Saturday, November 28, 2015
On the weekends I like to review the bigger wave counts. By changing or moving just one wave count from one peak to some other peak, we are actually traveling in time on paper. Our brains have to adjust to this as well and the slowest group of people to adjust is the majority of investors.
With this wave count I have moved my Cycle degree wave three to the right and above our present position, which means I jumped back in time because I get to do wave three in Cycle degree over again.
This would also make the 2009 bottom as my potential wave 4 in Primary degree, and technically speaking, I would need 5 waves up in Intermediate degree to complete this move. This would be a diagonal 5th wave as it is so choppy to always throw doubt into any wave count.
If the 2009 to present pattern were a true impulse then I think it would be far easier to count out. At this time I think there is another leg up, but it should not be a monster leg. Eventually, it should create a new record high for stocks.
We are getting wild swings in both directions and I read that as a sign that the markets are becoming unstable, a prelude to a major change in direction. If this Mini-DJIA breaks north much further then, the 4th wave could be completed, and a much bigger decline would be in the cards. I say "cards" because the market is no different than the house dealer, except the house only deals a run of five, a run of 3, or a run of 5 sets of 3. The card game "Big Bertha" comes to mind when I count waves.
Either way my junction of the bottom trend lines will be critical, as a bigger decline would have to smash right through those lines.
There are still far too many options as to what can happen, as this could drag on for a few more years yet. It would be until 2019-2021 when the solar cycle #24 is getting close to a bottom and shit can hit the fan. 2008-2009 was such a time as well, but it was solar cycle #23 that hit the bottom.
All this SC and GSC degree wave counting better show themselves by the time solar cycle #25 starts. Solar cycles eat and spit out Elliott Wave Counts like it's child's play. This is all 4-6 years or so away, but at this time not a single technical wave count has shown itself to be classified as SC or GSC degree. If your brain is still stuck in a bearish mood by the time solar cycle #25 starts, then the sun is going to destroy your wave counts without mercy, and you will miss another bull market.
Friday, November 27, 2015
The Euro is in the same basic pattern as the US dollar, it's just inverted, and with a few differences from time to time. This time the Euro has not gone as far down as the US dollar has gone up, but at this point the November crash has been a 3 wave pattern. If the small degree 4th wave was to develop still heading down, then this would take about another month or more to play out.
That would give us 5 waves down in
Minuette degree. This would also mean no decline for the US dollar and no rally for gold. The Euro is in the US dollar basket, so it would be extremely hard to claim the Euro is going to go its own way.
The Euro has had a low bullish consensus of 10%, which was an extreme, and it spiked to a high of 23% since then. If the Euro makes a "C" wave rally, then this should change the bullish consensus dramatically as well. Fundamentals do not suggest that the Euro will rally
, with bombs, grenades , gun attacks and lock downs in Europe. Never underestimate the power of any market to ignore the fundamentals, and still do the very opposite what fundamentals suggest.
If the 3 wave decline holds, then technically the Euro should go high enough to clear my "D" wave in Minute degree.
Since my larger pattern is still a corrective pattern, but the Euro rallies dramatically, it will crash back down to a new record high. This does not bode well for a super duper bull market in gold.
The same basic story applies to our CAD. Is our Canadian dollar going to rally so fast and far that it stops the oil market from crashing? After all the CAD is also in the US dollar basket and it would have to act the same inverse way to the US dollar.
If you thought your housing market was bad, check out Fort McMurray, the heart of Canada’s struggling
oilsands | Financial Post
Real estate in Alberta and Fort McMurrey is crashing. Will any rally be long enough for people to run back and buy all the cheap houses again? I doubt that very much.
It is pretty hard to justify the Oct top as an impulse starting to head down, so for now I am going to treat it as an "ABC" crash with an ending diagonal "C" wave. Gold has hit $1053, past that $1055 price level I had talked about several times.
What I would like to see is a very strong rally, but if the rally is strong, but short, then we can be in a 4th wave, and another record bear market low would be due. Fear of rate increases is the main fundamental reason for the gold
crash, but in the end, it's always about the US dollar, and its bullish and bearish phases. A quick glance at the US dollar, I can see that it has pushed well above the 100 price level, in a triple top like formation.
Unless I am dealing with a very diagonal 5th wave decline this November crash should get completely retraced. There is no way of knowing when, but with such a small degree hopefully we don't have too long to wait.
Year finish Christmas shopping can dump a lot of money in the streets, so it can always be the season to be jolly for the price of gold. In the end gold moves that are dictated by fear will never last, regardless if it goes up or down. With the gold bear market, declining for 4 years or more, nobody will remember the
fear fundamentals that drove gold down in the first place.
For gold to put on a real good performance there are other currencies that also have to reverse direction. Our Canadian dollar shows no sign of life at this time as the oil fundamentals are devastating the Alberta real estate scene.
The gold/oil ratio is pushed to the extreme again as it just hit about 27.41:1
Thursday, November 26, 2015
Sometimes you just have to chuckle as the markets will continue try to fool us trying to cover up what its real intentions are. We will never see what it may do by price alone as price is secondary to pattern. If it walks like a duck, and quacks like a duck, chances are good that it may be a duck.
In the markets the ducks will dress up like a goose to try and fool us. My potential inverted wave 2 has been broken, leaving it open for the SP500 to still rally. Folks, we are less than 40 points away from this E-Mini SP500 to create another extreme bull market high.
For now this so called bull market from the 2009 bottom could be an expanded "B" wave bull market containing a stretched triangle. I also must keep it open to be a diagonal 5th wave.
Lets say I need a "B" wave top in Primary degree, then to confirm this I would need 5 waves down in Intermediate degree. Any deviation to this will trash my wave count and I would have to review it all again and regurgitate an old wave count. Any potential new wave 1-2 heading down would have to form up pretty high as they are always the shortest waves, and they would have to act more to a true impulse as the markets would be resuming the original trend. All other crashes like 2002 or 2008 where choppy declines as they traveled opposite to the trend which was still up.
Of course, this is all sheer speculation, but you will get an idea how far forward we can look down an idealized wave pattern. In the last 15 years there have been no impulse waves of any size that matters and the SC and GSC degree wave counters desperately need a set of 5 waves. At a minimum they need 5 waves down in Primary degree, to give them one shred of credibility to their high degree wave counts. If they don't confirm any SC or GSC degree, then they are not going to get the depression that they base their wave counts on.
This is the January crude oil contract and at this time this; looks like a typical expanded 4th wave pattern, but we should see at least one more new high. I am counting it as an impulse right now, but I am sure wave 4 will dip into wave 2 so then it would become a diagonal wave structure.
Crude oil would still need to cross over the $43.50 price level as that would retrace the previous zigzag. Brent crude oil made the same pattern, but with no expanded flat.
The gold cash price and this January 2016 crude oil contract the gold/oil ratio is still a respectable 25:1. The is the exact same ratio as what we got in 1999! We had a world oil glut at that time as well and everybody hated oil investments. They hated gold even more. The HUI was approaching 35 and they could not sell gold stock investments fast enough at that time.
So far oil does not fit well into a bigger flat as that would happen if oil were to approach the 2008 $34 price level, but we can always get a "C" wave bull market that is still part of the bigger degree flat. In the weekly charts this pattern looks like part of an ending diagonal which is what I would like to see develop at the ends of big bear, market moves.
This crude oil crash has devastated Alberta as jobs flee and real estate is imploding. With Canadains carrying a massive debt load sooner or later this real estate implosion will rub off on Vancouver and other markets.
The 2011 top was one of the most extreme tops I have ever seen with the silver market loaded up with 96% bulls. It broke all known records for the amount of bulls present. The short story is, there was nobody left to come into the market and it was doomed to fail big time.
I think the words should be credited to Steven Jon Kaplan
At the same time all the fundamental analysts were trying to convince us to get into the game, as the $200 silver forecast was being tossed around. The majority had no clue that silver was about to implode as even the sheer length of the spike was giving us a clue
Now this same bullish consensus report gave us a low reading of 16%. This number is not low enough to force a massive bull market, but I think it will have to go lower yet. They just loved silver when it was pointing up, but now that it is pointing down they hate it. This is nothing new as even in 2000-2001 they hated silver with a passion. They really hated silver in 1993 as it crashed well below $4.00
The problem is that the silvers entire bull market did not produce any simply impulse waves to help us to figure out where we are. There may be a small rally in progress, but we have to see what type of pattern may still develop.
If the wave "3" in Intermediate degree is really a "D" wave
top, then silvers price could rally, but sooner or later it would retrace its entire bull market.
SLV has two major gaps in its bear market and they would get filled at $26 and at $38, but we do not know how long it will take to fill these gaps. In the very short term I am bullish, but if I see a potential "C" wave forming then I will turn bearish for another trip lower.
Contrarians will not agree with me, but to get their bull market the US dollar has to implode, and at this time it has refused to do so in a big way.
Wednesday, November 25, 2015
This all may be a figment of my imagination, but nonetheless, I have to go through the ritual of counting it out. I cannot produce mindless wave counts just for the sake of entertaining my readers, I want my wave counts to either make it or break it.
In this case only, we would have passed into a Cycle degree world at the top of 2007, from which we imploded into the worst recession since the depression. From this massive crash we still did not enter a New Era deflationary depression the likes that Prechter sees in his visions. The big wave counters saw the 2007-2009 decline as a 5 wave impulse, but they forced two wild trend lines trying to convince us so.
Trend lines can be very subjective as I can draw you many lines every time I post something.
What was special and different about the 2009 bottom was that the RUT crossed down into a new low as a three wave pattern. Those are not impulse waves when they do that as at best they belong to the diagonal family or even the ending diagonal. If 2007-2009 was a great impulse then chances are good the RUT would never have broken the 2007 top. The best pattern for a complete retracement is always a zigzag or many zigzags (triangle) or a flat of some type.
The 2009 bottom was at about the 341 price level, and there is no chance at all for a complete set of 5 waves down in Primary degree. If we are lucky we may get 5 waves down in Intermediate degree. Yes, that bullish phase from the 2009 bottom is choppy and wild, but that does not rule out a diagonal 5th wave. This would also be my first expanded flat with the RUT and usually they can produce a very flat bottom. On top of that expanded
flats, once they finish, are very bullish patterns as the stock market would roar one more time, and if the Cycle degree wave three holds then we should get 5 waves up in Primary degree.
Nowhere do I see or visualize any SC let alone any GSC degree wave counts. It's just not going to happen.
The big degree wave counters want to see a depression, which means everything must implode including gold and silver. At this time this does not compute, or I have to take stronger medication to see what they are seeing. Drifting into higher and higher degrees
is an ego thing, as that way they can always be right and it sells news letters.
My wave 1-2 that I would be after has to form up high as waves 1-2 are always the shortest waves, and I would be lucky to subdivide Minute degree levels in the first set of waves.
The RUT has topped at about 1300 and if everything works, then when the RUT is back down at 340 or so I will call for a complete retracement right back up to 1300 or higher.
At this rate the stock market is going to break another record high as we are only about 40 points away. In a wild fit of madness 40 points is nothing as all the bears would be trapped again just before another upside breakout. That would be the my favorite result, but in a diagonal world anything can still happen. The November decline had a nice zigzag in it so, I would like to see that zigzag get completely retraced.
It still is very slow and it may not move until later in the week. Today is the full moon, which has been very bullish for stocks, but that has never been as consistent as I would like to see.
We need a decline that is creating good impulse waves as impulse waves determine the direction of the new trend, plus it is the only type of wave that will give us distance as it compounds one wave on top of the other.
I am still counting this as an inverted move, but I am pushing it as a great looking zigzag, but still not tall enough to fit into an impulse. By the end of the week things could change dramatically. Right now this is starting to look like an ending diagonal 5th wave, as the US dollar would have to soar to show us otherwise. As long as this US dollar still needs to rally, then this will keep downward pressure on gold.
Gold has just completed a small set of 5 waves down so at a minimum, we should see another upward correction.
Tuesday, November 24, 2015
I tried to start the top as a wave 1-2 but it really does not fit well especially how this bottom is now forming. An ending diagonal or a 4th wave in progress. This is a huge difference as both can end on new lows, but the 5th wave can implode dramatically.
With the full moon tomorrow this can be a a trigger for a reversal but it is not the most reliable indicator that I have used. Full moons can be very bullish for stocks as new moons can be very bearish on stocks.
There is a good chance that gold can break through my top trend line, but not any higher than my wave 2. The only way this would work is if we are in a potential ending diagonal.
I think gold stocks will still see a new bear market record low as the XAU is only 5 points away from a complete bull market retracement. If the XAU and ABX can do it, then why not the HUI, GDM, or the BGMI?
During the great bull market from 2000 forward the only difference between the XAU and HUI was that the HUI's patterns stretched much further and taller than the XAU. The XAU contains stocks that use more leverage than the stocks in the HUI.
With the gold price still in a declining mode this tells me that deflation is more a factor at this time. When we expect a huge bull market in gold, then we know inflation numbers will also return. The deflation that the big wave counters are looking for is the type they had back in the 1930s. In those days there were no safety nets to fall back on, but there was also a massive bull market in stocks. The entire crash and bear market in stocks only took 3 years to complete, while the bear market in commodities took 13 years to play out.
Once I started to look further into the future in the WTI contracts I see that they also produce completely different wave counts. What was still very bearish looking in the January crude oil contracts is now very bullish looking in the June 2016 contract. Brent crude has already seen a new downside record, but this WTI is far from it. Any counter rally has already dipped into my potential wave one which instantly turns it into a diagonal wave structure.
Of course, if a zigzag has just completed, then a move with an 100% retracement or more, of this zigzag is due. At worst the gold/oil ratio to this June 2015 oil contract is just about 23:1 which is still extremely cheap when compared to the gold cash contract.
In the short term I have to be bullish as crude oil could push past the $54 price level. That sideways pattern at the $66 price level would be the next target that also needs to be retraced.
Ultimately the $92 price level on this chart would also get hit, but that may not happen for some time yet.
Either way it is pretty hard to keep a leveraged asset class down in the dumps regardless what the fundamental analysts say is going to happen.
Commodities still saw a surge in 1919 until they imploded into a 13 year bear market, so that can still leave lots of room for upside movement.
It would be better if crude oil
feel deep enough to match the 2008 low as that would make for a better fitting flat, but only time will clear that up.
The E-Mini SP500 has started on a trip heading south, or down. It looks like the start of a nice impulse, but it must turn down again to complete any thing resembling a 5 wave decline.
On the November trip up we had what looks like a great impulse preceded with a 3 wave crash. This leads me to
belive that stocks have at least one more push higher to go before they die again. The SP500 can crash to 2050 and then crank up again, but if that rally goes sideways and up, then an inverted move would be completed canceling all bullish scenarios, as inverted moves have the extreme high odds of complete retracement.
Right now I am looking at a zigzag correcting inside a zigzag which is pretty rare, but diagonals do contain many zigzag type waves. It will be the full moon tomorrow and those dates can produce dramatic reversals.
It would take this E-Mini SP500 very little to charge up and break a new world record high and I think it can do that just to piss off all the wave counters that think we are in a Minor degree wave 2 rally.
In the last 15 years no pattern has come to light that tells us that we are in SC degree let alone GSC degree. There are very specific technical requirements that need to be filled before we can cross over into any extreme higher degree and in the last 15 years not a single requirement has been fulfilled.
Just because something has crashed very deep (2007-2009) does not mean it automatically is a SC or GSC degree drop. It is also extremely rare if not impossible to produce a double expanded flat like what is being counted out today unless we were in a giant running triangle.
I may be hunting for 5 waves down in Intermediate degree which has already been delayed, but if and when it shows the wave 1-2 I would need, will start up very close to the top, and then it could be a 5 year decline as well. Even if I am eventually looking for 5 waves down in Intermediate degree, we would come off an expanded flat. Expanded flats are extremely bullish wave counts once they have played out.
Besides the solar cycle #25 will throw a monkey wrench into any depression theory as well.
Monday, November 23, 2015
It sure looks like platinum is going for the big one, but don't underestimate platinum that it can rally at any time, especially when it has been pointing down already.
Eventually I would like to see platinum break the $750 price level, as that would make for a better looking flat. I am counting this as a diagonal "C" wave decline, but I can also push it as another zigzag crash. We would land on a "C" wave alright, but the following rally could then be a "D" wave bull market. Big "B
,C, and D" waves can impersonate a wave 1 so good that if they were all Elivis impersonators, you couldn't tell which one would be the real one. For now Elvis has left the building and some even say he is dead, others think he is living in the jungle! :)
My point is there is no way of telling the difference in a bullish mood, between the rally with these three letters. The general public doesn't have a clue, as anything that goes up is in an instant bull market to them. I treat all moods in large bullish moves the same, but rely on pattern recognition, and sequential counting to tell me the difference. Some even say that the volumes are different, but with futures, volumes aren't reliable at best.
If the subsequent bull market in platinum does not conform to the impulse wave structure, chances would then be extremely high that an impersonator is back on stage.
In the last 24 months the bullish consensus hit a low of about 16% back in Oct 2015. The lower the number the less bulls are present, but 16% is not low enough to allow a full blown bull market to miraculously appear. Now if we hit below 10%, then this would be more ideal.
It looks like we are in a 4th wave and the same wave pattern in Brent did not go to new lows. It will take very little for WTI to come back and break the basic impulse so I have to switch to diagonal wave counting at this time. Still, if there is more downside to come than crude oil will fall much lower than the $40.50 bottom we have at this time.
Eventually I would like to see crude oil break all these boring trend lines and make a strong impulse like showing. Right now it is still a bit early to tell if this is going to be the case. Even though the same pattern in Brent did establish a new bear market record low, the WTI did not follow through at this time.
I am counting this US dollar bullish phase as a basic "C" wave bull market. If it were an impulse it still would not be long enough to fit into an extended wave three, as any strong 4th wave decline would dip into any potential wave
two. If there is anything to the next decline, then support would be extremely hard to figure out. Since I have extended my 5th wave, then a deep correction could happen before we see another bullish phase take over.
This could be anywhere close to the 97 price level, but the pattern of any decline overrides price all the time. Nothing in the first two chapters of the EWP proclaims that a wave count is confirmed by price or ratios. This does not happen until they start into Chapter 3! Even the first EWP book which I call the "little yellow book" has little to no references as to price and ratios any wave count can be confirmed at.
Right now the US dollar is creating another major double top which would make it a zigzag crossing to new record highs. This happens in triangles and ending diagonals, so anything can still happen.
When we get close to mid week the markets can be getting ready for a reversal. Short term I am bearish, but the pattern in any decline has the last word on that!
Sunday, November 22, 2015
I am only joking with the headline, but I know that EWI is after a SC or GSC degree deflationary implosion in the price of gold. Guys like Peter Schiff are going the other way, as they say the price of gold is going to the moon due to all the money printing they have done. Both sources can't be right at the same time.
In the 1970's the arrival of the E-dollar was just getting going as it could no longer be held down by the government of the times, until the fix came off in 1971. In the mid 70s gold corrected with a perfect expanded pattern and as soon as that hit bottom it turned and soared once again.
For over a decade, I already have tried all the GSC, SC, Cycle and now Primary degree wave counts
, and we are still guessing when this gold bear market is going to come to an end and soar to $5000 or even $10,000 promised to us by the experts in the tabloids! :) Back in the 70's it was only $2000, so now they have upped gold future price considerably. All this is understandable as hype feeds more hype until we are in an endless loop. The next thing we know this loop does get broken and there are no bulls left to come in and hype the price of gold.
In the early 80's the price of gold imploded, which no one expected, and rolled up and down in a 19 year bear market. In hindsight, we know it was stock mania that created the gold bear market, but from early 1996 to 2001 gold crashed right down to $255 in a 5 year decline. This was also caused by stock mania as the US dollar and stocks soared. During the gold bull market stocks went from a bearish run
to a bullis h run and right back into the bearish crash of 2008. Gold also crashed along with everything but it ended up only being a correction.
Then in 2011 the gold bull market party was over in gold started down as stocks and the US dollar headed up!
Stock mania reared its ugly head again. The problem is the gold bull market, as a few things stick out that do not fit very well and one of them is how long should the 5th wave be?
Why is wave one so small that not even 5 waves in Minor degree showed itself. If we switch that starting wave 1 to a Primary degree it is even worse, as then we should be looking for a minimum of 5 Intermediate degrees to form. The gold bull market has two strikes against it already and we barely got off the ground. Another strike against the gold bull market is the shear amount of waves that overlapped, producing choppy and wild impulse waves. Not what a true bull market would display, like back in the 1970s.
In July 0f 2015 the bullish consensus only had a reading of 28% bulls, this reading has still far too many bulls present, to give us a super bull market anytime soon. Now if there were only 10% gold bulls in the market, then that would be a different ball game for sure. Back in 2000 this consensus was at 14%, so 14% can produce a very impressive bull market in anything.
Ok, we have wave 1 the shortest which is good, but then gold soared as a potential wave 3, making it the longest wave at this time. Many times wave three and wave 5 are even or both are extended, but a normal length would match the 2001 to 2011 run of about $1660. At a minimum the 5th wave should add on $1660, or be extremely short and barely pass the old high of $1919.
This would make my wave three in Cycle degree reach $2700. All this from 28% market bulls present now? I don't think so! If we are crashing down to a potential "C" wave, then a "D" wave could form
, which can impersonate a wave 1 very easily. We don't even need a "D" wave as a "B" wave would be just as good at impersonating a wave 1. No matter what type of bullish cycle, we may get, I look for those nasty overlapping waves, or corrections that just don't fit right.
The deflationists like Robert Prechter, would send gold crashing well below the $200 price level as this is where their previous 4th wave of one lesser degree is hanging out at! Interestingly enough, this would make oil with a gold/oil ratio of 25:1, hit $8 per barrel. So the experts that are seeing $20 oil right now are also telling us that gold will fall to $500!
Sure, the gold/oil ratio will stretch, but there is a limit as it will always come back to normal before it soars or crashes to another extreme.
Saturday, November 21, 2015
I will no longer be working the Dec 2015 crude oil contract, but have switched to the January 2016 crude oil contract. Every month I switch to will have a different wave count even at the
intraday levels. This wave count allows for a potential "D" wave bull market to form, but it may also end up being a perfect flat. Nothing is perfect, but to be a better flat it would be nice to match the 2008 low of about $34. The triangles do not contain big flats, but are made up more of zigzag type waves.
In a flat I would relabel the top as a triangle "B" wave with an ending diagonal "C" wave, which is not finished at this time. If the 2008 top was a Cycle degree wave 3 then we could definitely be in a much bigger triangle
What is not mentioned or talked about very much is the fact that crude oil has seen some of the most bearish readings I have ever calculated or seen.
In 2011 the USD rally really kicked into high gear and it took crude oil awhile to respond, but when it did it started its famous 2014-2015 crash. In mid 2014 the gold/oil ratio hit 12:1 and then proceeded to crash. This ratio dropped very quickly and I would have missed it if I was not watching it on a weekly basis.
From a major world oil glut in 2009 to a bullish run to $115 and then back down to about $38 and another world oil glut much worse than the 2009 glut. If we go back to 1980 we can see what happened after every world oil glut. I am sure we get the excuse that it's different this time, but the only thing that is different is time, not peoples emotions and reactions.
By August 2015 the gold/oil ratio hit an amazing 30:1 which has beaten the 1999 gold/oil ratio of 25:1. I am sure the mainstream media or the majority of crude oil observers do not see any oil bull market coming, as $20 and $10 crude oil is still being forecast. I am sure it is the GSC degree wave counters that need this $10 price level. How do they know what price level separates a Primary degree bottom from a SC or GSC degree bottom? They make claims that only price can confirm a wave count, but I say that this is not true and impossible.
If crude oil were to
flatline so to speak, then it would go much lower and then not move for many more years to come. Of course, all it would take is a bunch of forecasters saying we are running out of oil and then before you know it oil would be at $300 a barrel, and gold at $3600 per ounce. (12:1 ratio)
Friday, November 20, 2015
The rally that started a few days ago looks like and easy impulse wave. The only problem is with "easy" waves are that they are put there to brainwash into thinking that they are easy. It would be easy if I was just giving you numingly boring wave counts, but hopefully that is not what I am doing.
I am a strict sucker for trying to stay in sequence and many times we don't always see the best wave count until it is right in front of us. That's when they are supposed to be clear. Is this one of the times that the wave count is "clear"? Of course not, but I have to explore it to try and confirm or kill a specific wave count. From my perspective, it's all about the game of elimination. Eliminate what they are not and we may end up with a wave count that has a higher probability of being true.
At this time I can't fit this two day rally into an impulse, so this always gives me a clue that the move is a potential fake bull market move. If this becomes true, but we pop up before gold implodes, then gold could fall much lower than $1050 in the short term.
Sure, I could be wrong, but with the bullish consensus on at a 24 month low of 28%, is not that low to produce a full blown bull market. Now if the bullish consensus was at 12 or 10%, then it would be a different ball game. Short term I am bullish but if a tall spike were to form then I would be switching to a very bearish mood indeed. This is the opposite of what the general public thinks like.
The XAU is a prime example of a big wave being a false bull market as it recently came close to only being 4-5 points away from a complete retracement of its so called bull market. This could all be forecasted by looking at the waves of the XAU from about 2000 to 2007. EWI did exactly that and they ended up being right on.
The pattern in this WTI crude oil chart has changed in the last 4-5 days as it is really bunching up tight, like a rattlesnake does before it strikes. Will it flop and crash to the downside, or is there a surprise move being set up? Brent crude has crossed to new bear market record lows, but this WTI chart has not.
Any sharp spikes we do see are mostly stops getting hit in both directions. It may still take a drop to the bottom of the Megahone like
triangle, but this has all the markings of an ending diagonal at this time, which is a very bullish indicator.
The gold/oil ratio is at an extreme 26.67:1 and this ratio would shrink when oil becomes more expensive when compared to gold. The gold/oil ratio hit 12:1 just before oil started to crash in 2014.
The bullish consensus numbers showed that in the last 24 month period that crude oil only had 9% bulls present. Since August of 2015 was a record low, then this 9% is only 3-4 months old. Last week this has drifted back down to the 20% level, which means there are still many bulls to come back into this oil market. Not until we see a saturation of 80% bulls or more will the crude oil price get top heavy again.
The Nasdaq is a bit behind the DJIA so it has further to go for a potential upside breakout. If this flops, then it will flop as a diagonal decline because the November decline has 7 waves in it, but matches a zigzag very well. There are many gaps in the Nasdaq charts and one of the biggest gaps got closed very nicely, before it turned and headed North one more time.
Anytime there is a 3 wave crash, there is the extreme probability of that "ABC" crash to be completely retraced. Even triangles eventually get retraced. It is only under extreme or rare instances when this may not happen. When they do retrace then they are also confirming that a previous wave was a 3 wave pattern.
Technically speaking the Nasdaq should make one more high, but if it does not, then another diagonal decline would be in progress.
The markets can play around like this for a long time and each time they head down, they could be fooling us. The only way I can tell is when they produce those choppy and overlapping declines.
We would need some pretty good forming impulse waves to give us the base for a longer decline as impulse
waves point in the direction of the bigger trend.
The Nasdaq 100 has pushed to new record highs by a wide margin, it is a slim chance at best if I have a Primary Degree "B" wave top just yet.
With one of my wave counts, I would also need to get a run of 5 waves down, but I would be at a much lower degree level. With the Nasdaq breaking to new highs it is a slim chance that the 2002 decline was a 5 wave impulse. To get a good impulse would be like finding dragons flying overhead and spitting out fire!
Most of the time markets don't care at all about any
world or even US fundamentals. They just keep heading in one direction until they run into a brick wall. In this case, it's a moveable brick wall as the DJIA is charging up with an impulse type looking pattern. It is also coming to a point where my wave counts get trashed, but it may not happen until next week.
The November drop looks like a great zigzag, which should tell me that the DJIA will retrace that entire drop sooner or later. Of course I can fit the entire move into a potential triangle at this time, and we could be heading up into a "B" wave zigzag. This would be my least favorite option, but the probability that the DJIA can push to a newer high is real.
This should happen next week as I think it may run out of steam today.
The US dollar looks like it has been having a bad hair day as many spikes, have been created and then pushed back to the downside. I think I am in an expanded pattern which fits best in "B" waves or 4th wave corrections. Either way, the US dollar should resume its decline as the 98.750 price level should not hold.
At 99.950 the top gap would be close, but then we are pushing it as an impulse.
Thursday, November 19, 2015
As a disclaimer, I am not an investment advisor nor do I do do any trade setups. If I were doing trade setups, readers couldn't pay me enough to make it worth my while. I would have to supply a stop for each trade and we know stops always get hit. In the end you would never be in a trade long enough because you would constantly get stopped out. Anybody with a good work habit can get you trade setups, as you don't need any Elliott Wave Principle to do that.
Besides the EWP is the worst for long term trading as they never practice to accumulate stocks at major bottoms. EWP trading ignores the geometric mathematics of accumulating at major bottoms as well, so when they trade with the EWP they leave massive amounts of profit on the table.
If you want a big example, just look at the 2008-2009 bottom, as EWI closed off shorts, but they never warned about the bull market to come so no one had time to accumulate anything. Especially when it comes to ETF accumulation. At best you would have had a month to accumulate SPY stocks
. From February to March 2009, by April May you would be well in t he green , while others were scrambling to get out of a losing trade.
There were many signs of a major bottom in 2009 and the EWP ignored every one of them.
It is extremely hard to accumulate futures contracts on the way down as you would get wiped out long before you made any money. Usually people are getting ready to dump an asset when it is low as fear starts to work on them. The people that may consider dumping the CAD never look at a chart because they think reading charts is black magic, or that
charts are a lagging indicator of what is going to happen.
We have seen a great decline in the CAD and yes, it can go much lower, but one more new low would also be the setup for another rally as another small run of 5 would be ending.
At worst case the CAD could retrace to 2000 lows, but then there still would be no commodity bull market on the horizon. Our CAD is in the US dollar basket with about a 9.1% weighting which is pretty small compared to others. If gold and oil are going to rally, then the CAD should rally as well as, "it's not going to be different this time".
If they think the CAD is going to miraculously separate out of the US dollar basket, then they are already smoking t
he stuff Canada is known to grow well.
Trend lines can give us a very false picture as the CAD is between extremes at this time. Only time can give us more information.
As much as it is nice to see gold rally it has started with a bad attitude in its wave formation. The waves overlapped right out of the gate and I had trouble creating clean impulse wave counts. Yes gold can travel much further, but ignoring the early signs and trying to force a super bull market, in the end will not work.
There is the potential for an expanded flat to be in progress, so if that is the case, then one more low is still to come
for gold and gold stocks. Gold stocks in true fashion rallied along with gold, but the only reason gold rallied is because the US dollar has started to decline. If and when the US dollar stops dead in its decline , then gold and gold stocks will also reverse.
I am sure that my top trend line will not hold as trend lines are made to be broken, beside we are dealing with a potential diagonal wave structure which do not play by the rules of staying in a set of subjective trend lines.
There is the probability that this Mini SP500 is ready for a correction or the resumption of a bigger move down. At this time we still can't tell
as all this also looks like a great impulse wave, in which we are at just another wave 1. We would still have to get waves 2-3-4-5 to complete this bullish set.
By the time all that did happen then the stock markets would be soaring and breaking new record highs on a constant basis.
I show this wave count as a possible inverted wave 2
, so it would have to crash to help confirm the next bearish move. 2050 would be the first price level the SP500 would have to break, with the ultimate test coming at the 2020 price level. Of course the SP500 would not stop there as it would have to travel much further south. In other words, the decline would be just getting started.
It may sound counterproductive to talk about a hypothetical decline, but it is one of the ways to help confirm a wave count. I don't think I am going to change my habits in describing a potential move in either direction, as even if they failed this time the description would be good for another time.
The only thing that really changes is the degree. It would not surprise me to see the pattern change as we get to the end of the week as there is too much uncertainty in the world right now. Constant bombings and threatening attacks in New York, Canada and the UK will help to kill the stock bull over time.
In my teen years the world was letting off Atomic and Hydrogen bombs on a constant basis, yet the bull market survived through all that as well.
In 1920 terrorists were also blowing up shit near Wall Street.
Wednesday, November 18, 2015
For now I have switched back to my old wave count, but I will keep that impulse wave count alive as well. If anything the impulse would be good practice. Yes, the US dollar declined with an Expanded "ABC"
, and then from about the 12th of November the rally was back on. This rally the impulse pattern started to fall apart, which is common in a 5th wave.
At the same time it could be an expanded "B" wave top from which we could suffer a good crash. I would rather be wrong than to ignore any potential expanded flat top as when these crashes finish, then watch out as the US dollar bull market could come back with a vengeance.
The US dollar may not even fall back down as deep as my bottom Megaphone line, but it should form some type of impulse on the way down. A small gap has already formed on the way down so this increases the odds that the USD has a rally left in it.
When we look at this gold stock chart the most outstanding features are the patterns of the waves from the late 2000 bottom to the 2011 top. After the 2011 peak the waves even started to smooth out and become more impulse looking. If we go back and start from late 2000, we end up with 7 years to the 2007 peak. Seven years are not, good luck years in stocks. The only good luck was that solar cycle #24 started in 2008 and made
it first major peak in 2011.
The short crash into the 2008 bottom, is now a bottom to bottom Fibonacci 8 years, but also from a peak to another 13 year bottom from 1995-96. 1996 was also a solar cycle bottom, but in this case gold stocks were crushed as the solar cycle bull market returned and stock mania kicked into high gear.
From the late 2008 bottom and our present 2015 bottom, it has now been a 7 year cycle as well. It still contained a 2 year rally to the 2011 peak, but now it would make a perfect 5 year Fibonacci bear market low. This recent 2015 low is only about 4-5 points away from a complete 100% retracement of the so called gold stock bull market. We were all promised that gold and gold stocks were going to the moon by the fundamental forecasters, yet none of it happened but the markets went the exact opposite way.
Don't think of this as being strange or uncommon, but this is what markets do, as they will never let the majority win. If the majority are all gung ho and brainwashed that together they think they can all ride a gold stock bull market to the moon. Then the market will buck them off and crush their big egos, well it will not crush their egos as it may send them hiding for a few years but then they do come back with a vengeance. All the fundamental analysis in the world will be worthless if we are so biased that they would not listen to anyone to sell high. Contrarians trying to sell gold stocks when they were at their peaks were called idiots or dummies. I am sure not a single Austrian economist was screaming to sell gold stocks in 2011 as they were all beating the bullish drum as well.
That was a little less than 5 years ago and now the XAU is so low yet everybody still hates gold stocks. If they love gold stocks then gold stocks would not be pointing down.
The XAU may still fall below that 41 price level, and there is no way of knowing at this time what type of bullish pattern will develop. I may also have to drop down my degree by one degree as I am showing parts of a Cycle degree triangle.
Besides the HUI is not confirming any of this just yet, but the HUI would have to fall dramatically lower to catch up to the XAU.