Saturday, February 13, 2016
As much as I hate trend lines most of the time, I do use them but only in parallel fashion.
The gold bull market ended in the first week of September 2011, but we are still faced with a big question mark.
One set of trend lines is pointing to the $850-$800 price level with our recent rally now intersecting, and it will be important to watch to see if corrective patterns form. The problem with that is diagonal and corrective wave patterns are much the same, as gold and even silver have made corrective waves up to Fridays close.
Nobody knows if the 2011 top is a Cycle degree or worse, like the SC and GSC degree wave counters want us to believe in, but Cycle degree is my best position at this time. Any Cycle degree correction has been far too small to be called completed. All my bullish consensus reports did not suggest a bearish bottom big enough to justify a major bull market in gold.
If a Primary degree "A" wave just came to an end in 2015, then yes gold will soar again, especially if the correction seems to take longer than what may seem normal. "B" wave rallies could rocket to new record highs in an expanded fashion, but I would have to look for a different bear market decline wave count.
This September 2016 would complete a 5 year decline in gold, which is a Fibonnacci number.
The short end of this is that a correction will take gold to a newer high while, a bearish rally will not sustain this great looking run, but end up crashing to a new record bear market low.
This weekly chart also shows the spike in more dramatic fashion, which I always use as a potential turning indicator.
The commercials also showed their bearish thoughts as they piled on with over 32,000 short positions. As usual the speculators are chasing the trend and piled on their long positions with over 24,000 contracts.
I may try the 2011 peak as a Primary degree top, but even then I would rather see a more dramatic end to a 4th wave bottom, which has not been the case. Now if the spike up was pointing down, that would be a very dramatic move.
Comparing cash, gold and cash WTI oil, we get a gold/oil ratio of just a bit over 42:1 An extreme reading
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The US dollar went sideways for just about two months. This sideways action looks like a triangle. Looks are always deceiving, but the US dollar finally added on a trailing "C" wave decline.
At present we could be at the bottom of an "ABC" decline which could send the US dollar back up in another potential 3 wave pattern completing a bigger triangle at the same time.
Commercials are net short by a good healthy margin, but last week they also made a dramatic reversal, by going long over 6000 contracts and at the same time removing over 6000 short contracts.
Of course the speculators took the opposite end of the trade with very close to the same numbers. The main media more often quote the speculators, but they are the trend chasers and always get into a trap with the majority, in other words the speculators act just like the herd.
Next week should tell us if this pattern will hold or fail.
Friday, February 12, 2016
From my perspective, it is very important to always stand back and review the biggest wave count to see if it still makes sense. Sometimes I do it too many times, but it is what I had to do and just got used to doing it.
I am working one big Cycle degree 5 wave impulse starting in 1929 and may have topped in 2000 with a wave in Cycle degree. What we have had in the last 15 or so years fits the triangle the best at this time with our present top via for the "D" wave spot. Our present bear market, as the experts have now declared we are in, looks more like a correction.
This correction could be a Minor degree correction, as I can't fit the pattern into a pure impulse. We need impulse waves to point us in a new direction, as they compound on top of each other to give us distance.
The markets seemed to have found a bottom this morning, and we will have wait and see if this holds next week. Gold has acted perfectly in an inverse manner, but gold can also turn very bearish if stock mania kicks in one more time.
In the short term I am turning bullish and we definitely need more evidence to support it, but a reversal could already be in progress. The Mini SP500 finished off with a 5 wave pattern to a new
low which makes it at least a part of one 5 wave sequence.
The entire decline is still a diagonal type decline and the SP500 would have to move about 300 or more points to retrace its entire crash. That's a tall order, but the markets can move dramatically when all those bears instantly switch into being a bull.
The last thing and bear want is to be left behind if a bull market run is on. Nobody has the deep pockets to ride out a bullish rally as even George Soros will feel it. Of course he may just be using options in which he will not get hit that hard.
Just about every stock index asset class has also turned so it will be interesting to see how far it can keep going. My first target would be to pass the top of my 4th wave in Submicro degree.
Yesterday, was a great day for pages being read, as the pages being read hit 958. This is one of the highest readings in a very long time. Thanks for your support.
Just recently it was announced that Canada has also sold more of its gold reserves and has very little left. What else is new, and if it were any other country that would crash the price of gold.
Silver is lagging far behind gold, and shows an even more pronounced choppy accent. It has all the signs of a bearish rally, not a pure impulse. As much as I hate to say it, silver should end up retracing its entire bullish move and a record new bear market low should get established as well.
We will have to wait a see if another correction will show up as any correction will take a bit longer than a few days. This move can also be part of an expanded move in which silver will also retrace by 100% or more. Either way it is a very choppy "C" wave type bull market.
Thursday, February 11, 2016
All the bearish news you hear comes from experts reporting on the fundamentals. Besides the $20 price target being constantly regurgitated, the experts simply reflect this heading. There is a huge difference between the March and April contracts, but eventually the April contract will reflect on what happened in the March contract. Oil crossed to a new low with a three wave crash which we are not able to see, unless I post on a 5 minute scale.
When this happens, it can always mean it is part of a diagonal 5th wave, or part of an expanded pattern, or worse yet a triangle is about to form. Oil is back at the $30 level as it started to charge up late today. Unless I force it or fake it, I can't make two trend lines fit on the down slope.
I am right down at the Micro degree level with a few degree levels still showing but unlabeled.
The gold/oil ratios have been in the low 40:1 range, which is the bullish indicator that nobody talks about. A market has to get to the extremes before it is over.
My wave counts are a far cry from all those wave counts that have a run of 5 waves in Primary degree in them. They say only price can confirm a wave count, but I think this is a false belief.
There is no way of knowing without looking at the big pattern if a Primary or Cycle, or SC and GSC degree bottoms are happening. Who is going to know if a bottom will end at $21 or $19.99 and at what degree its supposed to be? Even if we were to get a very ugly bottom nobody can identify the crash that has taken place so far. It all depends on where we count from as many think the crash started in mid 2014!
I am confident we are witnessing an "ABC" zigzag crash, but are any of the other wave counters seeing that as well? If they were, wouldn't they also talk about the bull market that will come?
Most are waiting for $10 oil so chances are slim, we will hear any bull market talk anytime soon.
Technically speaking any oil "ABC" crash will retrace by at least 100%, with a potential double top matching the 2008 peak.
If that happens then oil would be creating my "B" wave top in Primary degree, followed by another massive crash with 5 waves down in Intermediate degree. Then when it hits $10 we can see the end of a Cycle degree 4th wave, with a triangle in the "B" wave.
We are presently close to, a 4th world oil glut since the 1980 peak, and this one will dissipate like all the others.
Some story is out about how Obama is killing big oil with talk about a $10 price charge, this is coincidental bullshit, and they are using the present oil crash as proof in what they are saying. I think it is a big line of crock as this new energy source seems to be solar power.
It's all a big secret, but is broadcast on the internet regularly. This secret energy source must be as valuable as Cokes formula, or Colonel Sanders fried chicken recipe. Imagine millions of experts not being able to figure out what the new secret energy source is all about, yet every billionaire that is dumping money into this
does. Are they that stupid to dump billions into an unknown energy source?
This is the April contract which shows we are at a double bottom but if we look at the March contract WTI oil has crashed well below the January bottom already. Oil sure looks like it wants to go to $20, confirming the consensus forecast, which would be a very historic achievement. In 2013 they had no clue that oil could crash to $20 but now everybody is singing the same tune.
A bunch of parrots all trained by the same conductor reading from the same music sheets.
Nobody is talking about the bull market that will come which has happened after every oil glut we ever had. They will tell you it's different this time, but what does that mean? Do we have different degrees of gluts, and do we have to start rating them? All the experts that are calling for $20 oil can never tell you what will happen after this target is eventually reached! They dare not tell us because they would have to step away from the herd and that makes them very uncomfortable. Singing out of tune would be unacceptable.
Using the two April contracts, the gold/oil ratio hit a staggering 43:1 this morning as gold soars and oil crashes. I think the opposite will happen once stocks find a bottom and soar one more time. Oil could follow right along.
For now oil has crossed to a new record low with a three wave pattern and if this were to turn into an impulse, crude oil would have to fall much further.
As I post gold is still on a wild ride that all traders wish they were part of. Gold is approaching $1260 which is a far cry from the $1050 base it started from. This just goes to show how gold can perform and surprise the majority most of the time. Contrarians have been waiting for a move like this for a long time, so if this gold run has more legs, they will be the big winners.
I'm going to explore other wave counts, but this rally has too many overlapping waves from when it started, so I have to keep two or three wave counts going. I will never post several wave counts in one chart as then I can make too many excuses and always turn a bad wave count into a good wave count.
A correction is due as now our spike is getting longer and longer, and if another big leg is to come, the correction should contain a flat of some type. A net 61% correction would take us to the $1130 price level, but it must be finishing an "ABC" type crash by then.
Gold stocks also jumped another leg up which is also creating a huge spike.
This gold run has more to do with fear investing than a real bull market so if fear just dips a bit, gold could take a strong hit.
The media makes it sound like we are in a world sell off, and that we are in bear market territory.
This March contract still hasn't crashed to a new record low, which it still should do if the last sideways wave was a diagonal 4th wave. I sure cannot fit the decline into some super impulse decline, so something else is in the works that can still push this market back into a bull market with little problem.
The US dollar has taken a hit, but may be building a small base to bounce from, and gold has acted perfectly in response to the US dollar decline. Depending on which SP500 we keep wave counts on, some have broken to new lows and some have not. This gives us different wave counts for most of the major big indices.
In the meantime, we have to wait for the markets to find their bottoms and reverse. Only then can we see if the rallies follow a classic impulse set of waves. We need great looking impulse waves which point us into a new trend, but also compound into a bigger and longer trend.
Wednesday, February 10, 2016
GDX has now backed off from its rocket ride. It also formed a small spike in the process, but I think we need to see a much bigger correction if this bull run is to remain a bull run. Starting from the bottom of January GDX made about a $5 run, leaving many open gaps to the downside.
At $14.50 GDX would be at about 61% (
.618) net retracement price level.
The choice is simple at this time, because if we are only in a correction no new lows can form, but if this move is still part of the bear rally, then this spike will get retraced by 100% or more. Every false bearish rally gets retraced. It does not say that much in the book, but I use it as a rule all the time.
Expanded flats work just like this, except we have to look at it from an inverted point of view. The largest degree I am showing is in Minute degree, but eventually it may have to be changed.
It's time for crude oil to make or break the wave count as a potential "D" wave bottom.
All of my wave counts are Submicro and lower which puts us very close to the bottom of the degree stack.
The call for $20 oil is still as strong as ever as the world or just the east coast is awash with oil.
All the fundamental news is background white noise and is being repeated in a feedback loop, circles the globe. As fast as the wave travels around a hockey arena, is as fast as the news gets to all those who are listening. Many thousands of smart people are all watching the news and decided very quickly what they are going to do next. Anybody that hears the news 2 or 3 times is far too late.
If crude oil does head to a new record low, then, it would be doing so with a 3 wave pattern. A 4th and 5th wave would have to follow, but for that to happen oil would still have a long way to go.
What is important is that the April contracts both calculated a gold/oil ratio of 40:1 this morning, which is right back to the extremes we already had. It is the most extreme gold/oil ratio I have personally calculated. Gold would have to crash $400-$500 just to get to average or oil would have to go to about $80 to be normal. I always use gold as the money as black gold has a limited life span.
My Intermediate degree "D" wave bottom is still alive, but right now it is in limbo until this gets resolved.
Another fantastic pattern that is forming is a potential Head and Shoulders pattern, which can create crazy bounces as well.
Gold has not dropped down as I thought it might. It produced a sideways pattern that indicates gold can make another leg up even though it may be a very short leg, or with an ending diagonal.
This move is not a clear cut triangle at this time and it may even be the start of an ugly decline much like the stock market has put us through in the last year or so. I am showing you a Submicro degree top which is scraping the bottom of the degree barrel.
Can gold push the top trend line? It sure can but time will have to settle that answer.
Interesting enough gold recently peaked on Monday which was also new moon. The full moon in February usually produces the most snowfall as well.
There are always, a minimum of 5 choices of patterns we can make, all depending on where you start counting from. This is the same as cutting off a wave count every time we think a move is completed.
I will not give alternate wave counts in one posting as either I am right or wrong. Many times I am just too early, but hopefully not too many times that I am too late. Either way, if a specific wave count may not work, it can always be shelved, temporarily and if need be regurgitated at a later period of time.
Janet Yellen's big mouth sent stocks reeling this morning, but if a bullish phase is still in progress the markets will eventually do the opposite of what the herd expects or what conventional forecasters are telling us. We can't forget the wave count group from Mars as they need that the big decline to give us the depression that has been so long in the making.
Most of the time the triangle will produce a thrust, but we are on a bad start for that to happen. Any diagonal 5th wave can be pretty dramatic as well, but the most important thing is that any triangle forecasts that a bigger trend change, or bigger degree ending must happen.
To confirm that a bottom is already in, the markets need to press higher, after any bad news gets printed.
It is always important to constantly step back and look at the bigger pattern to see if it still plugs in well. HDGE and the VIX should also take a beating as they are riddled with gaps like a block of Swiss Cheese has holes in it.
Tuesday, February 9, 2016
Now we get a chance to try and put some realistic wave counts into the oil again as Millennium Degree will never work. I am working a giant Primary degree "B" wave which contains a triangle. I was hoping that the "D" wave may have been finished, but my impulse wave has disintegrated at this time.
Oil has now made a good looking zigzag decline and I find it very difficult if not impossible, to count out a zigzag in a zigzag bull market, because they rarely happen. They always alternate in pattern. Can it still be part of a wave two bottom? It sure can be but it must perform like it has a rocket stuck up its rear end! Only time will tell if this will happen! Next we could get an "E" wave bull market, which will seal the fate of oil in the short term after it peaks.
Once the triangle is completed, then expect a decline that will break any support we presently have had. Even now if we were in an impulse heading down, oil would have to crash much further to add on the additional waves it needs, to make a good looking impulse decline.
This is pure science fiction, but it comes from a real wave count put out by Elliott Wave Internationl. (EWI) They start in 1859 and end up on a 4th wave in Millennium degree. I agree with the 1859 date, but very little else at this point. The 1859 high matches the 2002 low in this oil chart and oil would have to go below $20 to hit this price level again.
The big question is, "What are the 5 waves required to complete the one move in Millennium degree,". The answer is we need 5 waves up in the Submillennium degree, to complete the 5th wave in Millennium degree.
EWI has the 2008 peak as a Cycle degree peak, but this would make the 5th wave an extremely long one and completely removed from reality. Inhaling too much of the red dust of Mars can have the effect to create a wave count removed from reality.
What they don't realize is that the crude oil picture they are painting is an "EXTREMELY" bullish picture in the long run. It is a bigger bullish picture that is longer than the complete life span of oil on earth and then some. The main reason why, is that nobody is continuing the research to see what is reasonable for a wave count that will have a beginning and an end to it, Even though it still may be 89-144 years out.
Remember the whole world of wave analysis has been brainwashed with there SC degree top in 2008.
This is the idealized wave count created from a Millennium degree wave 4
base and at a minimum that specific wave count would require 5 waves up in Submillennium degree. Instead of only a Cycle degree run up to 2008 we have to make it a GSC degree run to 2008. Our present crash would be a GSC degree "ABC"crash with the last 5 waves in SC degree. "Impossible" you say, well you are right.
My wave counts are wave two based, with oil being in one SC degree pattern for its entire life span.
The world is in a bearish funk right now and Apple is just one stock that just can' sell enough smart phones. They are able to spend billions giving to investors that have nothing to do with the success of the company, but should be spending on research for new products.
I would rather seem they spend money on a big logo on a SpaceX rocket than give the money to shareholders. Apple could finance a trip to Mars and back, I stress "and back"
,out of petty cash.
But those are just my personal beliefs and have nothing to do where Apple's price may go next.
If the entire decline has been a diagonal, then we could see a big rally in Apple and all other stock indices as well. The VIX and HDGE being as high as they are, Apple has no choice but to rally.
How high nobody knows at this time because nobody thinks stocks will rally anytime soon. They are all waiting for that magical 20% bear market
number. It's a great magician act that the bears distract you when you should be watching for a potential bullish hand to be dealt.
The Apple chart is riddled with gaps with many small ones above present price levels and a few big ones still open up closer to the top. It would eventually take to the $120-$130 price ranges to close all the gaps. That is a tall order and may not be achievable at this time.
The gold/apple ratio at present is about 12.5:1, and at a peak in July 2015 was about 8.8:1. Until someone tracks it on a consistent basis, we still need to establish some better extreme numbers. The secondary peak in early November also hit an 8.8:1 ratio. This gives us a reasonable set of parameters for tops, and it seems that the 12:1 ratio, works for the bottom in August 2015 as well.
All sorts of fundamental induce news is used to justify the Apple stock crash and all of them will be forgotten once Apple starts to rally again.
If I wasn't looking at other indicators as well, I could paint you a very bearish picture in stocks. I would be joining the crowd of bears that have come out of the woods and basically I would be in sympathy with the majority. That would be no fun at all and I would sound the same as all the other parrots do. Redraw and bend my parallel lines a bit and I could show you an extremely bearish wave count.
I can sure paint this RUT crash as a 3 wave zigzag, but a distorted expanded pattern could also have happened, in which case I would have 5 waves down coming to an end soon. When the bullish phase starts we will have to see if a diagonal pattern emerges or worse, another choppy pattern that just will not fit into any bullish pattern. Another 4th wave at this point is far too early, but we will watch it, if it coincides with the VIX and HDGE the next time they are extremely low.
At a minimum the RUT should pop up to the 1035 price level in the next few weeks, and more if we are at a stronger turning than what the majority expect.
My last wave count did not hold, but a new one always emerges. If it is a better wave count remains to be seen. Sure, this can keep right on going south, but the pattern has already changed, with a spike now also being formed.
This can terminate on a zigzag this week and crude oil may rise if the stock market cranks up again.
Investors only see doom and gloom and the crude oil is just part of it. It's a feedback loop as stocks go down it shows no hope for oil. East coast Inventories are bursting at the seams and are far above averages with the world or the mid east pumping as much as they can as well.
All it would take is a little bit of news that demand is getting bigger than supplies and crude oil becomes the new bull market on the block.
If we take a quick glance at this chart you would say, "Oh Shit, this is crashing and I better get out".
You're too late already and as soon as you get out this market will turn and soar the opposite way. Then when you get back in, figuring you made a mistake, as soon as your buy orders have been hit, this market will turn and crash again.
I think this market has a bullish run left in it that will surprise most of the experts that are bearish right now. Several indicators like the VIX and HDGE are also showing top heavy patterns, with many open gaps below. Combined with the choppy decline which is impossible to force into an impulse. With all the sharp spikes to the downside (6) in the last two years, keeps me thinking bullish thoughts.
The last decline I am calling it a diagonal decline, and since it dipped into wave two, I would have to call it an ending diagonal. Yes, it could go lower, but I am more bullish than I am bearish and only time can confirm this. If you think that 5th waves in diagonals can behave like this then, think again as it is more normal than we think. Any two trend lines I draw will be as parallel as I can make them as "ABC" declines will cut through these lines with little problem.
The entire rally with the Euro started back in March 2015 and a new record low has not been created since then. All critical waves have overlapped each other so there is no way we can ram or force this into a true Elliott Wave impulse count.
This could end up piercing my top trend line and even breaking into a new bullish high. This could happen in a flash or still take some time to play out, or not even get that high, before it turns and crashes one more time.
I see this as a 4th wave triangle and heading up to an "E" wave top. This entire pattern looks much like oil did back in the 90's, except in a much shorter time frame.
If the Euro is still going to crash, then I would bet that gold will also see another major decline as well.
Monday, February 8, 2016
HDGE has pushed to a new high, ending in a secondary spike. If we count the waves from the November 2015 bottom we have a count of 7 waves at this time. A 7 count wave structure, is corrective in nature which usually means a complete retracement should happen in time. We would have to add two more waves about the same size to kill this bear rally idea.
Any diagonal run will create the same wave count, so either way we should at a minimum get a correction. I also have a minimum of 4 open gaps below present prices, which are also bearish indicators for HDGE. With many of the stock indices having many gaps above present prices, this makes it more likely than not, a rally should close all the gaps off.
The VIX has also pointed up along with HDGE and between the two make excellent indicators for when stocks make a potential reversal.
From August 2015 top to the November 2015 bottom was a three wave crash,
( more flat) this has several implications in any asset class. It could be a perfect expanded pattern, a diagonal ending, or part of a triangle. Either way all the wave counts I suggested do not support a big bull run in the HDGE at this time.
Stock market live blog recap: End lower, but trim losses after Dow’s 401-point
fall - The Tell - MarketWatch
This cash chart of the Mini DJIA has a different wave count that actually fits my outlook better.
That can be very subjective, but any wave count will break a subjective wave count very easily.
In this case the DJIA would have to crash much lower, but it already came back hard at the end of the day. To prove all the super bears wrong, that are far too early, this market has to push higher.
Preferably I would like to see it above what looks like a small recent double top. The secondary top is lower in price so this can all be part of another zigzag correction.
This chart would have to travel a minimum of 2350 points to create another world record high, and I am sure many bears will say fundamentals do not justify the DJIA to go that high. Since when does the market care about the fundamental opinion of the majority?
Everybody already knows that a bearish trend is in progress, so are millions of investors, just getting ready to get out, or is panic buying about to set in?
When markets do high speed crashes like it started to do last night is usually a "C" waves crash.
None of these moves change the fact, that the top rounding process looks like a diagonal decline which still has to be resolved. The VIX has a minimum of 5 gaps to close below present prices so this also helps to keep my bullish opinion alive.
My impulse wave has broken down to another pathetic choppy rally, which also is traveling very sideways right now. This usually does not last for very long and will eventually break out, into some unexpected direction. The age old relationship to gold has also taken its toll as the gold/ratio is constantly reminding us of that fact. The gold/oil ratio just hit 37:1 with the April contracts and is still a far cry from the normal of about 15:1. Flip the numbers around and try to predict were gold should be, is 15X$32 = $480 for the price of gold. I always use gold as the money, as oil has no real life span when it goes up in smoke out the tailpipe of our cars.
Crude oil is far too early to even hit a zigzag top, but a triangle could be in progress where we could see one more push higher. If this push is very choppy and erratic, then it could be confirming a "C" wave bullish phase.
Gold has gone vertical and some gold stocks have gone vertical as well. The HUI is the main index which has gone vertical, but also has several gaps that opened up in the rocket ride, The GDX is loaded with open gaps, with about 4 gaps open on my count. Gaps will always get filled and it is just a matter of time when they do get filled. I have a pretty clean impulse with this GDX rally, but "C" wave bull markets can contain them.
Gold itself is a diagonal as this GDX is not. That is very normal and I don't read anything into that. For those who are ignoring a 40% gift dumped
on your lap, and you want more, you will pay dearly for this greed. Sure, there is no way of knowing if only a correction is due, but this will show up in due time, but if this pattern is actually an expanded pattern, then the GDX could crash to a new bear market low. All it takes is for stocks to find a base and slowly work their way back up and stock mania could be back on!
Shorter term I am extremely bearish, unless I see a very corrective pattern starting to play out.
GDX at this time has gone higher than GDXJ which I think is due to the fact there are less stocks inside GDX than GDXJ.
Gold on the cash basis has touched $1200 this morning, achieving the price level I said it could do.
It has also ended on a vertical move which cannot be ignored, as these moves are
the highest speeds, we can physically have. They cannot be maintained without a correction or a down right reversal of the trend.
also hit a several year top trend line, so this can offer serious resistance. We also have the makings of a huge big fat Head, so that just adds to my short term bearish mood.
Since the start of Dec 2015 gold has started off slow and then the afterburners kicked in and gold blasted like it wants to go to the moon. All the early waves in this impulse looking wave structure, overlapped, which must not happen in a true impulse so I can see this as a part of an old bearish rally and at best, we may be coming to another "A" wave type top.
The last wave of any diagonal wave structure can and does act just like this, which can fool the very best. Those that are just jumping on the gold bandwagon are going to pay dearly as the gold bears can come out and slash this gold bull to shreds.
The HUI has also gone vertical, but it contains many open gaps below which can all get filled before this market makes a new run north.
This is not the Mini but the cash contract. With its sharp decline this morning it has not pushed to a new record low, but now has formed two long spikes to the downside. I see this as a positive, but a new downside could still happen. It would do so as a 3 wave structure, not with a 5 wave impulse.
I am a real stickler into watching how a new low is created as there are huge differences in their outcomes. Being lazy and calling a 3 wave decline a 5 wave decline will never work. In case no new low is achieved in the next few days, then this can stand as the start of a diagonal 5 waves.
I changed my trend lines for a reason as this is what a diagonal crash can do. It's just a smaller version of the 2007-2008 decline. You don't want to think impulse decline when in reality it is a diagonal or an "ABC" decline.
The January 11th decline sure looks like it can fit an ending diagonal very well, so that also helps to support a potential bullish reversal. This SPY00 has about 300 points to go, to break a new world record high, which not too many believe can be done. It is a big mistake to underestimate the markets to rally after they have been pointing down for sometime, especially if it is pointing down, with a 3 wave structure.
The Nasdaq has plunged again this morning, and created a new bearish low at the same time. I counted this decline as a diagonal impulse and not as a true impulse, as there are huge differences between the two types of waves and their results. Yes, it can still go lower and hit the bottom trend line, but there is no law or that says they have to get hit. Diagonals can end up being short as they plunge to new lows with a 3 wave structure. We are still short a few hundred points or less from entering into a conventional bear market of a 20% decline.
Elliott waves can travel much further than that in a 4th wave correction as I have always used 40%. All this depends on the degree we are in and if we use net or gross numbers.
With this chart the Nasdaq 100 hit its highest point on December 2 2015 and has only looked back briefly before resuming its trend.
I would like this to come to an end and end soon and start a trend back up but that may be wishful thinking. If the bearish leg is to continue a counter rally would only take this market back up to my 4th wave peak before it resumed its trip south one more time.
Any market move far past my top trend line will help confirm my short term bullish picture.
We only have about 900-1000 points to go and the Nasdaq 100 would create a new bullish record high. Reversals can be very violent as all the protective buy stops get hit.
Gold has responded to this stock decline as investors run to gold out of fear.
Saturday, February 6, 2016
Even with all the bearish trash talk and warnings from the experts that the markets are on a one way trip into the disaster zone, it still does not change the patterns that have already emerged.
In the last year or so there are so many overlapping wave structures that it is impossible for me to force a clean set of impulse waves except for very small degree sequences.
Elliott Waves will always work in such a way as to always travel the opposite of the trend what the majority is thinking or hyping, because otherwise the 99% would be rich and the 1% would be poor.
It works contrarian in nature. Any wave count that confirms or is in sympathy with the herd for very long will never work, as 2009 proved that beyond a shadow of a doubt.
On Jan the 20th the DJIA landed with a big spike and proceeded to rally, in a choppy fashion. This can work as part of a diagonal wave structure so I have to follow it until it is trashed beyond a reasonable doubt.
Either way the next few weeks should make or break this bearish mood the market is in. Also, many are talking that we are in a bear market, but we are not even close to a gross 20% decline which is the mainstream definition that a bear market has arrived.
This is my Cycle degree wave count and any trend lines are parallel to the top line, with no forced throw-over. The entire structure is also running at an angle across the corners of the chart, which is what I like to see happen as well. Most of all there is no SC or GSC degree wave counts present and there will not be any present until all 5 Cycle degree waves are found.
This is the mathematical and sequential nature of Elliott Waves. I can't call my "D" wave top completed yet as it is still gyrating around without any clear impulse waves showing the way.
In the end, we could end up at a Cycle degree low with a major bear market completing below the 2009 lows. Even if these lows materialize the majority will not be satisfied, but will be
calling for the worst still to come. By that time I am sure we will see many other indicators telling us that the exact opposite will happen, as insider buying will be one big clue. Also the Warren Buffet indicator works if he is still active by that time. (2021) The solar cycle bottom will be the biggest indicator as solar cycle #25 will usher in the Roaring 2020s. I would expect 5 waves up in Primary degree lasting 8 years or more.
Our CAD had a great blast up, but it had a small section where it was extremely choppy. This could be part of an inverted "ABC" with the potential to be part of a bigger zigzag, yet to come. If all the fears are about the economy getting worse as well as deflation fears, thrown in for good luck, why should or dollar go anywhere but down? Fundamentals at the extremes will always tell us the wrong things.
The sentiment bullish consensus reading hit such a crazy low last week that virtually leaves nobody left to get out of the CAD. Also, any panic out of the CAD at this point shows very little knowledge about when something is oversold. Bullish readings of only 6% bulls, means there is nobody left to get out, as this is the most extreme reading I have personally ever seen.
A small impulse has started on the way down and if this was not a big fake, it would have to find a bottom and then soar again. On the daily charts we have a wicked spike that formed to the upside so a correction was definitely due.
Since our CAD has travelled to a crazy bearish side, our Vancouver SFD has gone the opposite direction. Look how the listings have imploded, as it seems nobody wants to sell their SFD at a high price. A 44 % gain in two years or so is not real and cannot be maintained, but picking the exact top is tricky with any real estate market. If Our CAD rockets upward should that not make the SFD cheaper?