets drift off in some direction that makes no sense or does not fit into the expected sequence, a review of the bigger picture should be done very quickly. 

Next week is going to tell us more but the markets could rally some before it may resume another leg down, which could be as long as wave three is now!  This all has the makings of a bigger 3 wave decline, from which this stock market can recover from and then blast to new record highs. 

If the markets are starting into a diagonal 5 waves then no new record highs will be broken as we would end on an "ABC1" wave count.  This would be wave 1 in Minute degree and even when that completes we would still have a long way to go for it all to fill out. 

The smaller the degree I start with the more sensitive it is to finding out that what we are getting may not match expectations.  

There are still other probabilities but the big thing is to identify what we are getting from a specific peak so we can splice it all together later on. 

Friday, March 27, 2015

Crude Oil Potential Correction Review

Due to many overlapping waves I have to look at this oil rally as a possible diagonal "C" wave and that we are still in a correction that may not be completely finished as I post.  I still would like to see oil push past the $56 price level this time around, but I also have the possibility of a diagonal and the diagonal 4th wave would already be finished.   

We can see how well oil can react even with a world glut in progress but many will use the excuse that it is a geopolitical move. I guess you can call dropping bombs on an oil producing country as geopolitical but this has been happening for years already, it's nothing new. Yet the oil price has still been crushed despite continuos wars or strikes in oil producing countries. 

Gold just blasted well above $1200 again which produced a 24:1 gold/oil ratio, which is on the extreme side of being cheap.  If oil was still to crash to $40 soon and gold stayed bullish at $1200 then this ratio would hit 30:1.  This has never happened in all the records that I have look at and I am sure this ratio will not get achieved this time as well.  If oil was normal say at $50 then gold should be much lower in price, like $600 lower.  Clearly there is something wrong with the overly bearish crude oil forecasts. 

US Dollar Intraday Review: Is It Still A Bull Market Correction?

The majority are still very bullish on the US dollar and some even claim that it is in a Supercycle bull market.  Of course just a few years back they were all convinced that the US dollar was in a Supercycle decline.  As usual markets will shatter all myths that the majority believe in at any given time as they always think that the perceived trend will never end.  All trends eventually come to an end and the important ones are the ones that force all participants to completely reverse their outlook and positions. 

Yesterday the US dollar came to a halt and then blasted up as gold started a potential correction. 

The US dollar came to a screeching halt at my top trend line but that only challenges it to cross the "line in the sand".    Since the March 13th top we have a potential zigzag that has completed and the only way to confirm that is if the zigzag is completely retraced and we break 100 gain. 

My 4th wave bottom is also another "line in the sand" as this wave count will be trashed as soon as that is breached at the 96.200 price level. 60-80% correction for wave two bottom is about normal but in strong markets it can bottom much higher. 

Since this is an early in the day look at the US dollar, I will add an update to it later in the afternoon. 

As I post gold is still dropping so that helps to confirm a potential bullish stance in the short term. 

With the whole world already well aware of this US dollar bull market then who is left to get in and take advantage of it? Where is this herd of people that all the US dollar bulls are talking to? 

Thursday, March 26, 2015

VIX Intraday Review: Potential VIX Bull Trap?

The SP500 did not confirm a newer low like the DJIA did and that could be a setup for a mini bear trap.  The move that the VIX created only has a 3 wave rally to it so far. This usually means a 100% retracement for the VIX and that would keep stocks in a rally as well.  

I think the liquidity in the markets is getting to be a problem and is one of the reasons why the markets are swinging dramatically in both directions.  I only have two open gaps to the downside in the VIX but many still open above, so eventually the top gaps will get filled, it just may not be this time around. 

DJIA Intraday Crash Review: Downside Breakout Achieved!

The DJIA has now crashed through a major price support on my potential wave 1 bottom.  The decline has not produced corrections of any size so this suggests that another wave 1-2 should happen. 

Over all I am working a potential 5 waves down in Minuette degree which would be far from over if I am correct. In reality the markets can always do something that the majority of analysts least expect but analysts are still calling on to buy the dips.  That will only work if you think we are in a bull market correction, but will never work if we are in the start of a bigger bear market. 

Any rally into a Friday, may happen as investors may see a small over sold situation. Even if this turns into an "ABC" crash then there still should be a bit more downside to go.   Next week will give us more information, but any impulse wave I am working is far from finished. 

SP500 Intraday Crash Review: Rally to Finish Of The Week?

The SP500 last broke a new record high way back in February 2015. At this rate we are in a record breaking drought which could switch to breaking records going down.  From early March the SP500 produced questionable impulse waves, with a rocket counter rally contain 7 waves, and now a crushing down spike with hardly any subdivisions of sufficient size.  

One reason for that is that we have still to hit our next level wave one which would suggest that a big move down is still in the cards.  It will be important to see on any impending rally how the pattern develops. If we get obvious overlapping waves and radical moves up and down then we may have a good idea that any rally with SP500 will have its limits. 

The showdown will be at the 2040 price level as that is a major downside breakout price level. 

If the bearish scenario keeps playing out then 1980 will be another downside breakout price level. 
Even if the SP500 crosses that price level it still would not be far enough to fill out a full set of 5 waves in Minute degree that I am working. 

We have been in many false starts to the downside before and we need far more evidence to complete this set of waves.   So far the SP500 has push further south so only time will tell when we get a sufficient correction. 

US Dollar Intraday Rally Review

The US dollar is in a rally which ended up capping gold and oils rocket moves, at least for now. 
Since the 13th of March the US dollar has declined producing some pretty good impulse waves. They can be deceiving as a great looking zigzag could be ending as well.  Most of the time I have to work two or more wave counts and this one will get trashed if the impending rally becomes very impulsive. 

At about the 98 price level the US dollar will start to run into my obvious invisible top trend line. 
Most of the time trend lines are so subjective, and they always get trashed. 

As I post the US dollar has already blasted much further so we have to see if it runs out of steam.
In the next several weeks we are going to have holidays and April Fool's with a new moon so this could prove very interesting as the jobs report will come out as well. 

Gold Intraday Rocket Ride: Need More Power Scotty!

Gold did not want to correct much but continued to blast upwards until it stopped just before $1220 on the cash charts.  The spike it left in its wave already should be the setup for another correction which could take a little longer to play out. My bottom trend line will have no meaning as chances are good gold is also changing its next degree and should pass outside the trend lines.   I show a 5th wave extension but as a diagonal. 

Does it really matter why gold took this rocket ride? Not really as the majority will forget any reason faster than we can create them.  If gold heads back down then they will blame a stronger US dollar for the reason. 

I still need to keep  several wave counts alive as gold may only be in a big bearish rally but it could have ended with a slight truncated bottom. 

With this wild gyration you would figure the gold/oil ratio would shift dramatically but it still is at about 24:1. This is about the same as the ratio was at the 1999 bottom, when it hit 25:1.

In order for the world or the USA to head into a world deflationary spiral gold and even oil has to go south not north. 

Wednesday, March 25, 2015

Crude Oil Intraday Review: A Bull Market In A World Oil Glut!

Crude oil pessimism is still running rampant in the oil sector  which is very normal as it has happened  many times before. This has been the third major glut since 1999 and they say it's only going to get worse.  Every conceivable place they can store crude oil they are trying it as production has not slowed down any in the USA. "Stack-em and rack-em" would be the expression that comes to mind if only crude oil was a solid. 

I was bullish long before this attack and it looks like everybody in the Mideast is ready to escalate until we have a full war across all parts of the Mideast. 

With such a perfect spike you would figure this bullish phase is over but I think a correction is in progress and oil will charge higher.  I have changed my stance on the triangle I have been working and now am working a single "ABC" with an expanded pattern with the crushing low of mid March 2015. 

A "C" wave bullish phase can take out any part of my "A" wave top plus add some more before oil can would resume its bear market.   Crude oil crashed to a new record low with a three wave pattern which can also mean an end to this bearish phase. Diagonals and expand patterns can all end on a three wave pattern and even triangles do, but only the diagonal would allow oil to roar much higher crushing all bearish expectations. 

The gold/oil ratio for this May contract sits at about 23.50:1 which is still extremely cheap when compared to gold so there is lots of room for oil to move up in price. This ratio would have to dramatically shift and become expensive if oil were still to crash to $20. 

If oil were to plunge big time and then go sideways, they there would be a chance that an "E" wave is in progress.   With this specific wave count I would be looking to the $60 price level before it would resume any downward trend again, but it would be nice if oil just broke $56. 

DJIA Intraday Crash Review And A Wave Count Of Seven?

I guess investors got a little excited when they woke up this morning as the DJIA continued its decline from yesterday and new sellers started to arrive. The real reason may be that buyers refused to show up like they do in real estate when it goes bust.  Even in the Tulip Mania Era buyers refused to show up and the people that bought high price tulip bulbs soon figured out they were holding a bulb worth no more than garlic! 

Well,  the DJIA is not quit a tulip bulb but now it just contains a very high price Apple. :) 

On the way up the pattern that emerged, I counted out 7 waves with several of them overlapping.  7 waves up or down is just a correction and in this case it could be a double zigzag. Any double zigzag in one direction can mean a powerful move in the opposite direction can happen. 

Technically the DJIA should keep going until that March 12th bottom is completely retraced. Only time will tell if a wave 2 top has just completed as I will not allow any leeway before I have to throw this wave count out.  If all the patterns stay diagonal then it will be a challenge to keep the wave counts realistic.    We may have to wait and see until a 4th wave type pattern shows itself and especially  if it contains a triangle. The start of another wave one will be a surprise as it will take more before triangles show up. 

Of course the way this market has gone in the past it could still roar up and break yet another all time record high.  I hope not as I am getting tired of hearing that bull shit. It would also be fitting if we have seen the highs for the year back in the beginning of March 2015. 

Russell 2000 Monthly Chart Review: 1998-2015

I must give a short warning about the wave count below because it is a wave count that the majority of wave analysts would never consider as they think it is impossible that it can happen.  Well, we have seen some market moves that we could never imagine could ever happen but yet they do. 

I could create it and never post it, but then I would be producing mindless wave counts and never figure out where we are in the bigger scope of things.  Many times wave counts have to be used just so they get eliminated quickly, but the wave count below can be used for two different wave counts as well.   

The chances are good so far that a potential "D" wave top may be approaching and then it is always time to build the bearish phase and have it ready once the bearish phase actually starts.  With a potential "D" wave top I need any type of a "zigzagish" type of a decline which would eventually take us back to the 2009 bottom.  This zigzag should have a stop at another "A" wave in Minor degree, with any "B" wave rally not traveling to new highs. 

The wave count from the bottom of 2009 is also a zigzag but with one huge difference and that is an expanded pattern starting with the 2011 bottom. Remember, that we can have any type of a corrective pattern for the "B" wave and many times they are expanded patterns or flats as well.  Any triangle in a zigzag "B" wave has a finality to it as triangle forces a degree change into the wave count.  The count I need now would be a Minute degree decline sending it down to the 2011 bottom.  

For this to happen we need 5 waves down but in Minute degree, and to make real hard to count out it may even be a diagonal.  As I mentioned this wave count may never happen but if it did, the subsequent  "C" wave bull market could roar back up and create another new record high.  Even after that we would need another "E" wave decline to end at a Primary degree wave 4 bottom by 2021. 

If a crash down to a "B" were to happen then a run back up may take until 2019 to complete. 

Tuesday, March 24, 2015

DJIA Intraday Charts Dropping Fast!

My largest wave count I am working does not allow me to have an expanded pattern in progress for a "D" wave top.  So far the DJIA has stopped early from doing this but all is not lost yet as ending diagonals can be very frustrating to say the least.  Any price above a new record high will do for me as pattern is more important than price.

The pattern in the rally contains overlapping waves which I would expect in any ending move. It also suggests that the rally from the 12th of March will get retraced by 100% or more, before others figure out a price support level. 

 All the Apple share holders have now been forced against their will into the DOW 30. Of course many other stocks have been removed from the DOW. So far that I can see only 3 or 4 stocks in the DOW have been still pushing making record highs, all the rest including Apple have fallen by the wayside, for now. 

We can see several fast moves up and down that looks like a straight line, these I think are computer generated moves, but I can't confirm it. 

Gold Intraday Update: Bear Trap Has Snapped Shut For Now!

The bear trap has now snapped shut a little over a week ago but just because it has gone up as expected does not mean the true bear market is over.  One big bull trap happened about 2 months ago which now has pushed gold to just $10 or so from a new all time bear market low. I don't like it when a so called double bottom happens as it is not resolved as well as it should. 

Right now we may have a small double top again but it looked like a correction is taken place which could take us back down to the $1185-$1180 price level before cranking up again.  On a bigger scale I am looking for another potential 3 wave decline and if gold charged up and even retraced 50% of the Jan 22 peak, then that would give us a "B" wave top as well. 

US Dollar Intraday Chart Review:

As much as I would like to see the US dollar to keep going to the South Pole, I know that any wave count can backfire and not work for very long.    The US dollar produced a downside breakout, but instantly turned back above my "a" wave price level.  This is usually a bullish signal. On the extreme side my Subminuette degree "a" wave can also be the top of my running flat and a 4th wave. Which means we just bottomed at a wave 1 and we still have lots of room for the US dollar to move down. 

I'm not going to spend to much time in detailed wave counts as on the intraday scale I know it can change as fast as the wind can change directions.  It may also look impressive that each wave is counted but all that work gets wasted if we are out of sequence or count diagonal waves as normal impulse waves.  

The most important wave position to have right now is the peak of March the 13th and to confirm that we cannot have anymore bull market record highs.   At this stage it will also get to a point where the US dollar bulls will constantly force a bullish wave count into the situation above.  For serious deflation to take hold (worse than 1932) the  US dollar bull market can't stop going up as otherwise we have inflation and gold and oil would soar.  Besides stocks would have to grind down as well. 

No trend lasts forever  but the general public always thinks any trend will keep going.  History has always proven the majority wrong at major turning points including most expert opinions.  Most people have forgotten about the bearish bottom in early 2008 but yet the USD exploded in price catching everybody by surprise again.  In 2000 it was all reversed as at that time the US dollar was only 22 some odd points higher than it was in 2015. 

Monday, March 23, 2015

Crude Oil Intraday Update.

This is the May 2015 crude oil contract which has prices just a bitt lower than any June month I have posted.  The easy wave count would be to follow the herd and give you a wave count that would still send crude oil much lower.  There is always the chance that crude oil is still hell bent on getting to $40 or $20 but both of those forecasts have no real meaning when we look at the weekly charts.  Worst case scenario I would target the $34 price level which would then produce a very good looking "ABC" regular flat. 

Reports show that many commentators or Saudi officials do not see $100 oil prices in the future but I beg to differ.  The majority always work on price as for using any EWP,  I always work on pattern first.  Without knowledge of the pattern any forecast is about as reliable as forecasting climate change. 

Our present rally could be sending us up to a "D" wave where $92 would offer some serious resistance. Of course all price levels at $56 would be taken out and exceeded first. 

Bear market bottoms are the breeding grounds for bull markets and with oil the bull markets of the past started from extreme oil gluts.   Even gold started its bull market from a gold glut in 1999. 

At present with this May contract, the gold/oil ratio is sitting at 25:1.  This is the exact same extreme ratio as was present in 1999.  Many say it's different this time but those words come out all the time at any extreme.  When oil was $147 they said it was different  because we were running out of oil.  What a pile of bullshit that turned out to be. Within 8 months oil crash from a shortage to a glut yet the majority of fundamental analysts never saw that crash coming.  They are still arguing about how much lower crude oil will go but if they really knew they could tell us where oil is going after their forecasts have been achieved. 

Every bearish bottom is followed by a bullish phase which has to be big enough to force all these oil bears to switch directions. 

The big sideways correction from 2011 to mid 2014 is one clue and the other clue is the angle of the crash which started around June 2014.  These angles are associated with "C" wave declines, combined that with the straight down 2008 crash and we have 3 major patterns and price levels to surpass.  The first of these price levels to beat would be around  $107, of course it may take all of this summer to get there. 

DJIA Intraday Chart Action Review:

Now that Apple has found another home in the DOW 30 we get all sorts of debates if it is a good or bad thing. They have been throwing out companies and putting companies back into the DOW and a regular basis but in the end if we hit another financial crisis or a liquidity crunch. Then it will not matter what the stocks are as  they will go down with the Titanic. 

Many times all it takes are 10 stocks or even less and the rest can go into the toilet, but the DJIA would still act bullish,  breaking to new record highs.  

So many times the DJIA has started to nose dive but then turns and comes roaring back.   Since the Oct 2014 crash the DJIA roared back up but also has started to shape shift again into a very tight pattern that best fits into an ending diagonal.  This ending diagonal could make one more fresh record high.  I am going to run the DOW like it's also working to a "D" wave top as the wave pattern I would need for the decline would be another zigzag type decline. Of course it could also be very steep and barely show any subdivisions like the oil crash did in 2008, or even the recent oil crash. 

With a potential "D" wave top I should not get anymore expended patterns as I already had one of those in my triangle. 

US Dollar Intraday Crash Review

It has been 10 days since the US dollar created its last bull market record high before it turned down in spectacular fashion.  I have done the weekly chart again with a few changes but we could be looking at a very major top at the 100.400 price level.   There is very little room to move when an impulse wave starts as it can fall apart very quickly.  

I always start declines when they look like impulse waves as wave three being the longest as they fall apart quickly and in doing so I have eliminated one type of wave structure early on.  At anytime I would count one more wave 1-2  which subdivides my wave two into three degree levels. 

 Technically the USD should have much more downside to go, with gold and oil reacting in expected fashion.  If the US dollar suddenly spiked up in an insane fashion then I know my wave count has to get trashed and I start again.  I use the same routine on every expected turn, as we never know exactly what pattern we would get at any potential strong turning.  

A good analogy would be that the US dollar is shape shifting all the time and the last two 5th waves preceding this peak the pattern shifted into diagonal waves.  The diagonal waves tell you that a violent reversal is due but it does not tell you that the trend has ended with certainty.  

The US dollar needs a downside breakout at the 96.600 price level but I think we need more than that to force all the major players into another direction.  There are not too many trading accounts around where a bull can ride such a bearish ride down waiting for the next leg up.  

Sunday, March 22, 2015

Wall Street Losing Millions From Bad Energy Loans

SP500 Weekly Chart 2000-2015 Elliott Wave Count Review

Recently last week the markets have started some wild gyrations even to the point of breaking some records in speed. As much as that sounds very impressive the net forward momentum has been slowing. Since Dec 2014 the SP500 has barely gained a net amount of about 1.25 percent.   One little drop then those that got in for the year end for 2014 will be losing money or their account will start flashing red. 

This is all happening after the SP500 has been breaking all sorts of new record highs, but this record breaking race to the moon is going to end. This market is unsustainable especially with the same pattern that has been going since the 2011 bottom. 

For the last three months the pattern has changed again an at this time it looks like it can fit into a small degree ending diagonal with a bit left to go where it will break yet another record high. 

When the mainstream is focused on how high the SP500 can go then it is usually time to review the biggest wave count and the biggest pattern that may be showing itself only now.  I know I have flipped flopped back and forth with the 2009-2015 bullish phase but I did not start this blog to give mindless trade setups when so few people can take advantage of it anyway.  I like to look for the turnings that will force all the participants to change directions. 

At this time I will keep my Primary degree wave three at the 2000 peak or shortly after, but I am looking at a potential triangle that may be developing.  This eliminates my diagonal  5th wave but it supplies a good fit for my expanded flat during the 2010-2011 correction. 

My wave counts have nothing to do with any higher degree than Primary degree. I am not in Cycle degree, and least of all I'm nowhere near SC or GSC degree wave counting.   All the wave counting is worthless if we think we are in GSC degree when the real world is in Primary degree. It is a natural instinct to call something completed before its time which constantly forces us into higher degree wave counts when in fact we have to go smaller to correct it. 

If the pattern is true but we are in SC degree then we could take this exact same wave count but we would have to sequentially force all the degrees up by two degree levels. 

My Intermediate degree "D" wave top would turn into a Cycle degree "D" wave top.
I have tried all of that many times and have created many idealized triangle charts, which are posted online. 

From 2007 to the 2009 bottom I counted a small expanded "ABC" crash which makes it now fit into my bigger triangle.  This brings us up to our recent 2015 top which contained that,"funny" correction in 2010 and 2011.  It's not that it's funny looking as it is pretty standard as expanded flats go, its just rarely ever counted as an expanded pattern. 

If we are close to a potential "D" wave in Intermediate degree then we only have one option or one general pattern that must emerge on the way down.  Another zigzag type of a decline would be perfect but we know they can come in all sorts of styles.  Technically I would not want to see anymore expanded patterns from here on. 

Between 1350 and 1000 is a big support range where my first "A" wave may rest at, but we could also see an "A" wave rest closer to 1350.  It may take participants some time to wake up when it starts to happen as they have been brainwashed to "buy and hold" for the long term. Yeah right, buy and hold in a time when we have seen two big market crashes already with a third looming closer everyday. 

Saturday, March 21, 2015

Euro Weekly Chart Bear Trap Review: Only In Your Dreams!

Last week the Euro bounced violently and it gave us another point to draw trend lines to. I am not saying that last weeks spike bottom will hold but sooner or later it will hold and then the Euro would rally beyond what any expert would even dream of suggesting. 

I am counting it as a single zigzag with the trailing 5 waves being an ending diagonal "C" wave. My 4th wave diagonal stayed well within the boundaries of wave two and as soon as it did that it technically became an ending diagonal, not just a plain diagonal. 

Could we get another complete zigzag for the next big rally? Sure we can and it could break the 2008 top with ease as I would be looking for a diagonal 5th wave anyway.

I am sure experts will not see the fundamentals that justify a bullish phase, but that is also the very reason why we could see a major turn for the Euro.  I don't think the Euro is going to be left in the dust once the USD starts to crash and gold/oil go on a major tear. 

Besides these type of crashes and the steepness of the decline cannot be sustained without a correction or even a downright reversal of the perceived trend.  The Euro decline has buy orders spread all the way up the ladder and once they get triggered then watch out as the bandwagon jumpers will compound the problems.  

Do you think that the bears that are shorting the Euro are going to survive a dramatic draw down in profits in a reversal spike?  I doubt it as they will be the first to panic out.  Fear of losing money can force investors to make dramatic shifts in very short periods of time.  

US Dollar Important Weekly Chart Elliott Wave Count Review:

Whenever I think the markets are showing us an extreme then it is time to review the weekly or even the monthly charts to see if it all still fits into a good looking sequence. Of course that is a subjective  point of view as it all depends where we are counting from, and in the case of the US dollar which way we flip the EWP.   

The 2008 bottom is where the US dollar bull market was born and it all started when all the experts never though that a major trend reversal was going to happen.  2008 is a good example that bear markets are the breeding grounds for bull markets, with the exact opposite being that bull market mania peaks are the breeding grounds for bear markets. 

Anything related to commodities and Elliott Wave Patterns is on the extremely leveraged side and therefore violent swings happen that surprise many. This leveraged world has fear as its prime motivational emotion, far out stripping hope and greed.  Hope and greed take much longer to develop as fear takes no time at all as it spreads with lightning speed. 

It is not greed going long on the US dollar but more like fear of all other currencies being worse and the USD is perceived as a safe haven asset class, for now!  

The 2008 bottom I have been running it as a potential wave three in Primary degree but inside a bigger diagonal.  Actually the wave count I am showing is an inverted flat as the bullish phase since 2011 can fit a diagonal 5 waves.  Short term we may still have some upside to go but this bullish phase is going to come to an end. 

If good US dollar bullish news no longer propels the US dollar then the US dollar party will start to unravel. 

If you have been with this bullish run since mid 2014 then you have witnessed something that comes along once every 7-8 years or so. It will not last as these fast "C" waves cannot be sustained. The US dollar took off from the 79 price level so that would be one of the main price support numbers on the way down. 

Any strong decline or potential length of decline will depend on the type of bearish phase the US dollar will develop.  When the US dollar does reverse you can bet that all bearish gold and oil plays will unravel as well. 

Even with this US dollar price high there may not be enough room to the downside to allow for 5 waves down in Intermediate degree. Another 5 waves down in Primary degree is also not an option. 

Friday, March 20, 2015

Gold Intraday Chart Spike Review

The great Janet Yellen gold bull attack is still running north and has cut through the top part of my trend line.  I love to see that happen and hopefully it will continue.   The gold bearish decline has been going on well over two weeks now and has come to a halt just before breaking new record lows. Don't you just hate that as now we have another close double bottom left unresolved for gold. 

The wave pattern that started had a fairly well defined start to an impulse wave but it could also be an expanded pattern as gold crashed to new lows yesterday with a three wave pattern.  Any potential down leg in gold still left to play out should certainly set a new bear market price low.  Pattern or how the markets are acting is far more important for Elliott wave analysts than any price forecasts that the talking heads can come up with. 

Sure I can come up with very bearish gold forecasts if you like, as everybody is always asking the same question, "How low can gold go?".  When the majority are asking that same question then chances are it's the wrong question to be asking.  If anyone truly knows where  the price of gold is going down to then why can't they tell us where it's going to go after the low has been achieved?  They will never tell you that  because they have no clue.  Imagine a forecaster saying, "BTW gold is going to crash to $700 after which it's going to $2800!" 

 Even gold SC or GSC degree wave counters are calling for this bear market to continue but the deflation we have been getting is not the kind they need to crush the price of gold. 

 Janet Yellen talking about raising rates is trying to fight inflation in wages.  Talk of rate increases is just talk as the majority of the population would have to get 20% pay raises each year for true inflation to set in.  All the government would have to do is vote in a 20% minimum wage increase every year! If that happen then you would see the price of gold literally explode in price.