Saturday, December 20, 2014

US Dollar Daily Chart Review, Short Term Bull Trap?

Since May 2014 the US dollar has been on a bullish phase that seems unstoppable. I for one see this as part of a big bear market rally which started in 2011. The recent dip and then counter rally looks like it went vertical which is a sign of a bearish counter move. Once I looked at the intraday chart I saw that a potential expanded pattern may be finishing its top. This also means a potential "C" wave decline is very near.  The problem is I have too much of a range for this to play out but my bottom support lines are closer to my small gap that is still open.  It may never reach this far so we will have to be on the look out for the USD to stop early on this impending correction. 

We should see the gold price rise in response to the impending decline of the US dollar. This is happening at the holiday season when everybody is going to dump dollars into the street, otherwise known as going shopping!  

Those expanded patterns are extremely powerful forecasting wave patterns as the USD can crash in the short term but the expanded pattern is telling me that the US dollar should completely retrace this decline and then make one more new bull move higher. Even though I try and catch as many of these expanded patterns as I can, I probably miss just as many. 

Once this expended pattern is fully played out then an even bigger US dollar decline will be in the future.  Never get stuck on the idea that the trend is your friend as it takes a full 5 wave impulse to give us a good trend in the first place. Besides it took the experts almost three years to turn bullish on the US dollar as they are all saying to dump gold and buy US dollars.

The herd and their cheer leading minions are far to slow to be any use as they always regurgitate fundamentals that are lagging indicators, sometimes lagging by many years. 

Gold Daily Chart Inverted With A Big Picture Review!

  I am sure that all of my readers have never seen a gold chart the way I have presented gold in the first chart below.  I have done this many times before with other charts and basically I've inverted the gold chart so it shows the opposite of what we have been seeing.  To produce this chart yourself just take a normal gold chart, print it out and then look at it from the back. As long as the chart is still  travelling to the East, (to the right side) we create a big bear market rally.  I open the normal file in a paint program and then flip it and save it again, and all the numbers on the right will be upside down.

All the dates will also be upside down across the top and not the bottom. The Elliott Wave Principle (EWP) also has to be inverted,  as now we have gold traveling the same way as the US dollar does.

Gold now looks like it is in a big bear market rally, traveling from the West to the East and once this chart is printed out I try and figure out a better wave count with pen and paper. Starting at the 2011 bottom with a wave three in Intermediate degree, the first group of waves we see are not  pure impulse waves as we have three sets of overlapping waves.  This is the first big clue that gold is in a bear market rally and that eventually we would see a new record low much lower than the 2011 low was.  Any wave count I produce must therefore always be one degree lower than Intermediate degree no matter how high this bear market rally eventually goes or what twists and turns gold is still going to give us.  

Many people get confused between physical height also being a bigger degree which is the furthest from the truth than we can imagine. 

In general the gold peak looks like it has completed and now we can be assured of the return of gold's decline.  I think we are jumping the gun if we called this bear market rally as completed.  Presently we could be on a smaller wave 4 decline which still has to make one more newer low before gold cranks up again.  

 Any new high should not go that high as my corresponding wave one was very short and only two waves can extend, never three waves.  In commodities wave one is always the shortest wave in which I have 2-3 sets of them above. There are also several sections which contain what I call "C" wave bull markets.  You never want to miss a bullish phase like the gold chart above shows and the majority will always miss them or never see them coming.  From an inverted perspective we do not want to miss the next decline, holding gold as selling high is the most difficult thing gold investors will do.  Traders on the other hand don't care about investors as they can play both directions. 

This is the normal gold cash chart we are use to seeing and if we believe in the 5 wave impulse then gold is in a bear market and once this bear market has played out we should see gold charge to all time new record highs. This is not going to happen tomorrow or next week, but we are well past the  middle of the way through it. 

The bullish phase of the US dollar is what killed gold as an investment, and by 2011 stock mani returned as all those inflated dollars headed into stocks which now has created a monster stock bubble. All bubbles or manias will burst and they burst bigger in commodities due to all the leverage. 

Mythical support levels are being used and most of them make no sense,  once you check them in the charts.   The first serious support is down at the 2008 lows of $700. The problem with looking too far ahead is that many readers will take that as it's going to happen tomorrow. We are still many counter rallies away from that and the EWP forces us to look far ahead on any idealized chart. 

Many forecasters are calling for gold to decline much further and they can use any number they want to dream up, but my question always is "how" it's  going to get there?  How do they know where gold is going to stop when they never saw the gold crash coming in the first place?  At the 2011 peak they were calling for $5000. In the late 1970s they were calling for gold $2000 and 30-40 years later it still has not arrived.  Economists trying to forecast the price of gold will never work if they don't watch the US dollar at the same time. 

Those pie in the sky forecasts are created by economists that think printing money makes the price of gold go up. What they can never calculate is how much of this electronic money goes up in E-smoke making their forecast worthless. How many trillions have been wiped out in crude oil alone never mind the crushing money lost in gold asset declines. Trillions more will go up in smoke once stocks take a serious dip.

Of course they never tell us about the inverse store of value gold has been displaying for over three years. To enjoy any gains in gold I believe we have to buy extremely low and sell high which is a concept only the contrarians seemed to have figured out. 

Friday, December 19, 2014

Gold Intraday Review: Up, Down And Sideways!

Since the November bottom gold has not displayed the great impulse waves that should happen if a larger bullish phase is in affect. That does not mean it can't rally as fake rallies are always part of any market action.  The decline from the 8th of December sure fits a diagonal decline but this may be part of a larger expanded pattern inside a zigzag.   If this is true then eventually we should see another leg up as a wave two may be playing out at this time. 

This could send gold back up the $1250 price level or more.  Silver did not confirm gold's low in early December, so this can be a fake bull market from my perspective.

Crude Oil Intraday Price Pattern Update!

From Dec 16 crude oil has started with a bang but quickly died out and refused to follow through with a true blue pure bred impulse wave. When crude oil hit the $59 price level it reacted with a violent move to the downside.   For oil to show us that it has more life in it this $59 price level should get trashed to the upside.  There still are many options as a diagonal could be still in progress or crude oil will go sideways for a long time. If there is any way that the markets can fool us then it will do it. 

The gold/oil ratio has been breaking records again and is siting just below 22:1. Many analysts do not look at this ratio, but they are powerful indicators when oil is cheap or expensive when compared to gold.   Many people will never use this ratio as they always switch and use oil as money trying to forecast the price of gold. 

Nasdaq 5000 Is It Just A Myth!

With how high the Nasdaq has gone in the last 5 years it still has not made a new post 2000 record high.  Meanwhile the DJIA and SP500 have made two big record highs since 2000.   Why should the Nasdaq be the black sheep and be denied its place in history? I am not sure if it will break this record as we are still 554 points away, but I am rooting for it. 

From the Oct 2014 bottom to the Nov top we have about 640 points and if we were in a zigzag we wounded another 640 points added to the Dec 17th bottom. It seems we are getting mid month bottoms.  Even if we were at a 4th wave bottom for the Dec the 17th and we get a 5th wave extension would also get us closer to a new record high for the Nasdaq. 

We have so many open gaps in the Nasdaq, it's a wonder that it is staying up at all.  I am looking for a correction that could close the big gap I have, but it should not break to a new record low if the impulse is still in affect.   The mini price level we need to achieve this feat is 4816, combined that with the many gaps to the downside on the VIX, there is still lots of room for a bull market to fly north. 

If I manipulate that charts and switch to area or line we would only be a few hundred points away from a new all time record high for the Nasdaq. 

A correction should be due and the obvious correction would be to close the gap. 

I will be taking some downtime during the holiday seasons so there may be very little posting during those 5 days from about Dec 23 to Dec 28. 

Thursday, December 18, 2014

Comment On: Oil-Led Slump Spurring Fastest Investor Exit Since 2008 - Bloomberg
Here is another classic example how investors buy high and now sell low in a panic to get out.

Quick Russell 2000 Intraday Price Spike Review

The Russell 2000 is as close to the pattern of a triangle that I can see, gap included.  The VIX plunge down also open a big gap so fear can attack anytime again. The sharp rise is typical for a small "C" wave which should get retraced. Other indices also gapped up so it is not just the Russell 2000. 

The triangle could also be the correction to a zigzag so this bull market is not over even though a correction is due. 

Wednesday, December 17, 2014

SP500 Intraday Price Action: From A Bear Trap To A bull Trap All In One day?

The difference one day makes is amazing. It is not important to know what makes the market go up or down , but it is important what pattern it makes when it does.   Fast moves up are fakes many times and single news does not make a bull market. 

Right now we would get stories how 1980 would be support but if it goes below that, it will go much further.  This should not take long as the SP500 has little room to wiggle and it has to produce an obvious "ABC" correction to keep going higher.  There is a very high probability that a 4th wave rally is ending and one more down leg is yet to come. 

I am sure everybody has a retracement level figured out but most of the time you can eyeball 40, 50 or 60% which is the same as high, average or low.  The three lines represent about 40% 50% and 60% of the net retracement for the Oct 15th bottom.  We just hit the 40% decline which is normal for a 4th wave bottom.  

This also means that the VIX could make another wild move up and send the VIX towards 31. 

As I mentioned there is very little moving room for the SP500 to squirm around, if the resumption of the bullish phase is real. 

We are two trading days away from a new moon and the new moon dates can be very bearish for stocks. 

Mini DJIA Intraday Elliott Wave Count Review.

It looks like there may be a bottom but looks are always deceiving when it comes to Elliott Waves in the markets.  The markets will never lay out a simple obvious pattern for us as the obvious patterns are always traps.   Fibonacci retracement ratios are another popular tool but I see them as a complete waste of time. I tried all the ratios that are show with the X formula yet I have never seen them work properly.  I don't think there are too many traders around that can consistently trade on a specific retracement ratio.  We might have 5 levels at any one time and presently we are sitting at a 40% net retracement level. 

Besides retracement levels are subjective because of the difference of opinion from where to measure from. Every wave count is different because we all start counts from  different positions.  I started counting waves never using "WXYXZ" pattern and never used arbatrary retracement levels but only use "net" difference numbers.  In the case of the DJIA it would be from the Oct wave 4 bottom. 

60% retracement would get us close to 16,700 price level and even then 80% would be another retracement level. 80% would dip into my wave 1 which would blow my present wave count, if it got that far. 

The VIX is in such a state that it can plunge, which would be very bullish for stocks so there is always a bullish move that can attack the stock bears when they least expect it. 

Crude Oil Intraday Crash And A Bear Trap At $54?

Crude oil touched a new bear market low at $54 yesterday and then proceeded to roar up and then a correction. This correction did not go to a new low developing a higher low in the process.  This is a good bullish sign initially and gives us a base for the start of a new wave count.  What I am looking for is that the pattern keeps developing 5 wave sequences of some type.  

The more true impulsive looking the waves are the longer and further this rally will go. Of course many will just take this as another bear market rally, and they may be right. I still have to confirm the pattern no matter what it is. 

All the economic horror stories you may be reading about crude oil or the drillers will  become irrelevant or quickly forgotten once oil keeps pushing higher.  On any potential turning like this I always make pattern recognition as my primary tool as Fibonacci retracement levels  will never work if in fact we are back into a bull market.   There are millions of Fibonacci ratios active ant any time and to me they mean nothing if we can't tell the difference between a counter rally and a full blow bullish cycle. 

My first serious resistance would be at $107 just about a 100% gain away.  The important thing to remember is that the gold/oil ratio was at 22:1 and today sits at 21:1. This makes oil extremely cheap when compared to gold and you can put that into the ratio history books.  I use a minimum of 4 points of extremes to establish the outside parameters of ratios and 22:1 is right at the top of the list. 

We need oil to keep pushing higher with impulse style waves and we don't want the bulls to jump on board too early.  Hopefully $54 will also hold as the low oil price for 2014. 

I have been shooting for  "B" wave bottom in Minor degree and I would need a full set of 5 waves in Minute degree to help confirm another stage in the wave count.  Putting in a stop at $53.90 could allow a trader to bet bullish and his stop could end up being very safe. 

Added weekly chart

There is still no guarantee that the $54 price level will hold but this price level ended up close to a longer term trend line.  With  the gold/oil ratio already at 22:1 we are at an extreme when compared to gold. I consider gold the very best in measuring any other asset class to it. Most people do not take the time to calculate out the ratio, but at the extremes they are very obvious and powerful indicators.

At the 2008 peak we were looking at about a 7:1 ratio which was expensive to gold or any other yardstick you want to use.  If the gold/oil ratio gets back to even 10:1 then were are looking at another extreme crude oil price. 

The long classic snake like decline fits very well as a "C" wave. If you print this chart out and look at it from the back it would be flipped over and then it would be called a "C" wave bull market. 

I have three major price levels that would all have to get hit if my wave count is reasonably on track. These price levels are $107, $115 and $147.  They all represent price levels that any "ABC" crash would have to retrace. The crash from 2008 to the bottom of 2008 is very straight but most of the straight ones are corrective waves as well.   

Tuesday, December 16, 2014

Gold Daily Chart Elliott Wave Count Review!

In the last few weeks I have looked at the gold chart from the 2011 peak in many different ways and I still came to the same conclusion that the decline from the 2014 peak, is actually part of a flat traveling to new lows. (Expanded) Gold also crashed as soon as it hit my bearish trend line, but it is crashing with a very choppy pattern typical of a diagonal decline in a 5th wave.  

These diagonals are found in two places, any 5 waves in a "C" wave in any direction, and any 5th wave in any direction in all degrees of trends. If a pattern can happen at a smaller scale it can happen on a bigger scale as well. 

When I start running into these frustrating patterns then they also help in supplying me with a hint to a location. "Location, Location, Location,"  How many times have we heard that expression before and with EWP its all about trying to find our location in the idealized script. 

If gold makes a new bear market bottom I don't expect it to get all crazy and sink to a radical new low  as a double bottom would work very well.  After that a radical "C" wave bullish phase should send gold right back up and it should exceed the 2014 peaks. Short term gold can pop back up to $1200 before resuming another leg down.  

The gold/oil  ratio is at 22:1, which means oil is extremely cheap when using gold as money. There were two other extremes that have matched or even surpass this extreme.  One at the 1999 bottom (25:1) and the other at the 2008 bottom (21:1). 

US Dollar Intraday: Is There More Upside To Go?

The US dollars decline sure looks like a diagonal decline and chances are good that it was part of an expanded flat type move. If that is the case then another push north is in the cards, and gold has paid the price for it.  When things get this violent there is always a surprise move and sometimes we can catch them but many times we can't.  Any rally in the US dollar could also push stocks on another leg up. 

Russia Defends Ruble With Biggest Rate Rise Since 1998 - Bloomberg

SP500 Intraday Chart Review: The Crash Continues!

The decline continued this morning creating another newer low.  So far so good but my 4th wave scenario is getting pushed a bit too far, but this can put my potential zigzag back into play.  I checked my 5+ year trend line and this would intersect at about the 1900 price level. I know many are stuck on price levels in assets but I can only give price level forecasts based on my wave counts. 

From the October low,  this rocket move only had very small corrections, and it could not continue.
Good zigzags tend to be even in length, but they also can stretch on the "C" wave.  At about 1920 we would be close to a .618 net correction from a 250 point move.  I only use Fibonacci retracements very rarely as they are not worth the effort. The relationships between waves are very subjective as nobody has the perfect wave count and besides there may be millions of Fibonacci ratios at work at anytime. Nobody new the perfect retracement level that the 2009 bottom created yet the majority are hooked on their retracement level tool. 

This morning the SP500 turned at 1180 and gold crashed so the SP500 may not even get down this far.  From any real bottom that the SP500 can hit,  I will add on about another 260 point move in which the SP500 could go well over 2100. 

Monday, December 15, 2014

1998 Comes Calling in Currency and Credit Plunges From Russia to Venezuela - Bloomberg

Crude Oil Intraday Crash at $55 And The Gold/Oil Ratio!

Economies are imploding around the world a fallout from low oil prices.  Most of the countries their bonds are imploding and Russia is now at 17%.  Many countries that have problems, the problems can be directly blamed on their own governments. 

Today crude oil touched close to $55.43 on this February futures contract and this entire last decline could be part of a diagonal decline, with one more up and then down move. Yes, we have had a new bottom but it could be an expanded wave 4 rally. $55 is a Fibonacci number so we could roar up but right back down again. Then it could drag out at another bottom creating double bottoms before it turns again. 

The crude oil crash has been one mean spike down and I am sure this is all part of a "C" wave crash. 
Fibonacci whole numbers are great as oil has moved around them many times before. 

We could see a potential run to $61 but it will be important to see how it gets there.  Eventually we should end up at a "B" wave bottom in Minor degree from which we should see a monster rally develop.  In the long run the turmoil will produce shortages supplying the fuel for the next bullish phase.  When commodities see major lows the smart buyers buy up the real commodity just like they do in gold and silver. 

Everybody is extremely bearish on crude, so the more bearish they get the higher the bullish phase will go.  

Today the Gold/Oil ratio topped close to 22:1! This is extremely cheap for oil. The largest ratio I have calculated was about 25:1 in 1999.  I double checked the ratio from the 2008 bottom and it was 21:1 at that time. We are breaking some crazy Gold/Oil ratio records. 

Gold is a great measuring stick but few use it as such as they don't think a floating gold price can do this. Gold is always adjusting itself to inflation and deflation and has crashed right along with oil since the 2011 peak.   

Quick Look At The VIX, And The Crazy Spikes!

This is yet one of the craziest groups of spikes I have seen in a long time. I think they are computer or algorithm generated as they sweep away all the stops. Yes there are futures you can play with the VIX  but the chart above is just a cash chart and still these crazy group of spikes developed. 
Wild spikes are normal in any commodity as all it takes is a thinly traded asset class to produce them. 

This could be building resistance as I count  close to 5 open gaps below. All gaps have a 90 percent changes of getting filled but I see it more like 99.99% of gaps get filled. Even if another leg up in the VIX may happen, then the gaps will still get closed but at a later date. Gaps never go obsolete or just disappear, but they can hide if we look at it from a larger time period. 

In other words stocks can still rally. The SP500 stopped at 1984 this morning and hopefully that price level will hold.  The VIX is still the best indicator for the fear that runs through the markets and it turns this fear into numbers. 

If the VIX makes a sudden drop to the $15 price level then I could see another leg up, but right now we have to see how this plays out this week. 

Gold Intraday Review.

It all looks nice and bullish and I can just hear all the analysts saying if "gold stays above $1200 it will be bullish", otherwise it will be bearish! What a crock of shit as gold does not work on some mythical support line or Fibonacci support ratio. Support or resistance lines that do not take into account of large previous lows or a previous highs are just mythical numbers picked out of thin air.

Gold should have rallied much further and much longer by now but it hasn't. It is starting to make a choppy decline which all look like corrective patterns.  Better yet it can be a diagonal decline which can produce death defying moves.  Especially in the last 5th wave. You will not find a nice trend line that will show these diagonals.

Silver did not confirm gold so a surprise bull market in stocks can send gold dropping like a rock or float like a heavy feather.

Any low below the November low would sure help to confirm this potential bearish rally as this rally started out to impress us but soon started to die out.   Gold just hit $1205 in the Forex charts but support is closer to the $1195-$1180 price level.  If we are  being fooled by a false start then even $1132 will not hold.

My Primary degree trend in gold is still up and this will not make any sense if we do not look back to the 2011 peak and figure out that gold's bear market is just a correction in a bigger bull market.   We still have some wild ups and downs that need to show themselves but I believe eventually gold will break to new highs, and it should do it by 2019 or sooner.

Saturday, December 13, 2014

VIX, Russell 2000, SP500, DJIA: Potential Stock Bear Trap Review!

From my perspective watching the VIX is very important as it has a direct inverse relationship with stocks.  Visually it displays the fear factor well enough to use with most of the big stock indices. 

The VIX displays great wave patterns but they are about as choppy as you will ever see. That has a lot to do with the fact that the VIX runs with the EWP flipped upside down, just like the US dollar does. 

All rallies in the VIX are 3 way patterns and the VIX will only produce very small degree 5 wave runs. Over all the VIX is more like it is in a permanent diagonal going sideways for many generations. 

The rally from last weeks bottom was an extreme vertical move that has not been matched since the early Oct 2014 move.   What happened in the last few days forced the pattern to bunch up immediately which I count as diagonal in nature.  Another wild spike also formed on Friday.  This cannot continue and it would not surprise me if the VIX slowly started to implode next week.  With a potential expanded flat 4th wave up, the VIX should retrace this entire move as it heads lower.  Stocks should rally just like they did from Mid Oct 2014. 

On the way up on this spike, gaps started to open up immediately.  If all this happens then the VIX will be faced with a Scalene type triangle and that itself will have all sorts of meanings later on.   

Who cares about the Russell 2000? Not to many do, but it works as a great leading indicator. The Russell 2000 has barely moved while the DJIA and the SP500 have run down much further.  The Russell 2000 is not confirming the SP500 or the DJIA. The only way for the Russell 2000 to keep declining, the VIX has to keep exploding as well.  The Russell 2000 still can make a spike to the downside, but we should end up going higher. 

This all has the look and feel of a bear trap, and next week will tell us more.  In the Russell 2000 I now have two 4th waves in a row,  and both have triangles in them but they are separated by one degree. Two back to back triangles are also telling me a major degree change is coming and I may have to dust off my Cycle degree wave three and find a spot that it can call home!   

I have been working all the markets without a Cycle degree wave three top or bottom anywhere in any of my asset classes that a cover. In other words I am still looking at the markets from a Primary degree perspective. Nowhere in any market have any SC or GSC degrees associated with them, as SC and GSC degree cannot exist until Cycle degree wave 5 is found. I spent over a decade looking for these higher degrees and I found out the hard way that they are all mythical wave counts! 

I had to draw in the trend line to highlight the two shoulders, as to the majority this is a downside breakout destined to happen.  How many times have we run into this same pattern and the pattern breaks out to the upside?   Hang on to your hat, as the winds could change directions and start blowing from the SW again.  

The same head and shoulder pattern is evident in the SP500 except for its angle.  So many times we have seen the markets push up and create an upside breakout, as the right shoulder ends up being a fake.   The Oct 2014 bottom has a good chance of being my 4th wave bottom in Minor degree and the rally since then is a 5 wave run in Minute degree.  I can get this pattern into an expanded top, which if true ,will force the markets into yet another record breaking upside breakout! The SP500 would have a long way to go down to get to another major downside breakout position. It's hanging in midair right now, except for a small gap. 

Yes, the markets can wobble some more but we should see attempts to head higher.  

Another big pointed head in the DJIA and a right shoulder decline, which most of us would assume should go much lower.  I have seen these double tops fail more times than they work as it seems the right shoulder can have a magnetic effect where it would produce another upside breakout.  Yes, we could still face some gyrations but this bull market could turn and sail NE one more time. 

I used to do some sailing in a small sailboat and the markets behave just like a sail boat except with the markets you know the winds "always" blow from the westerly directions. The VIX would work like a barometer or pointer and will always point in the direction where the stock winds are coming from. 

 It would not be rocket science to guess that the DJIA can still go above 18,000 as that top trend line is not a barrier but more like a challenge to go higher. 

I have mentioned it many times that I do not see that any markets have passed any wave three position in Cycle degree, as I removed all my Cycle degree wave three positions since June 2014.  From my Elliott Wave Perspective I'm still in a Primary degree world and I form Primary degree opinions and forecasts from my idealized wave charts.  Without finding and completing "all" 5 waves in Cycle degree, no SC and definitely no GSC degree wave counts can exist! 

Elliott Wave is easier to figure out from the idealized wave drawing which tells you what we are supposed to have. If we don't know what we are supposed to get then how do we know what we are supposed to be looking for?  

For anything I will ever need, I have 5 waves in Cycle degree, making sure that wave three is extended down to three degree levels. This makes my Minor degree level the most important degree.  If we can't confirm anything at the Minor degree level we will never confirm anything at a higher degree as well. It's all connected in sequence, and how stringent the connections are the better the wave count we can get.  
By 2021 my Cycle degree wave count will be 89 years old! 

Nobody has confirmed any part of GSC degree, as all it takes is being out by one degree anywhere, and the entire wave count falls apart.  Creating forecasts now ranging between 1000-3000 in the DJIA are simply numbers picked out of thin air. 

Why not add DOW 5500 to this list as that would fit the megaphone very well.  What many do not understand is the lower and uglier the markets eventually become the bigger the bull market will be after that. Both the 1932 bottom and the 1975 bottom saw stunning bull markets explode from these lows so the future will not be any different.  

Now we are facing a stock mania peak that eventually will end,  and the real bear market will start as we head into Cycle degree wave 4.  I prefer my 100 year cycle which means I look back to 1914-1915 and then look forward from that time period. This puts the Roaring 2020s still high on the list which would be my Cycle degree wave 5! 

Record Oil Tankers Sailing to China Amid Stockpiling Signs - Bloomberg

Friday, December 12, 2014

Crude Oil Crash, Weekly Chart Update!

I just love to see a crash like oil as it can be a long time between these types of crashes.  I am sure we can find all the horror stories out there that oil is going much lower. Yes,  this may all come to pass but if they all new exactly when the crude oil will stop crashing then they should tell us what will happen to oil after it stops crashing! They will never tell you what will happen "after" any target price gets hit.  Are there any wave counters out today that will tell you that oil still has to go above the 2011 peak or even the 2008 peak?  Most wave counters are stuck in their SC or GSC degree world which are  all mythical wave counts. 

Forecasting a bear market in oil after a 3 year decline is not exactly rocket science, but it demonstrates how late the fundamental analysts see economic reality. When oil was at $147 they sure did not see a world oil glut coming nor did they see a bull market coming at the depth of the 1999 world oil glut.

This morning oil hit $57.75 before turning again, and it would be nice if we hit our 2014 low of the year. Any rally that starts out I will be looking for impulse waves as they are the waves that will compound the degrees after each 5 wave sequence is completed.

If $55 is still in the cards I don't know, but what I do know is what I see after the 2011 peak. From the 2008 peak I have about 4 price levels that technically speaking should all get retraced by at least 100% or more.   This may all happen by 2019 or sooner as that would match a commodity peak from my 100 year cycle. The 4 price levels are, $107, $111, $115 and the big one at $147.

The gold/oil ratio hit 20:1 this morning which makes oil very cheap when compared to gold.  We could get a higher ratio but I would not count on it. If the ratio switched back to say 13:1 or lower then crude oil would be expensive when using gold as money. Gold is the best measuring stick we can use as its weight never changes.  Imagine if we used the same gold/oil ratio today but had a $5000 gold price, then we would have $250 per barrel oil price. This is virtually impossible that it will happen as crude oil would be closer to $500 per barrel  by then with a 10:1 ratio.

Updated Dec, 13, 2014

As I look at the intraday decline which started in early Dec the decline does not fit into a pure impulse pattern as waves overlap at critical times. Also the speed of this little decline is also very fast   and straight.  This makes this 13 day decline fit well as a diagonal or even a triangle as a potential expanded pattern.  You would think no freaking way (NFW),  that expanded patterns happen like this, but I say they happen all the time, but are rarely every counted out that way. Instead they use WXY waves which mean nothing!  Back at the early Dec double top,  would be the best place for a counter rally to terminate at. It would be a "C" wave bull attack and does not have to display perfect impulse waves. 

Any counter rally would break up this crude oil decline and finally produce a bigger wave structure than what we have had so far. 

I would rather be wrong in trying to catch a wild move like this before it happens than not see it happen at all and be completely surprised.  In commodities fast moves happen regularly so if we are not looking for them, then we most certainly will be surprised by such a move.  

Maybe those mythical algorithm creatures will come back and panic the crude oil market to the upside. 

Gold Intraday Elliott Wave Count Review.

This is the February 2015 gold contract which means real money is involved, not like the cash charts I have used.  When I make a daily review I can use the cash charts just not the intraday charts for a while yet.  

As much as I would like to give my readers a very bullish gold chart, I can only give you a mediocre bullish wave count. In other words I am very suspicious with this bullish phase because all pure impulse wave patterns has fallen apart. Silver does not confirm gold and at major turnings it should,   When gold took that swan dive at the end of November, silver crashed to a new record low but gold held and produced a higher low.   The early November low may yet be a diagonal low which means this bullish phase would have to die and resume a downward path exceeding the $1132 price level low. 

Yes, I know we have had extreme bearish lows and they are all good signs for the longer term, but short term I can't ignore what the gold market is dealing us.  

From the beginning of Dec gold exploded in a near perfect impulse wave, which I can fit into another zigzag easily. In the last week we have had a correction in gold and it should push above the $1240 price level. Maybe the November low will hold as the 2014 low of the year. 

Next week we should see higher gold prices,  and gold would have to perform very well if a full true impulse is still to play out.  Giving that 5th waves do have a habit of extending in commodities, gold should see $1250-$1260 or higher. 

I also took a gold/oil ratio reading this morning which was over 20:1,  this makes oil very cheap when compared to gold.  In the past I have measured an extreme of about 25:1 so we are getting up there. I think gold is one of the best tools to use when measuring it to anything else, as it's always adjusting itself to inflation and deflation or the velocity of money.  

Thursday, December 11, 2014

Is The Nikkei Ready To Tumble?

If you want to see a bear market of epic size then the Nikkei is the one to look at. The Nikkei bear market has been going since early 1989 no going on 25 years. The rally which started in early 2009 with the US markets sure looks like a big bear market rally as the choppy start does not fit into classic impulse.  Japan has had real deflation for decades now and Abe's attempted at inflating has backfired. Japan also has an aging population problem and no immigration to speak off. 

For the last year the Nikkei has gone up but its pattern was a choppy ride at best,  which could make it an ending diagonal in a "C" wave bull market.  At 18,000 it has also formed a double top which adds to my bearish outlook. 

I have always had the bullish move from 2009 as a 3 wave pattern, and any "ABC" in any direction will always get retraced by 100% or more. In the case of the Nikkei it looks like a 25 year triangle and eventually that 1987 peak will get surpassed.  It will not be tomorrow as I think one more new and final record low still has to happen. 

Imagine if this was the North American markets and how well the pension plans would be working. No net gains in 25 years will not build a pension plan. 

PressTV - Chinese power plant burns banknotes to generate power

PressTV - Chinese power plant burns banknotes to generate power

Chinese power plant burns banknotes to generate power
A person
A person's hand on piles of 100-yuan notes
A power plant in the Chinese city of Luoyang in the central Henan province burns used and worn banknotes instead of coal to generate electricity.
According to the power plant, one ton of banknotes is capable of generating over 600 kWh of electricity, and is more environmentally friendly than using coal.
The People's Bank of China, the country's central bank, has authorized the unusual energy source, and says it is an efficient way to generate electricity.
The old paper money gathered from the province "can help generate 1.32 million kWh of electricity annually, which is equal to burning 4,000 tons of coal," a bank staff member told reporters.
China usually uses worn paper money to make paper products after they are withdrawn from circulation. 

Mini SP500 And The VIX Update!

Analyzing the VIX is an integral part of my Elliott Wave as human emotions are the real fundamentals of the markets. The recent drop in the VIX has open yet another gap, combined with one more big open gap above tells me that more fear is yet to come, but at the same time I have 4 gaps open to the VIX downside. Any downside to the VIX is bullish for stocks so there is lots of room for wild swings to occur.  If the VIX pushes much further than anticipated this time then my expanded pattern will be thrown out.  

The decline in the SP500 looks diagonal and it may smooth out but that would be wishful thinking on  my part. A very fast rapid ride indicates that the bears were caught in a bear trap and it may pop up one more time before it resumes a downward path. If the decline produces another fast down move but does not travel to a newer low then all bearish bets would be off the table. I have a few lines drawn across horizontally,  and those lines show where gaps would get filled at. 

I am not going to call the extreme peak as a completed wave three in Cycle degree as we may be in just another correction and could even build as a triangle.   I am sure there will be year end selling at some point but that may no happen until after the holiday season. 

Gold Intraday Review: It's Still Going Up!

With the US dollar making downside moves gold has reacted like it should.  In the short term gold is not finished going up as it should break out higher in a potential 5th wave move.  The November bottom, silver did not confirm gold which will have implications further down the road. Gold could be in a bearish rally which should hit my invisible top trend line one more time. 

Gold has gone past one major bearish trend line already, which is a good sign but now gold will face a price hurdle at $1260 as another bearish trend line would give us resistance. 

There is a chance for gold to be in a fake move from which we could see a short term free fall to a newer low but then charge right back up again. 

The best move would be for gold to contain an expanded pattern with a very long "C" wave attached to it,  as ideally we want the gold bulls back in the gold party.  We just don't want them to come back to the gold party to soon. 

It will be tough to find any top if gold and silver is in a fake move, as we want to milk this run to the absolute max if we can.  The violent moves that gold has made virtually kicks out any gold Forex trader very quickly as their stops will always get triggered. They would be forced to change directions many times.  Very few traders if any can take a position when gold is crashing down, to catch the next violent move up. With  EWP this would be like trying to catch a "C" wave bottom or the falling knife all the time.   All the Elliott Wave analysis in the world is never used, as the majority will never buy something as it is crashing, and beside contrarians are only a very small segment of the worlds investors or traders. 

Quick US Dollar Intraday Review!

For that last three trading days the US dollar has started a decline. This decline is not a pure bred impulse wave, but it fits a diagonal decline much better.  The last move sure looks like an expanded wave 4 so we should see the US dollar head south one more time, even though it could be a very choppy decline.    This should give gold a boast for the rest of the week. 

I  take a diagonal for any leading "A" wave or in any 5th or "C" wave positions in all degrees. Sometimes they act just like triangles and the only difference is that triangles form in different positions. 

Wednesday, December 10, 2014

Important VIX Intraday Spike Review!

The VIX performed its duty and has shown us how fearful participants have become.  This was a vertical move which rarely can be maintained without a correction of some type.  The move from about Dec the 7th seems to be completing a 5 wave sequence but what is important is that it may only be a 4th wave peak with an expanded wave 4.  Any expanded wave pattern, if identified correctly,  will always be retraced by a100% move or more.   

The spike also contains 3 open gaps which further supports a potential drop in the VIX. An impending  drop in the VIX means a bullish move in stocks,  so stocks could be in a mini bear trap. 

At my present line one open gap has been close and the other gap up higher will get closed at another time.  Any down cycle in the VIX could then get closer to the $11 price level and we will have to see if my last remaining bottom gap will also get closed. In all I have 4 open gaps below present VIX price levels and one open above, so this guarantees lots of wild price moves in both directions still to come.  As I see it at this time the stock bears can still get slaughtered as the bulls make a comeback. 

The VIX will never go to zero so any record low around the $10-$11 price level will be pushing the VIX to the extreme side.  If the VIX run is bigger than anticipated then only a short correction will take place which would be between the  $15-$14 price levels. 

As long as no Elliott Wave counters look at the VIX we can be assured their wave counts will always get them in a trap as the VIX supplies a reality check to over zealous bulls and bears alike. 

Mysterious ‘glitch’ trade foretold Apple’s fall

Crude Oil Weekly Chart Elliott Wave Count Review: 20:1 Gold/Oil Ratio!

Another few dollars lower and the crude oil spike gets longer. The price of crude has reach a bit above $60 and is now starting to face some serious support levels.  Crude oil has dipped deep inside the 2006-2007 support with $55 also looming closer and closer.  The last little intraday pattern looks like a diagonal so that looks promising as a potential turning is getting closer. 

In the end these commodity crashes can never be maintained, especially when the bearish mood has been rampant. I am sure you have heard every price forecast known to man, and they all mean nothing when we look at it from an Elliott Wave perspective.   They sure did not forecast $60 oil when it was at $147 as they did not see the world oil glut coming.  Price moves create fundamentals not the fundamentals creating price moves as fundamental news is lagging information. 

Any price forecast can happen but if they can forecast any price,  then why can't they forecast what is going to happen after their price forecast gets hit?  When we look across that 2011-2013 pattern there are no good impulsive waves heading down, which instantly puts them into a corrective pattern, with the peak price of this corrective pattern being about $115. From the 2008 peak  of $147 crude oil crashed virtually straight down and these moves are always corrective moves or part of corrective moves.  

Since the 2008 peak we have 3 major bullish price tops that all need to be retraced at some future time period. There is a "C" wave bull market in oil yet to play out and we are getting closer to a "B" wave bottom every day. 

On any bullish move back up, $107, $115 and $147 will be the three price targets for crude oil to beat. 
Do not be concerned about the world oil glut presently in play as major bull markets start from gluts in commodities.  After all gold was in a world glut and gold depression in 1999 and look what happened to gold!  

 I just checked the gold/oil ratio and this has jumped to 20:1.
 To put it bluntly this is getting "CHEAP" when using gold as the measuring tool.  In 1999 this hit about 25:1.