Tuesday, September 23, 2014

Grand Supercycle Degree Wave Count Terminator! The Wave One-Two, One-Two, and One-Two Reboot!

Virtually every wave count that any Elliott Wave analysts can come up with, can be destroyed very quickly. Destroying wave counts is the number one function that wave analysts should be doing, as only then can we find a better fitting wave count.  99.99% of the time we can always find a better fitting wave count by going back in chart history. Dragging a wave count around for 20 or 30 years and not having the markets confirm it, is not a wave count that gives out any degree of confidence.

Moving wave positions around after the 2000 peak is a cosmetic way of wave counting, and this process never works.  I found myself in the same trap many times, and the only way to fix that is to constantly review the largest degree we "think" we are working in.  We will never find the largest degree correctly if we do not "print" out a 200-300 year chart of the DOW and analyze all the wave  one-two counts.

  Cosmetic wave counting is what the majority of wave counters do, trying to keep us believing in this mythical but very popular wave count.

With Cosmetic wave counting, we never have to go back and review the largest degree, but only adjust the waves after the 2000 peak.  This way the majority can use the GSC degree designation for  many, decades and even for 100 or more years, and always be right!   GSC degree wave counters already have a 60 year wave one-two, so why should GSC degree wave 4 not last just as long or a bit longer?

All it takes is just "one" degree being out of sequence anywhere in the past, and any wave count can be destroyed with just one new location of a wave one-two set. Never mind 3 or 4 complete sets of wave one-two positions.  I have posted those wave 1-2 positions many times already, but recently I have adjusted my wave count up by one degree.

Many of these GSC degree wave counters say we are approaching a "B" wave top in Cycle degree. My wave counting tells me that there is no chance that a "B" wave in Cycle degree will fit in any peak in 2014.

In stocks wave 3 should always be the longest wave, and any extensions usually occur  in the last final degree of any 5th wave.  The idealized script in GSC degree is the most important thing we can draw out as that is where we extend wave 3 with.  This is done with a one-two wave counting method, and I mentioned 4 sets of these combinations.  Why 4 sets?  I use 4 sets because all my wave counts were  exactly 4 degrees lower than any GSC degree wave count out today. (2000 peak)

I also would need to find 4 sets of one-two waves in the past, and all we need to do is go back to the 1929 stock market peak.  Going back to DOW 1000 is like going back to the 1970's time period in stock prices, which is still far away from any depression era stock prices.

We don't have to argue about the last 600 point difference just now, but when we look at 1970's prices for all other indices, then any 5 wave decline in Primary degree will never fit.
Make no mistake about it, as the GSC degree wave counters "must" get 5 waves down in Primary degree, otherwise they still have not confirmed a single part of any GSC degree wave counts anywhere!

This is not Elliott Wave rocket science folks, but a basic understanding of a 3-3-5 "ABC" pattern. The only thing that changes is the degree.

I had to make a change to my wave count which brings my Cycle degree wave 3 back to the 2007 peak as the 1980 pattern is my wave one-two in Primary degree.  My wave 1-2 in Cycle degree was a very short wave which instantly should also tell us that wave three should be the extended wave.  With this wave count I only need three sets of One-Two waves with each set being sequentially lower every time.  Extending the waves down to Minor degree would still give us 4 complete sets of 1-2 waves subdividing all waves to the 2007 peak. 

Since all my wave counts are based on a one-two base, the markets cannot crash down to these wave two bottoms.  This gives any Cycle degree wave 4 bottom a completely different price level, which at the worst case scenario would fall below the 2009 price around the DJIA 5500. In the 1900's the DJIA stop well short of crashing that deep, so even the DJIA can produce a running flat type pattern. 

I could no longer keep the diagonal 5th wave alive at this time, as it has also become extremely hard to count out.   It takes time to get the feel of a changed wave count compounded by the fact we have three major peaks to jockey wave counts with.  It is at the extremes like we are now, when it is time to review all the wave positions as this market seems to be a market of expanded patterns.  They are not the only expanded flats as there are many smaller ones as well. Instead of a Cycle degree "B" wave top we could be at a Minor degree "B" wave top, with both requiring 5 waves down. The difference is 3 degree levels. 

DJIA 1996-2014 Elliott Wave count Review!

The Elliott Wave Principle that I use is based on the idealized script of a complete set of 5 waves in Cycle degree.  The most important feature of this script or blueprint is that wave three must be the extended wave and that this extended wave "must" be subdivided down by a minimum of three degree levels.  This means that this extended wave must show Minor degree subdivisions before any wave count can be confirmed.  I wasted many years wave counting the markets without a clear understanding how to draw out an extended wave three. Not until I started to focus on the wave three being the extended wave, did EWP make sense.  The first waves and 5th waves I leave as single subdivisions.  The Elliott Wave Principle is based on one giant impulse wave and there is a wave zero  somewhere in our past. Any start to any wave can be called wave zero, but I have dedicated my time to the complete set of 5 waves in Cycle degree.  Finding wave zero in Cycle degree takes us back to 1932, in the real world. 

If we do not have a clear picture in our mind of an extended wave three structure then, how do we know what we are supposed to be looking for?  Once this impulse wave became easier to draw out on paper, I realized that the real world wave counts were all extending their 5th waves, ignoring all wave three's as being the longest wave. 

EWP as published in the little blue book is all about promoting GSC degree as it has little to do with figuring out what other degrees we could be in.  It is not the real world wave counts that are important but it is the idealized 5 wave script that is everything.  I am sure we would have difficulty in building a house if we had no blueprints to work from, Elliott Wave principle is no different. The Cycle degree   impulse wave is my blueprint and without it we will never find SC or GSC degree wave counts. 

In the real world my Cycle degree wave zero started in 1932 .  Cycle degree wave 1 was very short, which instantly forces us into looking for a wave three being the longest wave which may have completed in 2007.  I have two boxes showing and they represent solar cycle stock market price bottoms.  After each solar cycle bottom the stock markets roared, with the 2007 peak being the half time bullish phase.  The 2007 to march 2009 decline is not 5 waves, and for several reasons, one reason is that the decline is far to steep, and it any trend lines of an impulse never fit.  The only way the markets could have broken the 2007 peak was because the 2007 meltdown was a 3 wave corrective pattern.  That little wave structure was also an ending diagonal which happen at the ends of "C" waves.  Even now the "super"wave counters are calling the 2007-2009 decline a 5 wave impulse, part of a single expanded flat.  

In 2010 -2011 the markets  corrected in what I would count as an expand pattern, but fitting it into the bigger pattern has been a head scratcher.  Even if I have several different patterns in the impending decline most of them would make the same type of moves. 

The difference in the above wave count would require a 3 wave decline, or a straight one would also work.  In the end I would require 5 waves up in Minor degree.  This would make the entire pattern a 3-3-5 or simply put an expanded flat "B" wave bull market. 

We know stock buying kicked in with the 2011 bottom, so this would still be a natural retracement level in the future.  The DJIA also wobbled around that price level going all the way back to 2001. 

For the markets to crash much further  the DJIA would run into some major support levels first.  How the DJIA reacts at these support levels will also be important to watch, but I would say insider buying across major indices would be the biggest and best clue that a powerful counter rally is going to happen. 

All we would need is for Warren Buffet to call stocks cheap and the bearish game would be over.  Investor ignored Warren Buffet's calls in  2008 and they are ignoring his call now saying stocks are expensive.  I am sure stock investors will ignore Buffet again at the next bottom. 

September, 23, 2014 Elliott Wave US Dollar Daily Chart Update!

Here we are again as the US dollar pushed past many old highs, especially the choppy decline we had  since the July 2013 peak.  Now what?  I am showing you another potential wave three peak, but that may not happen where "ABC" patterns seem to dominate. 

Since the May 2014 bottom, the entire move can fit into an "ABC" zigzag pattern, as part of a larger triangle.  If this wild move was corrective,  then the USD should correct the entire move and some. If not then we are doomed for a 4th wave correction which should pierce my bullish trend line. Right now the USD is starting on a decent 5 wave decline which is promising that the US dollar has downward legs.   Commercial traders are net short by a good margin so a sustained super rally is not in the cards at this time. 

The stocks in the general big 4 indices that I cover, have all been pointing up matching the US dollar, while gold has taken a severe beating.  This three way combination has happened many times before in stock market history, and started again in 2011.  It's called "stock mania" as in past history major stock bubbles have developed in the same type of conditions.  The Roaring 1920's was one big stock mania,  and another very long one started in 1980, with another leg from 1996 to about 2000.  In short stock mania took a 10 year holiday before it returned.

The super wave counting bears need the USD to keep going as they say a massive deflationary depression is coming, but those forecasts are only as good as the wave counts are.  Since 2000 not a single "super" (SC or GSC) degree pattern has been confirmed by anyone. 

If we are lucky we may be in a Cycle degree 4th wave with the US dollar, but there is a zero chance we are in SC or GSC degree US dollar. 

Monday, September 22, 2014

Palladium Monthly Chart Elliott Wave Count Review.

It has been some time since I looked at palladium and if we start back at the 1980 peak most all the waves have overlapped at critical points. This is not good as that would be more like a diagonal wave, or a big monster triangle.  The crash in 1980 was a zigzag which eventually completely retraced,  but it took about 19 years to do. 

Palladium did break higher above the correction and now has started to turn down, how far this will go depends on if this 4th wave correction has completed. If palladium crashes to the point of extreme pessimism and does not make a new record high then the clues are already in place that is telling us that in the future palladium prices will make a new record high.  I look at two patterns for this with the first pattern developing in the crash from 2000 into 2003. This looks like a zigzag, followed by another expanded flat into the 2009 bottom. It is the first zigzag that has not been fully retraced, which all "ABC" corrections must eventually do. 

Commercials are net short Palladium by a ratio of 7.85:1 so this also helps to confirm that a bullish phase may be running on empty. 

Mini SP500 Intraday Bearish Action Review!

The general public never sees a bull market coming to and end until after the 20% decline is already well on it's way.  With any EWP the end of a bullish phase, ends with stocks pointing up, not after it has been declining for many months.  They called the end of the bull market in gold many months after the real top was in. This is far to much of a lag time, as it never gives enough time to mentally prepare for a reversal.  In 2009 the end of a major decline was being setup in March and earlier, yet wave counters were ill prepared to mentally make the switch to a bullish phase.  This is not a flaw of the EWP but a flaw by all wave counters ignoring insider buying or not recognizing an extremely oversold stock market.  No matter how many contrarians were screaming to buy at that time, investors were fleeing as fast as they could, and no words of confidence came from any Elliott Wave counters. 

What we can be assured of is that this scenario will repeat itself over and over as the majority alway miss the major turnings.  

Now we have the situation potentially reversed, where the majority are bullish as they look for "value".  The decline so far has already produced a small gap, and the VIX has joined in with a big new gap open below it's present price.  Let's say the trend is much bigger, and the small gap above does not get filled.  If the SP500 dropped another several hundred points, or more, then this open gap will be a target that will get filled.  If the SP500 were to get chopped by 50% with this gap left open then I know a call of SP500 2019 would work.  My Scalene triangle  (megaphone) is a potential 4th wave bottom, but in reality I want that support range to be exceeded by a large margin as we may be heading for a "D" wave decline.  (4th wave equivalent) 

One good thing about this present top is that it is fairly clear, in other words no double or triple tops to content with.  Gold, down, stocks up is what has been happening since the 2011 crash bottom, and it represents stock mania.  Some analysts have noticed this but they may call it a divergence. 

It took a while to figure out what happen, but once I figured it out the year that stock mania returned, it became easier to see and track. To track it we need three asset classes, gold/USD/DJIA or any of the big 4 indices. 

Nasdaq Intraday Update.

On Sept the 19th the Mini Nasdaq reached a new post 2000 peak of 4118. This still has not cleared or even matched the 2000 peak of 4816.  The other three indices all made post 2000 highs, but the Nasdaq has never been able to do it.  In the short term the rapid drop has opened up a gap in the chart above, with others also creating gaps on this opening decline.  This is indicating that the markets can backfire and reverse this trend quickly.   Even the VIX  has opened up another gigantic gap adding to a potential short squeeze in play.  We need consistant lower highs to help confirm a big correction or the start of a bigger bearish phase, and so far the markets have refused to play ball. 

There are many open gaps below present price levels, so the bearish risk is always present until those gaps all get filled.

Even with all the fantastic hype surrounding Apple's record iPhone 6 sales, Apple's stock  has refused to jump higher. This is a very bearish signal. 

Comment: Gold crashes and is now tarnished for good - MarketWatch


When I read this post, I could not believe how they are using the same words as they did back in 1999. 
No mainstream experts were screaming  to buy gold in1999 as they were warning to stay clear of gold investments.  Gold was an ugly investment at that time, it was tarnished so much that everybody was shorting gold, in other words there was no hope for gold to go anywhere but down.  Of course shorting gold at $255 ended being one of the biggest gold bear traps in history. Smart seasoned contrarians knew this but Elliott Wave Counters could not figure this out in 1999!  EWI saw no gold bull market coming back in 1999!  When gold hit $1000 EWI still had bearish wave counts out. 

The only difference between then and now is the intensity of the news.  It does not matter what the rest of the news says about gold as the key word or indicator is, "tarnished"!  If we get this single word repeated or regurgitated by other gold experts, then we are getting closer to a major bottom. 

Experts recommending to sell gold on any rally also displays the bearish sentiment on gold. 

The intensity of the gold bearish news is not that great just yet, but we are also one degree smaller than at the bottom of 1999-2000.  There is the issue that we can be at the bottom of a wave three, but a small gap has opened up last week already.  Making forecasts in consensus with the trend, or being in sympathy with a well established trend, will always back fire. The herd always gets into a trap, when they see the trend is obvious.  The trend is only your friend for so long, and the longer it goes, the bigger the sword will be to stab the trend lovers in the back. 

The US dollar and the general stock market has been pointing up, at the same time that gold has been pointing down. This has happened many times before in market history, and is associated with stock mania symptoms.  This all started in 2011 and may reverse once stocks get serious with their down trend. 

Sunday, September 21, 2014

Heating Oil Cycle Degree Review, Is It Going to be a Cold Winter?

Some are forecasting a colder winter more than normal this year, so if this is the case would heating oil also rise?  It sure looks like it can. I also hear some reports that NG inventories are unusually low for this time of year, which could also give a big boast in natural gas prices this winter.   

I have to warn readers that the long spike back in early 2000 is an anomaly, which does not show up when I switch home heating oil to line type. I am not breaking any rules even though it may look like it.  This gives us a potential wave three in Intermediate degree for the 2008 peak. Then the violent crash down into 2008, followed by a much better bullish phase, which must be 5 waves in Minor degree.  At present we could be in a fourth wave decline which may still have a bit to go.

My biggest wave count is still wave three in Cycle degree, which should be confirmed by a minimum of three degrees lower in the extended wave. In this case wave three is the extended wave, with the 5th wave matching wave 1 in Intermediate degree.   Since the bottom in late 2009 we could also see a potential 5th wave extend, which would set new all time high records for home heating oil.  

SIL Silver Stock Review.

SIL is a newer ETF which does not have all that much for history to work with. It is obvious that SIL has "not" made a new bear market low, which is out of sync with the silver metal itself.  This is normal as stocks do not have to bottom just like silver did. The reverse happens at major peaks, as silver stocks start to perform poorly and do not keep up with the metal.  The mainstream media pushes the metals so we are constantly brainwashed with bearish opinions while SIL is still in a bullish phase.   Since the top in 2011, the pattern has been anything but a neat 5 wave decline, which is very bullish in the longer term.  When there are no neat clean impulse waves heading down then, this bear market is a corrective pattern, and with that in mind, SIL should eventually break past the 2011 highs. 

Since the early 2014 bottom we had a pretty clean 5 waves up, which is bullish, and then a decline that had a count of 7 waves in it, which is a correction. This correction has not been completely retraced, which is also bullish. Then another strong but short counter rally, with correction looking pattern declining into Friday close.   Since early 2014 silver stocks can also fit into a 1-2-12 wave count which is very bullish.  There are more things that are bullish with SIL than there are bearish signals even though the fundamentalists are emphasizing the bearish picture. 

I have no reports of any insiders going gang busters in selling silver related assets. Even Steven Jon Kaplan has not made any bearish overtones , as the contrarians would be buying on any strong dip.

I always like to make the point that silver stocks have pointed down, while the US dollar and stocks are all pointing up. This is classic stock mania behaviour, and has happened many times before in market history.  Stock mania started with the 2011 peak, and we could be facing a reversal where silver stocks head up while the stock market heads down.  Of course when the stock market hits a major bottom then stock mania could be getting ready for another attack.   Again this has happened many times before, and one real notable time was the 1996-2000 metals crash.    Solar cycle #23 bottomed in 1996, so silver repealed down as stocks repealed up from this solar cycle bottom. 

In 1980 we also had the stock mania reversal, as investors hated stocks but where in love with gold stocks. 

Since 1932, every solar cycle bottom turned into a stock bull market as solar cycle activity returned. 
I view the solar cycles as a powerful indicator that most people ignore, but they have extreme forecasting properties in them.   We could face a half time solar cycle silver stock rally, before we are faced with another major decline. 

Not until we hear of consistent insider selling in silver and gold stocks, should we panic out of silver stocks.  It would be very silly to sell low at this time, but experts are saying exactly that as they see no inflation!  
In the early 1900's silver did not top out until early 1919 before it crashed into another 13 year bear market. 

Friday, September 19, 2014

Silver Weekly Chart Crash Review.

Silver has crashed through support, and I have been suspicious that it would do that ever since the June 2013 bottom. It was the fast upside rally that was not a clean impulse by any standard of wave counting. Since that peak silver has traveled down in what looks like a triangle or a diagonal 5th wave.   Once we start a count from the August 2013 peak, we now can count  a 7 wave decline. 

Any 7 wave decline is the same as any  corrective phase, which means that eventually the August 2013 peak will be matched or exceeded.  If silver comes to a halt soon then it still can be in an expanded pattern, forcing a sharp counter rally.  But that would also have an upside limit as silver would resume another leg down.  Even when silver was at the June 2013 bottom, there really was no  support.  Silver would find real support closer to the $13 and $10 price level. 

All those bullish silver expert forecasts in early 2011 of $200, have proven false, as silver went the exact opposite direction.  Silver as a store of value has not worked for over to 3 years, and it started this she everybody was buying silver as a store of value.  Another example how silver will never keep acting the same way once the majority are using it for that exact reason.  
Now we hear stories how gold and silver have lost their lustre, which are the same stories they used in late 1999. 

Mini SP500 Intraday Chart Update. Stocks Pointing Up, USD Pointing Up, and Gold Pointing Down!

Many investors may never understand the stock mania we are in, but it has been going on since the 2011 crash.  It's characteristics are very plain, but the majority never pick up on this when it starts to happen.  The divergence started in 2011, when gold peaked and stocks and the US dollar bottomed.   This has happen many times in financial history, but has gone into hibernation from about 2000 to 2011. 

The best way to look at it is that stocks are expensive and pointing up, while gold is cheaper and pointing down.  For the smart and seasoned contrarians it's more obvious but very few are picking up on this. It took me a little while to clue in when it started, but it was easy to track back to what year it started. 

 Sooner or later we are going to be faced with the situation where this could reverse for a short period of time, when the US dollar and stocks crash and gold soars.  In very small intraday chart movements the stock mania becomes a bit blurred, but most of the time when it arrives it surprises all the gold stock investors.  Since 2011 gold stocks have been crushed in price yet everybody is bearish on gold. 

Every new high the markets make can be the last  high, and these zones are always full of buy orders, as investors have been brainwashed to play the upside breakouts.  You can also count on a huge supply of sell orders all the way down, and once triggered can produce a domino effect.  This happens in futures and is one of the main reasons why commodities can drop like a rock from major peaks.  All the short term support will have to be retraced if the next correction is going to be bigger than the little stuff we have had.  The August crash was a good start as the markets will warn you with a 4th wave dip.  Looking back in history the markets have given early warnings many times. 

About the only index still lagging is the Russell 2000 which makes it a leading indicator right now.  We are constantly being brainwashed by the mass media reporting the record highs in stocks but they ignore the Russell 2000.  It's the old smoke and mirror tricks still being use. 

If a short term panic developed, then this could end in another correction, and stocks would roar again.  The swings could also get larger and travel faster as the SP500 Titanic starts a rocking.  Passengers are playing musical chairs "before" the Titanic  has hit the iceberg. 

Russian Billionaires Stung by Ukraine Bristle Over Arrest - Bloomberg

Thursday, September 18, 2014

Gold Crash Daily Chart Update, How's That Store Of Value Thing Working For Us Now?

We have lots of gold hype in either direction, and when the gold price points down, the bears dominate. As soon as everybody recognizes that the trend is down, the gold will reverse at a major turn or fool us and only correct before resuming it's real trend.  Gold has tossed every support level to the side, and now is faced with another potential turning.  My wave count reflects a potential "E" wave going down, but my triangle is not dead as well.  If the present bottom is already at a "B" wave bottom then a "C" wave bullish phase would have to happen, with gold charging back up to the $1400 price level. 

Gold came within  $37 dollars in striking a new bear market low, and many times when it gets this close it usually hits the lower price again. Many have forecasts for gold to fall to $1050, and it may do that, but what good are these forecasts , if we don't know where gold is supposed to go after that price target gets hit?   Which will come first, gold $1050 or Gold $2000? 

Some say this is the longest bear market in gold's history, but I say this is totally false, from an Elliott Wave pattern,as gold had a 19 year bear market.  Even silver when it crashed took 13 years to hit a major bottom in 1993.
Silver also took 13 years to decline into 1932, so a 3 year bear market in gold is nothing. 
 Comparing many other 4th wave bear markets in gold, as a percentage of the decline, we are not even close to seeing a normal correction. 

Our chances that this bear market will be relatively short is the fact that we are at a potential small degree level, from the 2011 peak.  I can change this wave count into a diagonal wave count pretty easily which helps to define a potential expanded flat top for 2011 as well.  

When the public displays it's greatest fears that a brand new down leg is starting then it will make liars out of these experts and reverse. The lower that gold falls the higher the counter rally in gold will be. 

Any market that does "not" display a clear set of declining 5 wave patterns is prone to 100% or more retracement.  Many times peaks happen 5 or 8 years apart, as well as bottoms, so 2016 would give us another 5 year peak to peak move. 

Crude Oil Intraday Chart Update.

Since crude oil dipped  in early Sept, it dipped with a three wave starting pattern. This could be the 5th wave with an ending diagonal in play.  At the same time crude oil could blast up to $95 or so which would fit an expanded 4th wave much better.  With such small degree wave structures the difference in what follows will be great. A 4th wave peak would follow by 5 waves in another leg down. The ending diagonal 5th wave, means exactly that, that the end for this major decline is near. 

Of course crude oil came very close to hitting the Fibonacci $89 price level, so it may have to go back and finish the job and go below $89.  

What does not fit well with me is that the DJIA is massively over bought which contains two key oil companies.  Can Exxon or Chevron crash independently, and crude oil itself  turn into a strong bullish phase?  Exxon has huge problems in Russia, as Putin seems to want to steal all the major oil companies for him and his friends. 

Many stocks in the DOW 30 have worked independently as only about 10 stocks have carried the entire DJIA. 

When I look at crude oil, I always try and do a quick oil/gold ratio check.  Today that ratio has touched 13.37 barrels of oil for the cost of one ounce of gold.  Oil got a bit more expensive, but still very close to normal at a 14:1 ratio. 

Mini DJIA Intraday Chart Update, Who Is The Greatest Fool Buying At Record Highs?

My joke for a DJIA forecast of 17,200 has come true, which doesn't mean much as just about any forecast a few points above any level has a good chance of getting hit.  Where were all these bullish experts when the DJIA was crushed at 6500?  They were too busy telling you it was still going  to 1000.  Of course that never happened and investors were not prepared for the ensuing bull market.  

Investors are never prepared for any turning in the markets even though they know that it is very overbought.  They figure they will have lots of time to get out.  Good Luck with that, as it has never worked before and it will not work this time as well.  It's mathematically impossible for the majority to take profits, when you are trying to sell to the majority.  

Who are the smart ones that are brave enough to buy on the dips? Only the day traders are nimble enough to jump in and out.  Insiders or the contrarians have a much bigger time horizon. They will not touch anything that is at an extreme and pointing straight up.   Trend chasers buy when stocks are pointing up. 

The DJIA has again broken all time record highs and I have lost track in how many times new record highs have been broken. I time I am sure we are going to see many records broken on the way down. 
 I have a small 5th wave blasting up to a new highs, and after every 5 waves that are completed a correction must follow.  In this case 5 waves in Micro degree could be finishing.  We can see that the markets are starting to swing wildly in both directions, and that is the same as running back and forth on the decks of the Titanic.   Janet Yellen opens her yap and the markets rock.  I am sure the markets will retrace all the good news  below the 17,000 price level. At 16,950  the markets have ignored all the good news that Yellen has produced. What they don't realize is that Janet Yellen is speaking with a forked tongue, like every other fed before her.   

Next Tuesday will be the new moon, which can be very bearish for stocks.  The DJIA has lasted for two full moon cycles dating back to August the 8th, matching  a low in stocks as well.  Stocks have to crash through some serious support levels to show us that it means business, and that a bigger correction is due.  This little stuff just does not cut it.  We should get 5 wave sequences that give us a clue that the markets will go into a sustained downward trend.  This has not happened. 

Who is that smart guy that has bought at record highs and thinks he has an army of investors still to come in?  Chances are good the guy that is doing the asking, is already the greatest fool. 

Wednesday, September 17, 2014

Solar Cycle #24 Review And Record Early Snow Fall.

The man made global warming scare keeps on going, even though real world records suggest otherwise. CO2 Records have been exceeded again well over 400 PPM.  When we track all the computer generated scenarios about how fast the earth will heat up, we see that "none" of these forecasts have come true but in fact have gone the other way.

Another report I read is that CO2 looses it's effectiveness as a temperature forcing greenhouse gas, the higher that CO2 levels go.  Even without that knowledge, there is no scientific correlation with the amount of CO2 in our atmosphere to a rise in global average air temperatures.

The forcing is so slim that it is next to impossible to measure clearly.  In many years of looking for this correlation, I have never seen a clear scientific chart that shows this correlation. Five different measurements all show that 1998 seems to be the hottest years, and since then global average temperatures have levelled off and declined.  CO2 never blinked and just keeps right on going producing the yearly sawtooth pattern.

The global warming scientists get funding from the government, and if government funding dried up, these scientists would not have a job and climate change would not be an issue.
 Rapid City Sees Earliest Snowfall in 126 Years : News : Headlines & Global News
Earliest snowfall in 126 years, will get twisted around, and blamed on global warming, just like they did with record cold for the 2013 winter season.

      New all-time satellite-era record for Antarctic sea ice extent | Watts Up With That?
All the stories about the ice disappearing in the Antarctica, has also be proven to be false with record ice coverage so far this year. It is the end of the winter there now, so we should hear stories again how the Antarctic ice is melting, due to man made global warming. In reality it is just the start of summer, where ice is supposed to melt.

The world is not happy about global warming climate change, and crazy schemes have come up, in trying to cool earth.  Be careful what you wish for, as we can plunge into a mini Ice Age when we least expect it.   Global cooling has more of a devastating effect on humans than any global warming we will run into, as even diseases increase with global cooling.

Each warming period corresponded well with peaks in civilizations , and global cooling has proven to decimate human populations far worse than any global warming will ever do.

Here is a picture of the ozone hole in the Antarctic, which isn't a hole but just less ozone.
Ever wonder why it is sitting over the Antarctic and not in all other areas? Maybe because there is no sunlight reaching this part of the world. Storms from the sun creates the ozone, and without it everybody would get huge doses of radiation. This hole has not increased in size dramatically but also, expands and contracts on a seasonal basis. 

New satellites are doing a much better job of tracking the earths magnetic field, as it works like a force field for earth. Without it our greenhouse would not last very long, as all atmosphere would be stripped from earth by the solar winds. 

Just last weekend a double solar CME hit earth and caused some GPS disruptions, as some flights over the north pole were also rerouted. 

The amount of solar flares have not gone above 10 at anyone time and they usually decline as we head to the new moon cycle, and I have seen them drop to zero between moon cycles. 

The little dots represent each months reporting, and the best that I can see is that the solar cycle #24 peaked in early 2014.  The bull market in stocks started with the bull market in sunspot activity. This is not a one time coincidental correlation but bull markets take off after all major solar cycle bottoms have completed.  Even during solar cycle declines bullish phases can start, but we generally will get a major crash just before major solar cycle bottoms. Each solar cycle bottom will also correlate with an index stock price level.   The solar cycle is also to blame for all Elliott Wave count failures, as a bearish wave count at the bottom of a solar cycle will never work.  By the time we reach 2021 wave counters should have a very bullish wave count, as it will surely fail if we ignore the sun and maintain a bearish outlook. 

Here is an updated chart which shows little change, except for a small pattern going up.  Even though  sun spot activity can increase dramatically, if solar cycle #24  has peaked,  we should not see any new extreme highs.  From a major top, and to two major bottoms, makes up the 20 year cycle, and even corresponds well with a single generational season which last about 17-24 years. At this time I believe that we are in the second part of the Winter season with a little less than a decade to go.   

US Dollar Intraday Chart Review.

I have several patterns I can still work with this US dollar correction. One is that the USD rallies with an ending diagonal, or another complete set of a 5 wave move.   Another move could send the USD dropping like a rock, right back down to the 79 price level, ignoring all support, or correcting just briefly. 

That type of move could end at a potential "E" wave bottom, before the USD cranks up again. 
Either way that Sept 9 peak will get retraced before this bullish phase is completed.  I still have one open gap below, with another further on down already closed. Even old closed gaps have power, as they still can provide turning points. 

For gold to go, the USD has to start a larger bearish trend, which would be at complete odds to the GSC and SC degree deflationists.   The GSC degree wave counters need the US dollar to keep going and going and going, otherwise they will be proven wrong again.  Longer term I can see the US dollar still drop below 2011 price levels, and even make another huge double bottom, as a Primary degree "B" wave bottom. 

Gold Intraday Price Action Review.

Gold has been in a bearish mood for well over 6 months, with another recent bottom on Sept the 14th.
The question is, will that $1225 price level hold.  Since the March 17 gold peak at about $1391, gold has created a very choppy and sideways pattern that has an eire look and feel of a triangle at this time.   We can attach any fundamental reason you like, why gold is so bearish, and we can come up with any reason why gold would want to rally.  The gold experts are on the side of the bears as they seemed to be seeing all sorts of bearish technicals.   The more high profile gold bears come out,  the higher the odds are that they are in a bear trap, and gold will be ready to rally.   

If gold still has a smaller bearish leg left, then gold will definitely hit some resistance level and then turn south again. The first resistance level would be $1255, with the next resistance level being at $1280, as that would be my max for a 4th wave rally. 

If the gold rally starts getting very lethargic, or suddenly makes a very sharp break to the upside, then the bearish mood could take over again. 

The best information that will be very bearish for gold, will be if gold stock insiders start selling like crazy, and the gold experts are extremely bullish again.  The odds that gold will climb above it's 2011 peak is still alive, I just don't know when it will break that top.   I am not comfortable in calling any 4th wave bottom completed just yet, as gold would react much differently than what it has been doing since 2013.

British Pound GBP Review!

It's all coming down to the wire and the question is, Will the GBP fly or will it die? 
I don't watch the British Pound very often as I see very little inverse correlation with gold. but it is interesting how it acted during this independence debate.  I have it as a 4th wave but the steeper the decline, it  could stop with a "C" wave decline.  It could stop well short at the 1.40 price level and then turn and roar up again.  Eventually the GBP could fall to the 1.15 price level as that could end on a Cycle degree  wave 4. This would also create another large degree double bottom. 

My two trend lines is just like any megaphone pattern, which is the same as any Scalene triangle I always use.  Right now the GBP is stuck in the cone of the triangle, and it will break either trend line once again. 

Tuesday, September 16, 2014

VIX And The XIV Review!

The Vix took a big hit today as stocks roared. The VIX did not get to fill the 15.60 gap but I am sure it will on a later date. As the VIX crashed it opened a small gap, hardly visible on this chart, which will also get filled in due time. I have two big gaps open below which may get filled this time around as the VIX rally since August the 25th is fairly choppy, suggesting it to may be in a 4th wave rally. 

The 12.40 gap could get filled which only leaves the 10.40 gap open. Secretly, I would like to see that bottom gap remain open for as long as it takes, as that would act just like an "Ace" in the hole when it's time to forecast a big bull market. Two open gaps below and two open gaps above today's price level puts us in limbo, as short term the fear gauge can go both ways.  Longer term there is a lot more fear coming where all resistance will be futile! :) 

I have added this inverse XIV ETN that was created to play the VIX down.  In other words the investors in the XIV will lose their shirts when the stock market gets serious in correcting or crashing. 
Any GSC degree 5 wave decline would wipe this ETN of the map, and they would have to create an inverse split.   There have been some that are bragging how good it is to play the VIX shorting game, which means being long in the  XIV. Any trade that is enjoyed by the majority will eventual die a painful death, as they get trapped. 

The last high was in early July, 2014, which gives us a lower high this month. This XIV can still make a blast upwards but, it's bull market is getting close to ending.  Just like fear in one directing cannot last forever, hope and greed can not last forever as well.  It is hope and greed that takes longer to build and it also last longer, but it is fear that has a shorter life span, as it is a very exhausting emotion. 

Once I looked at the DJIA, it burst to life as I show a new record high on my charts.  The SP500 is well over 2000 again, but still lagging, as well as the Nasdaq and the Russell 2000.  There would still have to be some dramatic moves upward, for the other three Amigos to catch up to the DJIA. 

Crude Oil Intraday Update.

On Sept the 11th, crude oil has made a bottom. Immediately following that bottom two impulse waves took off.  Of course it can also be another zigzag and if that's the case crude oil would break another record low.   I may have far to much of a bearish bias, as this would put me in sympathy with everybody else,  and that never works for very long.  Oil could have hit a very strong bottom, and how well oil takes out the $94-$95 resistance waves, will help to support a bullish outlook. 

Now $107 would be back on the price target list, with the next being $112 and then $115.  I would not be surprised if oil closed an expanded flat type pattern on Sept 11th, then at a minimum the $103 price level will get exceeded. 

Crude oil is a very back futures contract to do Elliott Wave analysis with because the continuous charts are horrible as the do not flow smooth when changing months.  Pattern and prices are radically different between daily and weekly charts, and in this case a difference of 4 dollars. Natural gas also behaves this way.  

US Dollar Intraday Sideways Action Update.

It has been a week since the US dollar topped out. It has gone sideways for the entire time making what looks like a classic triangle. The sideways pattern triangle can also be part of a "B" wave from which it would crash and then turn up one more time.   If stocks rallied, then "stock mania" could come back, and the USD would rally and gold would fall once again. 

I do have an open gap below and this may get hit before the US dollar reverses again.  84.750 would now be my next target to beat if this bullish US dollar trend continues.  Either way we have a very triangle looking pattern, and triangles always force a degree change on us as well.  

As the USD gets stronger US exports become more expensive, which eventually will hurt manufacturing as well.  Going back in time and chart pattern, the 2011 low started out very choppy and this alone indicates that this rally in the US dollar is a fake. 

You would figure that with Obama now being the 4th consecutive president that has bombed the shit out of Iraq, that it would create inflation.  In reality any bomb or bullet fired, is the act of destroying an asset. Any war is just like taking all the tax money, putting it in a big pile and then torching it. 

Mini DJIA Intraday Chart Update.

When I look at that big dip  in August 2014, I see more than a H&S pattern, I see a nose or a beak to an animal, Draw a couple of circles on each side, and you would get something that looks like an owl. 

Many are expecting a correction and rightly so, some have already declared the markets in a bear market as the Russell 2000 started early acting like a leading indicator.  For a larger correction the markets are going to have to act bearish with much more conviction behind them.  This little choppy pattern traveling  back and forth does not cut it, as it looks more like a 4th wave containing a triangle. 

We may get one more push to the downside, before it cranks up again, and even then, it could be a fast  move up,  finish before it hits 17,200, and then resume another leg down. 

By mid October, we are also going to run into the worst month for stock market crashes, and many times we would get a "Black Monday" or a Black Tuesday historic crash. So if the media comes up with another sensational "Black Monday" event then chances are good it will be a big buy signal.

Monday, September 15, 2014

GSCI Sept, 15, 2014 Elliott Wave Count Monthly Chart Review.

This is a commodities index,  where the 2008 bottom did not dip into the wave 1 peak of 2000. In crude oil the 2008 bottom did dip into wave one. This is a dramatic difference between asset class, which has made crude oil much more difficult to count out waves.  I will have to adjust my crude oil wave count, as there could be another crude oil bullish cycle left.

 The GSCI bull market from the 2009 bottom, can also be in a diagonal 5th wave. After the May 2011 peak, the pattern that followed was choppy with many overlapping wave structures. Except for the smallest 5 wave sequences, the last 3 years have been corrective patterns. This would mean,  that the 2011 peak should get exceeded.  Even if the GSCI keeps going south, and drops to 2009 level lows, the commodities will come back and retrace all of the decline.  If the 2008 top is a true wave position, then this  also would confirm that  the 2008 peak will get exceeded.

If the GSCI dropped to 500 then this would still fit into a diagonal,  but then it would be a big ending diagonal.  When choppy declines start then there are many more areas that can act as support, but a big 5 wave decline would break through many of those support ranges.   Some of those larger term support ranges sure seem close to even numbers, like 500,400,300.  Below 300 would be Cycle degree wave 4 territory.

The GSCI also repelled from the solar cycle peak in 2000, and just before the solar cycle bottomed, the GSCI crashed into early 2009.  This is what happened in stocks as well, in most past crashes.

Russell 2000 Daily Chart Review.

All indices seemed to have turned the corner, and all have seen the best part of their highs.  The Russell 2000 had and early start at a decline, but in early July broke into another record high. 

What is very important to remember is that many of the declines are not your perfect impulse waves heading down.  What this means from a wave counting perspective, is that the decline has a corrective bias to it.  Overlapping or choppy waves heading down, means we can be heading down a diagonal "C" wave, or even a diagonal "A" wave. 

Our top could have finished part of an expanded pattern, which could still crush my two trend lines. It would not surprise me if the Russell 2000 was still to make a burst to the upside, and set a new record , just to aggravate all the bearish opinions.  If we start back in early 2014 the Russell 2000 is forming a great looking triangle as well. This would be scary as that would indicate a very short but strong bullish phase yet to come.  Any triangle is just a Megaphone pattern, and if another "ABC" decline is coming then, I would be looking for the bottom trend line to get hit. 

The VIX has made steady progress heading up, but the VIX seems to be struggling.  I have several open gaps below with the VIX so this suggests, that a stock bull attack can happen when we least expect it. 

Sunday, September 14, 2014

Gold Intraday Potential Bear Trap Review.

I can show you a very bearish wave count by just changing the angle of these two trend lines, but then I would be showing you a wave count that is in sympathy with all the bears.  When the chart is pointing down, then that is caused by the majority of gold investors and traders. It's all about mob rule, and the gold bears are winning. The majority can only win for so long, because it is mathematically impossible for the majority to profit, besides the majority will always push any trend too far, and if this is the case, then we should get a gold bull attack. Bulls always strike from the bottom, but we could still be too early. 

The gold decline has been going on for a little over two months, and we can insert any popular fundamental reason that you like.  The "economy is getting better" is always a good one.  I have the decline as an "ABC" decline, but I am going to talk about gold as if it were a 5 wave decline and wave 3   just bottomed.  Invert this pattern and we could be off on a 5 wave impulse, and the bottom trend line would become support.  

This decline is much like the start of the 2007 decline was in the DJIA.  In any larger rally, gold would be fighting many resistance levels all way up, and a few prices would be $1265, then $1280, and $1295.  If my "ABC" wave count is true then $1345 would have to get retraced sooner or later as well.  Gold is well below the 200 day moving average, and it could bounce $20 above that moving average.  

A correction in gold is due, and how many of the resistance levels it breaks with ease, will help to show us that gold has a little power stored up.  Isn't gold supposed to be a store of value?  Gold is a rebel with a "cause", because if the majority use it for a safe haven then sooner or later it will no longer work as a safe haven. If gold is bought for protection against inflation and everybody is doing the same thing, then gold will no longer play with you.  In 1999 the majority hated gold, that barbaric metal was good for nothing, banks were selling, shorting gold at $255 was the place to be.  When gold was in the dumps then, just to spite the majority of gold bears , gold roared and added on over 750% in gains. 

When a trend in any direction gets pushed to far it will reverse and go the other way. 

It can’t make calls. It can’t send e-mail. It’s the NoPhone. - The Washington Post


Saturday, September 13, 2014

Crude Oil Weekly Chart Plan "B" And Crash Review!

On the crude oil futures chart below, I have moved my Cycle degree wave three back to the 2008 peak in the oil price. I have been pushing my small  degree wave counts to the limit, which is the same as running out of degrees.  Any move of any wave position, always  triggers another look and a recount.  The choppy bull market we have had, had many overlapping waves, and therefore would have to be corrective waves.  

If oil has been in a triangle "B" wave in Primary degree, then the problem would be which wave is the  last "E" wave. It would also be the home for my "B" wave in Primary degree. Sound familiar? Yes, it would, as many wave counters may have "B" wave tops in other asset classes as well. 

The fan lines are not drawn to a preordained degree angle, but they are all drawn over the tops of the peaks in the bear market rally.  The top line has about a 15 degree angle to it, with the next angle being about 20 degrees.  The second trend line has given oil support, and this would only be temporary if a bigger bearish trend is in play. 

I am going to explore a potential "B" wave top in Primary degree, and that the first wave 1-2 in Intermediate degree has already completed.  If that is the case then we may be close to a wave 1 in Minor degree.  Looking at the pattern at face value, then it is telling us that wave 1 is a short little thing, strongly suggesting a long wave three and a shorter wave 5.  Where would the support be now? 

All support would melt like butter cut with a hot knife, as my $75 price level would not hold as well. Sure we could see some bounces at that level, but crude would have to keep pushing south.  Oil is also coming up to the Fibonacci $89 price level, and then the next support would be the $55 price level.  We would be looking at a single flat with no expanded top. This "C" wave decline could turn into a regular flat or a little below the "A" wave bottom in early 2009.  From $34 and another Fibonacci decline, would bring us to the magic $21 price level. 

That would complete a nice single "ABC" (3-3-5) correction in Primary degree, with Cycle degree wave 4 coming to an end at the same time.  The 2013 peak also fits better as it would be just under a 5 year bullish phase. This impending decline would not be as steep as the first one, but the steeper the angle, the smaller all wave divisions will be.  If a "C" wave is in progress, then it should also be relentless in it's decline, and in most part ignored by the majority until it's too late.  

If we look at the drillers debt load, and every oil producer in the world stepping up oil production, then the fundamentals are already in place for a world oil glut to happen. I can only describe what would happen if a wave count like this is true, but not to many would think a $21 oil price can happen with all the wars going on.  Nobody thought that oil could crash from $147 to $34 in less than 8 months as well, but it did.   The public is vastly underestimating the power of commodities to crash when the "Geopolitical reasons" suggest otherwise.  Commodities never act in such a manner to allow all those players and opinion makers playing in the most popular direction, to win.  As soon as the consensus opinion is obvious, then it will change and turn the consensus forecasters into babbling idiots.  In early 2008, consensus opinion had been infected with, "Bullshit Fever" and they all became delusional chanting, "Crude oil $200",  over and over again.  

The DOW has been at record highs, and it contains two of the biggest oil companies in the world.  I just don't see how crude oil can stand up to any DOW decline. 

In the bigger scope of things any crude oil crash is not a bad thing, as an oil price crash will do several important things, It will slow the flow of oil funds going to the Mideast and Opec countries,  and second it will produce a huge cash flow back into the hands of  US  oil consumers and the economy. 

The Oil/Gold ratio is still very normal at a little under 14:1, and I would expect that ratio to expand.
When the ratio contracts, say down to 10:1 then you know oil is getting very expensive again.