Wednesday, October 1, 2014

VIX And The SP500 Intraday Update! What A Bear Attack Looks Like!

It's always best to look at the VIX just before we look at the SP500 as they are inverse to each other. 
We have a potential double top which the VIX would have to break through without a serious correction.  What we do have are many open gaps that have not been filled below present VIX price levels.  If they don't get filled soon, then they will definitely get filled at a future date and in a future stock bull market.  With a double top we also have a H&S pattern from which the VIX can repeal back down from. Combine this with all the open gaps acting like a giant magnet to pull the VIX down, we would have to be in a super bearish phase already to resist this gravitational pull. 

Many traders could now be in a VIX bull trap, which is the same as a mini SP500 bear trap.  Sometimes Thursdays and Fridays can be very bullish, and with the employment report coming out on Friday we could see some real wild swings. 

 There is not enough of a clean pattern here to justify a pure impulse wave count, as we have had steep angles with high speed drops.  The pattern on Monday and Tuesday looks like a classic expanded flat pattern, from which the SP500 could roar and take out my top bearish trend line. This could take us back to the 1985 price level before the SP500 would decline again.  This can all still be an intro to a leading diagonal 5 wave pattern, so we have to keep our minds open to any potential trap, especially in any opening decline. 

Even now the SP500 is showing a potential double bottom after it closed the gap that was formed way back in August 2014.  From the record top in September, I also have a minimum of  4 open gaps, but only three of them I marked.  If I cheated on my trend lines, I can show you a very bearish wave count, but they are not even trend lines, but more like a Scalene triangle. 

All the wave counters ignored this in late 2007 as well as they forced a 5 wave impulse, where none existed, and still does not exist.  Right now we have a single peak, so this can make it easier to start a new wave count from.  I show that I am at a "C" wave top in Intermediate degree, which is much the same as a potential 4th wave peak,  but it can go much deeper than any 4th wave ever will. 

Fibonacci retracements rarely work in these types of potential bear traps, as the counter rallies can be very violent.  I have always used pattern identification first, besides you can do all wave counting with out using a single retracement ratio. 

All this eventually can  take us down to the 2011 stock price levels, before insiders start to buy their own stocks back.  At what price level this may start to happen at is impossible to pin down before hand, but if Warren Buffet opens his yap and says, "stocks are cheap", then we don't want to ignore him.  Of course we would like to see more indicators than just commentary from Warren Buffet. 

Overall I would like to see at least 5 to 8 indicators show themselves, before a strong bottom may be near. 

Mini Nasdaq Intraday And Monthly Chart Elliott Wave Count Review.

The Nasdaq is now the index that is lagging or falling behind the other three big indices that I watch. One good thing is that is that at this time I don't have to wrestle with multiple tops as the Nasdaq post 2000 record highs ended with a 5 wave pattern finishing off this high.  It was the decline that followed that we need to figure out if this decline has some power behind it.  The Nasdaq bull market developed many gaps on the way up, and now it already has many gaps on the way down.  Gaps are extremely high value targets as 90% of all open gaps will eventually always get closed off.  If the Nasdaq continues without closing off these open gaps, and it crashes to 2000, we already know  that the Nasdaq will come back and close any gaps left open. 

I started the wave counts with "ABC" lettering but this could turn into an extended wave three wave count at anytime.  At this time I am treating the Sept-19 top as a "C" wave in Intermediate degree, which means I have to look for a "D" wave decline.  Any "D" wave decline is much like any 4th wave decline except I can go much deeper with my "D" wave. 

I draw my trend lines below major crash bottoms, which points to the 2000 price level.  The markets love even numbers and 2000 saw support and resistance in the past an I am sure this price level will get interesting again in the future.  I had to bring my Cycle degree wave three back into the picture, but that is subject to change as time goes on, as I am not satisfied with that position.  Since the 2002 bottom, I am looking at a potential "B" wave triangle in Primary degree with "D" and the "E" wave still to go.  There are many potential wave counts for the Nasdaq, so giving a downside target is unreliable at best, as even then the Nasdaq could pierce below the 2000 price level by a long shot. 

Just like the Nasdaq stopped at different lows in it's crashes, I am sure we can see surprises from the Nasdaq again.  It still has not created a secondary record high, which I think may still have to happen before a really big crash comes.  In the future there is no way that the Nasdaq is going to follow the other indices as deep because if the Nasdaq were to fall back to the 1970's price levels, it would be getting closer to zero!   I am sure the media will be pumping the fear leaving the majority ill prepared for the bull market that will surely follow.  I think any wave count should give some sort of warning well ahead as it takes time to mentally switch directions.   Many understand that this market is over bought and not until it is over sold will we need to switch our thinking. 

There is not enough room in the Nasdaq to fit 5 waves down in Primary degree, besides it's mathematically impossible for 5 waves down in Primary degree to form. Sure we may get 5 waves down in the future but even then Intermediate degree would be my highest degree.  As much as we try deliberatley or accidentally, we can not cheat in the chain of the degree sequence. 

I would like to see those little gaps remain open as if I did not remind readers that they are there, we would forget about them very quickly.  In this case that is actually a good thing as we can use it as a indicator later on. 

Tuesday, September 30, 2014

Gold Intraday, End Of The Month Elliott Wave Count Update!

It's always a big deal when we are on the last few days of the month, combined with the last days of the business quarter as well.  With 3 months to go before the end of the year, it would be nice for gold to hit it's low for 2014 as well. Every year we will hit a hit price and a low price for the year. Gold would have to travel up over $180 just to break it's last high of 2014.  Once gold decides it wants to fly north for the fall , a $100-$200 dollar move will be nothing.

You will never find the real fundamental reason, why gold will travel back up, but when the experts start to figure it out, we will be getting close to another top.  Just like the beautiful vertical  move the US dollar made, I am sure in time ,we will see gold do the same thing. 

We are dealing in the world of commodities where wave structures can dramatically change, surprising the most committed gold bears.  At every price level above today's price there are gold protective "buy" orders in place all the time. Combine that with the trend chaser's being net short by a wide margin, can produce some wild moves.  Commercial traders have been making bullish bets in gold, which has been the opposite to what the speculators have been doing.  Most of the media reporting comes from what  the speculators have been doing, but they only have a good track record of chasing the trend. This emotional trend chasing always gets them into a trap, and traps is what I try to look for.  

I see there is a potential ending diagonal in progress, as right now gold has crossed to new lows as a 3 wave pattern.  The US dollar also made a 3 wave crossing to new lows in May 2014, just before it exploded and headed north.  The decline from March 2014 has been choppy and erratic which sure fits the description of a triangle.  The entire triangle should get completely retraced,  and this will happen when we get closer to the $1400 gold price level.  Of course if that were still to  happen this year then we would be on a path to establish a new high for 2014. 

When the US dollar was down in the dumps I was always saying it had to cross it's choppy wave structure, and it did this with style. Now we have gold in very much the same situation as the US dollar was,  and at a bare minimum gold will have to clear the $1391 price level for its corrective patterns to be confirmed to my satisfaction.   At this stage gold has retraced about 37% of its gross price, which is still very normal for a potential 4th wave decline.  20% bear market declines are something that experts dreamed up, as any 20% decline in a 4th wave is just a pussy move. 

We can have 60 or even 80 percent declines in a wave two bear market, but from an EWP perspective this would be extremely bullish.  Imagine being constantly told to stay away or get out of a market that has just hit a wave two bottom or a 4th wave bottom like what gold did back in 1999! 

End Of The Month US Dollar Weekly Chart Update! Are The Bear Claws Sharp Enough Yet?

The US dollar has made one impressive wild ride up, and it added another small 5 wave sequence.  Is it going to keep on going or the USD going to die like it has done so many times before?  In 2008 everybody in the world hated the US dollar, and loved gold, now look how it has turned.  In 2011 investors really hated the US dollar but loved gold as well.  

After 2011 everything changed as gold started it's bear market and the US dollar started to rise.  I would also bet that very few people can ever tell you the fundamental reasons that caused the USD to turn each time.  At each major turning the US dollar forced all the players to completely switch their thinking and all their bets as well.  

In my previous update I had an "A" wave for the 2012 peak, but with the chart below I changed it to a wave three peak.  The resulting decline will be about the same.

The 2009 peak is still my "A" wave in Primary degree, but the correction that followed is a zigzag with an expanded pattern, in the "B" wave counter rally. This 2010 counter rally did not travel to new highs, but then crashed down into 2011.  This entire zigzag will still need to be retraced, and even the 2009 peak will get completely retraced, but it should not do it on this trip.   We need a decline so strong that it kills the USD bulls dead in their tracks. Imagine all the sell stops that are stacked up at every little last low, and they start getting triggered one by one or a bunch of them at the same time.  It's not like it has never happened before, as there is a lot of evidence that the USD can crash when they least expect it to. 

Being complacent in any commodity is not an option, as this leveraged US dollar will shred every trend, after everybody has heard about it. Any consensus forecast in the US dollar will never work if we do not pay attention to the pattern it has created. The key are those crazy "ABC" patterns or overlapping wave structures. 

Since this 2011 bottom the entire rally has been choppy, and I am confident in saying that the USD will still fall well below that 2011 bottom, but not this time.  Any decline in the US dollar that goes below 79, will help to confirm this wave count, with a maximum of 75, as below 75 would no longer support a diagonal "C" wave. 

If this has a good chance of coming true, then once we hit a bottom, we could see another strong US dollar bullish phase. That new phase could make this move look pretty lame in comparison.  The more vertical the move, the faster it actually travelled. Speed never lasts as a fast move is usually a sign to the end of a move not the beginning of a new leg.  My general guideline is, if the angle of this rally is greater than 75 degrees, then chances are that the move in question is a "C" wave.  I measured the recent angle at 85 degrees. 

I have an open gap down at 83.800 so that can always become a support area, even though it may only be temporary. 

Monday, September 29, 2014

Crude Oil Intraday Update.

Since Sept 11, crude oil has been in a rally that looked very promising in the beginning but fell apart quickly with the next wave.  An expanded flat may also be in progress which would be very bullish for oil.  Many are trying to blow up oil lines and even blow up refineries like the US recently did.  Refineries are shutting down in the US for maintenance and switching to winter fuel production. 

For oil to impress us, it would have to clear the $94 price level and keep right on going.  There is a good chance that another leg up will eventually happen, retracing that $115 price level, but it may take until next year to do this.  Either way the routine of declining impulse waves has already been broken, but any diagonal pattern can still have a bit to go before it is trashed as well. All other peaks have been cleared enough to call a diagonal completed but not a 4th wave. 

Sept, 29, 2014 Mini DJIA Intraday Chart Update.

Stocks have started on a bearish move but there are many things that do not confirm nice impulse waves going down. Many overlap with wild swings in both directions, but the biggest issue I have is the amount of gaps open in anyone of other indices.  The VIX rally has been riddled with big gaps which matches the gaps still open above in the DJIA. 

Unless we see some big moves down past all of these open gaps, this market can still come back and kill a few more bears.  The DJIA produced a false breakout from it's Head&Shoulder pattern which is very normal. Now the we have the same situation again with another H&S pattern, and a potential downside breakout.  Even my trend can't fit between two parallel  lines, which is also a clue that a correction is underway. The question will be the degree we are in, as a too shallow of a correction will not produce a very big bullish phase. The bigger the bearish mood at any bottom, will help to produce a bigger bullish phase after. 

There is a high probability that eventually we could see a zigzag type correction that can go deep as a "D" wave decline. Any "D" wave decline is much like a 4th wave decline, but a 4th wave would more likely contain a flat type pattern. 

Sunday, September 28, 2014

Rick Rule: I Think We’re Seeing A Bullish Transition In The Junior Gold Miners

Larry Summers says tax system can’t last - Capitol Report - MarketWatch

Euro Weekly Chart Elliott Wave Count, Potential Bear Trap Review!

I dislike drawing many trend lines as trend lines are so subjective.  I have seen many other chartists that plaster the charts with trend lines, and most of these trend lines mean nothing if they are all drawn between unrelated degree levels.  Since the 2008 peak the EURO has been in a bear market that on the surface seems like it will never end.   The commercial traders Euro futures contract net positions are still long, which will only increase the lower the Euro goes.  This will also put a bottom to any move, especially after a near vertical drop.  That drop is also ending with a spike on this weekly chart.  We have had many past spikes like this and the recent drop, has now only developed with a zigzag type pattern.  I can only fit that into a triangle correction and in this case an expanded triangle correction.  This would indicate that at a minimum, the entire zigzag will get retraced.  

A diagonal "C" wave decline in a 4th wave would also produce another limit to it's potential rally from which the Euro would crash to a 4th wave Cycle degree bottom.  The 5th wave decline would also be in the shape of a zigzag.   Eventually the Euro would fall below the 2010 bottom price level , but then it would also be facing a triple bottom. 

Any diagonal 4th wave rally has a very strict guideline how far it can rally and it must not pass any wave 2 top. Sometimes they stop dead right in the middle of the wave two location, and this helps to confirm the previous wave 1-2.  Diagonals are very choppy with overlapping waves and can be a real problem in counting them out.  In the end the entire Euro bear market is a corrective pattern, which ultimately means that the 2008 peak price level will get retraced. 

I have a small gap just above the 1.32 price level so this may be an important price level to watch. 

Saturday, September 27, 2014

US Dollar Weekly Chart Elliott Wave Count Review! Is There A Bear Lurking In The Bushes?

I know there can be many different wave counts out regarding the US dollar, but very few invert the Elliott Wave Principle when applying any wave count to the US dollar.  In other words the 5 wave impulse is always heading down, which makes every bull market in the US dollar a correction.  

Sooner or later depending on the degree the US dollar will resume it's largest trend, which is always down.  Does that mean that gold will always go up? No, because these USD rallies can last for a long time, and inflated dollars move.  In 1980 gold started a 20 year bear market even though the US dollar declined most of the time.  All those late 1970's inflated dollars abandon gold, and started going directly into the stock market.  We can thank Ronald Reagan for the catalyst for that bull market. From 1996 to about 2000, the US dollar roared in a stock mania send gold crashing.   

 With just a very little bullish move in the USD, this can send gold crashing.  Currencies are leveraged like all commodities are, and this produces sharp and wild spikes which displays the fears in traders hearts.  Every imaginable fear comes out, as the day traders jump on a trend one way and then bail out and jump the other way.  

In little more than 4 months the USD has roared in a bullish phase that has to end or start a correction soon.  This happens many times the closer we get to the end of a month, and the end of a quarter. 

Since the May 2014 bottom, the US dollar has only displayed a 3 wave rally, which could leave one more 4th and 5th wave to go.  The only way I can let that go, is if the rally is a zigzag and part of a triangle "B" wave, slightly expanded.  My 2012 top in the US dollar can also be a 4th wave in a diagonal which I would still be looking for the same declining pattern. What will be different is the resulting "C" wave bullish phase after.

There would be little bearish warning because the news that will push the US dollar is not front page news yet.
Nobody can say with any confidence what the fundamental reason will be behind a US dollar reversal.  When all the expert analysts start finding the same reason, they will act like a bunch of parrots and regurgitate this knowledge over and over.

Since the last move up is a potential zigzag, this means that the entire move should get retraced, This would happen at the 79 price level, which is also very strong support.  If the USD slumped that low then a Head and Shoulder pattern would exist, and a downside breakout would also be setting up.

75 would be my maximum to keep this wave count alive, from which we should get another dramatic reversal. When the USD gets sufficiently oversold again, then all the dollar experts will be parroting all the bearish news and Gold bulls will be screaming, "buy gold"!
My rule of thumb is, if you hear fundamental news more than three times, or from three different friends or sources, then this news is already irrelevant.

All the way down below the present US dollar price level we know that there are massive amounts of stop loss sell orders, this always compounds the fear factor as stops get hit.   All we have to do is look back in chart history and we can see how fast any wild reversals have been.

Commercial traders just keep piling on the shorts, which is a good thing, and even the commercial gold traders have added long gold positions.

When any asset class is pointing up I look for the bear attack, which many times is a "B" wave top as well.

Other currencies that are inverse to the US dollar have also seen improved long positions last week.

Yen Futures Monthly Chart Elliott Wave Count Review.

It has been a long time since I looked at the Japanese YEN last. When looking at the pattern at arms length we can see that the trend is down. Anybody that watches the YEN also sees the same thing. 
Before I create any wave count, I had to look to see how the commercial and speculator net positions are.  They say a lot in how bearish of a wave count one should look for.  Without a doubt the contract positions by both parties are skewed.  The speculators who are the trend chasers, piled on the short positions last week, to an already heavy net short position, while the commercial traders are skewed the opposite way.  As the YEN declined the trend chasers added about 13,000 short contracts and took away over 9000 long contracts.  In other words the speculator's are about as bearish on the YEN as you can get, and they are acting in sympathy with the herd. They all have been brainwashed that the trend is your friend and this always gets them into trouble as they head into a bear trap.

Most of the analyst's that mention these traders contract positions, follow the speculator's numbers as the smart guys.  It is also very noticeable that they also use the speculator's as the smart traders in gold as well.  I have never seen the speculator's be right when a major trend reversal is due. 

 I though the YEN would have bottomed some time ago, but we  could be fighting through an ending diagonal. To get more detail we would have to switch to the intraday charts. 

 The commercial traders are the smarter guys as they are not speculator's but use futures for hedging and other reasons.   Last week they added a huge long positions to their already heavy net long position, and now are well over 6.24:1 net long on the YEN.  With that type of a skewed set of numbers I would not be looking for the trend to be able to continue for much longer.  Before I start a wave count I would be looking for a reversal more than just a little correction. 

The YEN 5th wave is looking like a diagonal as well, and since it broke well into wave one is now also an ending diagonal.  The YEN can drop down to the .75 price level but anything pas that it would terminate this wave count instantly. 

It would be nice to see the YEN react with gold as it seems to have done in the past, but I would have to study it closer to see if this relationship is trusting enough. 

Friday, September 26, 2014

Gold Monthly Chart Cycle Degree Elliott Wave Count Review!

When the short term wave count is not clear enough, then it is always a good time to review the largest wave count I am working. This is the only way to make sure it all still fits into my sequence.  
Those that do not review the entire wave structure consistently are cosmetic wave counters, and that never works.  
The bearish mood has increased lately and it would be nice to see a bit more intensity of the bearish mood.  Words like, "gold is tarnished" is a great step but it would be better if these words are regurgitated more often.  The more they repeat it the higher the intensity of the bearish mood is. 

Even though gold was fixed for many years, it still broke out from this fix several times before 1970.
We can still apply a wave count to it once we use long term commodity index charts. Once Nixon set the gold price free, it started to display very nice impulse waves that are still going today. They will keep going as long as some new president doesn't get the hair brain idea to try and fix the gold price again.  Gold in it's free state helps us to see the results of government printing presses going at full speed. A free gold price is also an extremely good indicator when potential stock manias are being setup.  

The problem with all the printing is that the inflation moves, like it did after 1980 and 1996, and recently in 2011.  The majority do not see stock prices rising as inflation, but in the end that is exactly what it is. 

Stock mania will trump gold every time, so it is important to watch when these setups occur. 

When the gold price is low, it represents US dollar strength,  and when the gold price is high it represents US dollar weakness.  Only when the price of gold is low will it protect us from inflation. Gold will never protect us from inflation when it's price is high and everybody is buying it for inflation protection already.   

The correction in the mid 1970's contained an expanded flat 4th wave in Intermediate degree, and that wave 4 is the base to connect to the other wave 4 in 1999-2000.  This base line points to about $500 in the future.  Once we project the top trend line we can see it still points to a gold price well above $2000.   Any forecast that you will ever read about, ask yourself the question, "where is it going after this target gets hit"?  Any forecast is only as good as the wave count is, and if some economist makes a $5000 gold price forecast, then where is it going after that?  We get bearish gold forecast only once after a gold bear market has started for some time, as they sure would not dare to forecast a gold crash to $1050 in early 2011. 

Going back, all my wave counts start as 1-2,-1-2 and another 1-2 base. All Cycle degree wave counts in the extended wave is subdivided down to minor degree, which takes us back to the early part of the 1970's.  From that Minor degree wave two bottom only waves 3-4 will develop.  All the 4th wave bottoms provide the base and each 4th wave steps up by one degree.  Wave 4 in Intermediate degree, then wave 4 in primary degree (1999) and in the future a wave 4 in Cycle degree. 

Changing any wave count forces a complete recount which I have done  many times, because I called the Cycle degree wave count completed too early.  It takes trial and error and a clearly drawn Cycle degree impulse script helps us to stay on track.  I don't see how we can count out waves without a script, as we would have no clue in what we are supposed to look for. 

I follow the 100 year cycle and commodities were still in a bullish phase up to  early 1919, before it succumbed to a 13 year bear market.  It would be great if gold stays bullish until 2019, as that would be a good setup for a Cycle degree crash. Again, I think it will be stock mania that will take the price of gold down in the future. 

Mini SP500 Quick Update.

I can say that the, "wave count is clear", and we are heading to a Grand Supercycle degree decline, but I can't .  For a very big decline we have to start with impulse waves, as they will point to lower lows. At this time the markets can revolt if we are not over on the bearish side far enough.  Gaps have already opened up, which if they do not close will give us plenty of bullish ammunition later when the majority are bearish.    All we can do is to identify any wave counts from a specific point, and avoid getting caught in a bear trap of our own making.  Next week will tell if this impulse looking wave continues.  

The VIX looks like it may have more power, even though it had a rocky and choppy start, with several open gaps below. 

The steeper the angle of the decline the better the odds are that an "A" wave or another corrective pattern is in progress.   The Russell 2000 and the Nasdaq don't have the pretty wave decline like the SP500 does, so those two are indicating diagonal patterns in progress.  

Thursday, September 25, 2014

US Dollar Intraday Chart Review, Is It Just A Correction.

For the last couple of weeks the US dollar pattern has become choppy and erratic, with another peak early this morning. The small decline looks corrective, but that could be part of a bigger decline as well.  I have counted this out as an ending pattern but it being part of an expanded 4th wave cannot be ignored.  Many experts are now blaming the stock market crash on the strength of the US dollar. If this were true stocks would have crashed a long time ago, as the US dollar has been in a major bullish phase since 2011. 

My last wave I counted as a 3 wave rally but this may not work if the USD still push higher.  The higher the US dollar goes the better the odds are that we will get a sustained decline, therefore sending gold much higher. 

Many are still forecasting that the USD is going much higher, but I look at, "how" it is getting there. This "how" is much more important than, the "why" it's going higher.  If the USD has roared up with a "C" wave bullish phase then no number of a bullish forecasts will work for very long. 

The USD could keep going if the stock mania just took a little rest, as at this stage of the game, stocks can revolt and still roar back. 

The VIX , The Herd Of Bulls Are Not So Complacent Now Are They?

The stories that the experts have told us about the stock market is safe as long as the VIX is low or keeps below some mythical low price, is a fantasy.  Contraians use the VIX the opposite way as when the VIX is low, its time to sell but when the VIX is high it's time to buy.  For short term traders this may work but for longer term investors, they would want tot see a much higher VIX before they thinks stocks are cheap. 

We are still dealing with shorter term moves, as the VIX rally has not been impulsive enough.  My gap at 15 has just closed, but three gaps remain open to the downside.  The VIX would have to crash through the bottom support line if it were to close all the gaps below. I really don't want to see that bottom gap close, as that gap would work like an Ace up our sleeve. 

Yes we could see this spike continue, but that will happen at a later time, as the markets need to do some back filling. 

Russell 2000 Intraday Price Action Review.

We have been told that a major deflationary attack is coming but if that is the case then the stock patterns in the Russell 2000 still puts any deflationary event  still far away. Besides, gold would be much lower in price then what it is now.   The Russell 2000 chart also has  many gaps still open above present price levels.  All these open gaps gives us a strong clue that stocks prices will come back and fill all open gaps, sometime in the future.  The VIX also confirms gaps open below it's present price level, so a VIX decline is likely which is very bullish for stocks on a short term basis.  It's time to slaughter that big bad bear and put some bear steaks on the barbecue.  Eat the bear steaks quickly, or invite your friends, as you may have to make room for bull steaks right after that. :) 

The entire decline in Sept has no clean impulse waves, so I have to look at corrective or diagonal patterns instead.  Any decline that starts as an impulse indicates that it is going much lower, but as soon as the impulse wave count falls apart, I have to change my mind. 

Nasdaq Intraday Crash Review!

From Investor bliss one moment to investor panic the next, a surprise drop started this morning, or is it finishing?  The VIX blasted up and closed my $15 price level gap, but now there are three open gaps below, which is bullish for stocks on a short term basis. In other words we could be in a mini bear trap. Even Apple's decline this morning produced a gap. If Apple's stock price keeps right on going without filling that gap then we know Prices will come back and fill that gap eventually.

The Nasdaq is riddled with gaps anyway, but I have two open above present prices at this time. The same applies for this cash futures chart, if the Nasdaq charges down without filling these two open gaps and we are at some ridicules  low extreme then we know that prices will recover and eventually fill these two gaps. 

I can't get a clean impulse to the start of this move, unless I have an expanded wave 2 correction.  I consider this part of a corrective move, which still has a bit to go. Leading "A" waves or any diagonal waves are a real headache as they act so much like corrective waves.  We may need a longer tail on this move, but markets can roar back just as fast as they go down. 

Wednesday, September 24, 2014

BULL HORSE MOUNTAIN at Brian Ripley's Canadian Housing Price Charts and Plunge-O-Meter -

Apple Chart Elliott Wave Count Review!

The hype surrounding Apple has turned into a shrill of fundamentally created forecasts, yet the Apple stock price has stalled. It has refused to break out of it's next leg up in the last 3 weeks or so.  Since the new record top is a done deal, this helps to confirm that the 2012 correction contained an expanded wave 4 correction.  If identified correctly any expanded flat means that the future stock price will at a minimum, exceed the "B" wave top of the 4th wave correction. 

Now what? What would happen if yet again we were in another expanded type pattern and Apple repeats the pattern?  With two major gaps open below Apple has a long way that it can fall, but if this bullish phase is not finished, then any correction down to the bullish trend line would have to hold. 
If a 5 wave decline is in progress, then closing the first big gap at $75 would be one of my target ranges. 

I leave it up to my readers to figure out what is going to disappoint Apple share holders soon?  Any new record highs in Apple would trash this wave count very quickly, but when all stocks start to tumble what is Apple going to do? I don't think it will keep making Apple bulls happy. 

The majority of investors will not make any money as it is impossible for the majority to get out of Apple stock all at the same time.  In any decline, sooner or later bullish investors can no longer take the pain and will sell out at a loss.  When news of insider buying starts to come in, then the price will be getting ready to turn in on another reversal. 

SP500 Intraday Price Action, Will the Record High Hold?

The SP500 created another record high 5 days ago, and it only takes the smallest of waves to push us over into the bearish side.  If that's the case then any bullish news should have limited effect, and once that becomes clear then the analysts will push the bearish news as much as they can. 
In other words analysts will keep pushing stories that have a bearish fundamental reason behind it. 

The VIX has backed off as well during this rally but should resume it's climb as well if a wave two peak has just finished. If nice clean impulse waves do not form on the next trip down then the potential for the markets to still soar are still in play.  I would love to be more bearish but this early, it is easy to get into a bear trap.  I have an open gap below on the SP500,  but if my wave count is true then that gap will only offer token support.  It would be nice to finally get a major high for the 2014 year, but these markets are crazy and it is smart to keep our options open.  This effects day traders more than any seasoned contrarians as they are long with the HDGE ETF already.  

DJIA Intraday Action Update.

I figured the markets would come back hard, but this also has the potential to be a 4th wave counter rally.  I have little to no room for this pattern to keep going, and any down move that does not fit an impulse wave could send the DJIA much higher again.  There is the potential for the DJIA to be in an expanded 4th wave pattern which keeps the bearish outlook alive. 

The new moon just finished on the 23rd of September so a return to the bearish mood is also highly likely. I don't like to jump the gun, in showing lower highs as a bigger expanded flat may also be in play.  If the DJIA returns to it's bearish mood, then it will leave a gap open above, which will be useful to know once the markets are crushed.   I don't give short term trade setups as you don't need Elliott Wave for that. It is also harder to take larger positions in short term trades.   Contrarians would be long on the HDGE ETF and they don't panic so easily as day traders do. 

Sept, 24, 2014 Us Dollar Intraday Chart Update, Going To Where there is Less Oxygen!

It is amazing how little my US dollar postings get read, as no US dollar related posting has even worked to the top 20 in a weeks worth of data.  Most of my readers seemed to be more interested in the stock indices than what is effecting the commodities.  Most of my postings are commodity related and currencies are a big part of all commodities. 

It is critical to understand when the US dollar turns, as that correlates with a gold turning as well.  The turnings I like to look for are the turnings that forces all those playing in one direction, to close their positions, and then forces them to join the party going the opposite way. 

The commercial and speculator positions shows this very well as speculators have been dumping shorts and have been adding longs. They are the trend chasers and eventually will get caught in a US dollar bull trap. Meanwhile the commercials are doing the opposite as they just keep on adding shorts to their positions. 

My small degree 4th wave scenario is not dead just yet, as this could be an expanded pattern. It can take the US dollar right back down and fill my little gap at the 83.600 price level.  Right now the US dollar has crossed to a new high with a single zigzag which can also work as part of an ending diagonal.

Any decline that does not start very impulsively, instantly joins the ranks of a potential correction only.  Sometimes I can't tell for days, other times it takes longer as diagonal 5 wave structures compound the problem.  The US dollar has surpassed several of my key price levels and gaps,  that were needed to retrace past corrections. The chances that the USD can decline from  a potential expanded 4th wave is high, and should no be ignored at this time.

Crude Oil Intraday Update.

The world is in turmoil and I believe WWIII has already started with the anniversary of WWI.  Of course all the destruction going on does not slow the flow of oil, but it forces many countries to keep pumping and shipping crude oil.  Every major oil producer wants to sell oil as fast, and as much as they can.  Money comes from the pockets of consumers and tax payers which is turned into military hardware, or "assets" which in turn they blow up!  

Any war is the equivalent of taking printed money, putting it on a big pile and then torching it. The above pile of money is a billion dollars.  
How many piles of this money has the military complex blown up this year alone. All those people marching for climate change should stop war as it is blowing shit up that is causing global warming. 

Even with all the inventory stories out, crude oil has managed to hold onto its bottom price.  We have a short term higher low trend, which could carry us back to the $93 price level, but must not cross the $94 price level if the ending diagonal is still in play. Since I counted a potential small expanded pattern there is little room to move.  That September low could hold as an expanded pattern can mean that a powerful rally could be in play.  

Gold Speculators And The Keyword "Tarnished".

   For much of the entire gold bull market the wording, "gold is tarnished" has been absent in most gold postings. But this year it has returned and has increased in frequency.  All the "gold is tarnished" stories was the front page keyword in late 1999 as well.  Of course once they started to use that word more consistently,  gold turned on them and started on a 10 year bullish phase.

Since gold has been pointing down lately, these gloomy comments have resurfaced. It is not rocket science to be bearish when the entire world of gold watchers see exactly the same gold decline.  When the majority see the same thing then a bear trap is very close at hand.
                                       As Broader Fears Fade, Gold Is Tarnished - WSJ
When can point to the year when gold started it's decline, and the cause has been the flood of investors going back into stocks, and is a sign of "stock mania".  This is nothing new, and has happened many times before in market history, and had been absent for about 10 years, before stock mania reared it's ugly head in 2011.  At this time we could see a short break from this divergence once stocks start to correct.

           Hedge funds extended this year’s longest exit from bullish gold... - News - Mynextfone
Much of the commentary about hedge fund positions, follows the very people that have the worst track record in gold. The speculators were the exact same people that were massively short gold in 1999-2000.  It is the speculators that are chasing the trend down, not the commercials,  as they are doing the opposite of what the hedge funds are doing.

                    Gold's intraday surge catches speculators off guard - The Economic Times

 Sure enough the speculators are starting to get caught in a surprise gold bear trap!
This happens over and over at every extreme, but is more subtle on smaller degree turns.

In the last few weeks the commercials are the ones that have been dumping their bearish bets, and have been increasing their bullish gold bets.

I have been getting search hits about the DJIA/gold ratio, which in my opinion is a worthless ratio.  It is far more useful when we track a potential "stock mania" attack.  It took me a while to clue in on it and all we need,  is to watch three assets. Gold, Dow (stocks) and the US dollar.   Hopefully we will see this stock mania reverse soon.

Gold has been pointing down but a small spike has been created.  Yes the bottom of the gold market can still drop out, but going back to the March 17th peak the decline has not been a perfect 5 wave impulse. Far from it as this indicates that gold is still in a corrective pattern.  If this is true then gold must eventually break that March 2014 peak of about $1390. Golds correction since March 2014, is now looking like a triangle, which means that once this plays out, I must find one higher degree change as well. 
The gold bear market has been going for three years and my 2011 top still stands as a wave 3 in Intermediate degree, so longer term all is not lost for gold investors. 

I recently searched for "Elliott Wave Counts in gold", and I found it hard to except any of them as even being remotely close to sequential reality.  Gold $5000 or gold $13,000 all have no chance if we follow the gold long term bullish trend line.  Gold $5000 forecasted, produced by the Austrian economists, will never work as the last forecast I would believe in, is a biased economists dream!  

Of course SC degree gold wave counts have gold flying to $13,000.  I think that analyst has been smoking to much of the "green gold" to dream that forecast up.

Tuesday, September 23, 2014

Russell 2000 Double Top Confusion Review.

Double tops always present a wave counting problem as it takes time to sort out which wave belongs to the bullish phase and which wave is already into the bearish phase.  In early June the second peak recorded the last record high, but then the decline is a weak 5 waves down with a expanded flat for a 4th wave.  Depending on where this may stop I can count the entire move since early 2014 as a triangle.  Both wave structure can come to an end below my support line, but it will be the following rally which will help to determine if another large leg up can still happen. 

I still have small open gaps above present prices so in the future those gaps will get closed. Size of gaps makes no difference as gaps get hit 90% of the time.  I think it is more like gaps get hit 99.99% of the time.  Either way a big correction is overdue as this pattern has not produced a big enough bearish mood.  Just like gold has a bearish mood so stocks will also develop a bearish mood.  The more intense any bearish mood gets the closer we will be to seeing a strong bottom.  Price levels are irrelevant, but insiders buying will be one of the important indicators to watch for. 

Once we get regurgitated bearish news, but stocks recover after each news flash, then the bearish phase will be coming to an end.  Another indicator to look for is any SC or GSC degree bearish wave counts. If they have wave counts in sympathy with the bearish herd, then it is safe to bet that they are wrong as well.  Any wave count that is still bearish after stocks are already oversold then these wave counters are the least prepared for a huge counter rally. 

In the bigger picture the Russell 2000 has very little room to move below 2009 price levels and it may also become a leading indicator at the next major bottom. 

The VIX has been shooting up nicely, but now I have two big open gaps below today's VIX prices. The 15.60 VIX gap still remains open. 

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.