Monday, October 20, 2014

Gold Intraday Elliott Wave Count Update!

The fact that gold still can be in a bearish rally is how gold crossed to a new low in early Oct.  There was nothing clean about that crossing  so I will keep  working gold as a bearish rally until it tells me otherwise. $1255-$1260 would start to push the maximum I can have, with $1280 being the maximum.  The USD has one more rally left to go from which it could top out at a wave 4 top, but gold will have to suffer some more down side while the US dollar plays that scenario out. 

This is also when most gold investors will get very depressed as it could also kick in bank selling, or stories of banks selling gold.  Of course companies that control the GLD will be selling gold but they will be buying it all back once the gold market bottoms.  We could see a $100 or more drop in the price of gold during this time but I believe it will terminate at a 4th wave bottom in Intermediate degree.

If this all becomes true then gold will start to behave radically different as it will keep making "ABC" corrections and not stop. Gold should pass all old highs and maybe even approach $2000 or more.  I would be pushing my luck if I said gold can still hit $2225.  Sure I am looking ahead into the future but that is what Elliott Wave is all about as anything above $2300 gold would be approaching the long term top trend line again. 

Even when gold approaches to a potential wave three in Cycle degree most contrarians will be selling  as the subsequent gold crash will be much deeper than what we are going to get in the next few weeks.   Gold can surpass old highs but old bullish readings may not,  so we should be prepared for that when it happens. 

Gold $5000 is a number picked out of thin air because crude oil would have to keep up to gold and if we have an average gold/oil ratio of 14 then $5000 gold would produce a $357 per barrel crude oil price.  When gold was approaching that extreme top 90-95% did not see a bear market coming as the majority were all bullish on gold.  The same thing happens at bottoms when the majority are bearish on gold like they were in 1999 and just recently.   Mind you 4th wave bottoms in gold do not have to match the bearishness as what happened in 1999 as that was one degree different then what we are facing now. 

US Dollar, Intraday Elliott Wave Count Update.

By the end of this week we are going to approach the new moon date, which can be very bullish for the USD.   It hasn't traveled down far enough to fit a zigzag so in the short term we should still see some US dollar weakness.  Then we should see a USD bull attack which should push the USD towards the $89  price level, maybe reaching for the $92 price level.   

This will all be bad news for gold in the short term but the good news is that I believe the USD would be terminating at an Intermediate degree 4th wave top from which the USD should decline in a 5 wave pattern creating a new record low in the process.   You will be hard pressed to find the fundamental reasons for this decline now, and the old lame excuse of the printing presses running full blast will not do.   This 5 wave decline will send gold soaring just when everybody has given up on gold and banks start to sell their gold holdings. 

Saturday, October 18, 2014

US Dollar Weekly Chart Elliott Wave Count Review!

As we get closer to the end of any month then we can also expect a potential big turning. It does not happen like clockwork but it happens enough times that we can't ignore it. 

Below I have reworked the  degrees with my wave counts because I think I am still too early to have crossed into Cycle degree with  the 2008 bottom.  This all makes my present degrees several degrees lower but my targets still ending up doing the same thing. 

Always remember that when looking at  my US dollar wave counts that I flip the Elliott Wave Principle upside down.  This makes "all" upward bull markets always a 3 wave affair and only small degree 5 wave sequences can form,  specific to my largest degree.  

At the 2008 bottom, Cycle degree was too big and Primary degree makes less sense so for the time being I will work the pattern that started with the 2008 bottom as an Intermediate degree wave 3.

  The largest degree 5 wave sequence I can have until the entire corrective wave is completed, is a 5 wave run in Minute degree.  Making sure that my degrees are relative to each other is a mathematical sequential process that I take very seriously as that stops wave counts from drifting into a degree that we should not be in.  The best part of understanding Elliott Wave is if you understand the concept of all the "ABCs" eventually getting completely retraced.  This is very degree specific and in the case of the US dollar it has to be below Intermediate degree. 

Since 2008 all the patterns have been choppy and erratic which makes the entire pattern very prone to complete retracement. Eventually the US dollar will create an all time new record low. To do this it has to make an Intermediate degree run heading south.  You will never find the reason why by looking for fundamental news to support that forecast, because fundamentals are the result of price changes not the cause of them.  

By the time they do figure out a reason and regurgitate that reason a few times, that very reason becomes irrelevant. 

The majority always forecasts for a trend to continue but I always expect the markets to eventually do the exact opposite of the crowd, This has always the best chance of happening after a major run, and after a major spike has formed in daily and weekly charts. 

We may have another leg up to go with the USD but then we should see a return to a bearish decline that nobody is expecting or talking about right now.  Any bearish decline with the US dollar will be good for gold as you can't pry them apart no matter how much they try. 

All the SC and GSC degree wave counters must keep forecasting that the USD heads north as that is what deflation is supposed to do.  The deflation that we recently have had, since 2011 has crushed the gold price and even the oil price, which has happened many times before.  Gold is the most sensitive metal to inflation/deflation but it is useless as an inflation hedge if we buy it too late.  

Friday, October 17, 2014

Mini SP500 Daily Chart Elliott Wave Count Review, With VIX Commentary.

Markets rebounded in dramatic fashion today. Creating a wave count without ever looking at the VIX is like beating your head up against the wall. The VIX visually displays inversely,  the emotions that investors go through every time the markets go up or down. The idea that the markets are "safe" when the VIX is low has been proven wrong time and time again, yet experts keep regurgitating that  theme.  One reason they do this is because investors hate volatility and they only get in when volatility is at a minimum. Most all gains have already played out once the VIX is at an extreme low price. 

As the VIX crashed today it opened up a big gap which strongly suggests another new high in the VIX can be created in the next week or so, considering we are within a day of the 1987 crash anniversary date.  Back then it was called a Black Friday, maybe we will get a Black Tuesday?  

The degree of the 5 waves that I had been working was one degree too high as the SP500 stopped at the 1820 price level.  This matched another gully low back in April 2014.  No retracement calculations were required as I rarely ever use them.  When you travel back down the bull market, every bottom can be a turning point so why spend all that useless time with Fibonacci retracement levels. Fibonacci  retracement levels do not tell you when a bull market is supposed to start or end and we can use the bottom of 2009 as an example. 

Pattern recognition is far more important than any Fibonacci price level, but any pattern is strictly degree related. All the SC degree wave counters may be saying how much worse it's going to get as the markets are supposed to plunge back to the 1970s price levels.  Dow 1000 has been a favourite battle cry for the GSC degree wave counters, so where do you think the SP500 is going to end up at if it were to keep up to the DOW?  The SP500 would have to plunge well below 200 and that is a very conservative number as it would have to be closer to SP500 100! 

 All those forecasts are based on wave counts that have never been confirmed by anyone in the last 14 years. Hell they haven't even found a complete set of 5 waves in Cycle degree yet, and I bet they never will.  They will never find all the Cycle degree wave counts because it's too much like work. Cosmetic wave counting is much easier as you don't have to go back 300 years to double check your work. 

As long as the majority are using the WXY wave system, they are hiding the true waves in a smoke and mirror like game as sequential wave counting is thrown out the window.  

Elliott Wave 5.0 "Reboot" is all about finding those 5 wave sequences in Cycle degree but that can't be done without a detailed blueprint for five waves in Cycle degree, and wave three must be the longest  wave. 

The SP500 may have one more leg down, where it could halt closer to the 1740 price level and this would match the level that a potential expanded wave 4 started from.  If this were to come true then we could see a fast monster rally that may even take the markets to record new highs by years end. 

US Dollar Intraday Update! Are We In A US dollar Bull Trap?

The small sideways pattern in the USD sure seems to fit better as a small 4th wave which means there is more downside to come. 5th waves in commodities can extend dramatically but that may only be the tip of the iceberg.  Even if the US dollar hits the 83.800 price gap it would not be long enough to complete a great looking zigzag.  I have applied an impulsive wave count but most all my wave counts that I use are wave counts that have to be eliminated.  Elliott Wave from my perspective is the process of elimination, not mindless cosmetic wave counting which we all have practiced at one time or other.   A further decline in the US dollar will give us the kick that gold deserves to get, as golds bear market has been dragging on for far too long. 

Mini SP500 Intraday Update Are We In A Bull Trap Again?

This market is going to move fast in both directions as this looks like it can be a bearish rally which means more downside yet to come.  The VIX opened a huge down gap so the VIX can push much higher again.  Even the SP500 opened a small gap on the way up, plus I have a very vertical move which dictates a correction to come or the resumption of the bigger trend. 

Eventually I would like to see a complex pattern like a triangle as that would indicate a bigger degree change is coming or that we are in a  4th wave. 

Gold Intraday Chart Review, Is Gold Going to the Moon?

If there was a time for gold to do something special it should do it soon.  Gold may not go to the moon but another leg up can sure happen. I did not start my blog to produce mindless trade setups but rather bigger turnings that will impact all the players who are playing in one direction. 

Turnings that force the majority to completely get out of one direction and which forces them to jump onto the trend in the other direction.  The emotional traders cannot handle these turnings as they don't have the trading liquidity to handle huge draw downs.

Even this counter rally will force all the XAU/USD players to jump onto the bullish bandwagon as missing out in a bullish trend is not an option.  After all the trend is our friend right?  Well,  the bearish players sure got stabbed in the back by the gold bulls last month,  and they may not be finished yet. 

Let's say that gold hit a big rock bottom in early Oct as a potential 4th wave,  then we should see some sort of 5 wave patterns build by compounding themselves and only producing "ABC" corrections.  This would be the classic higher lows which indicates a bullish phase is in progress.  Drawing trend lines too early is also too subjective and many times all trend lines do is highlight the area in discussion. 

With crude oil potentially hitting a major bottom, it would fit well if gold also has hit a very strong bottom a few weeks apart. 

Gold stock insiders are not selling, but I am sure they are all buying whenever they see their stocks hit new lows. They are the smart contrarians as they never buy gold stocks on an emotional basis.  Yes, Mr. Andy B,  you are on my smart contrarian short list.  :) Gold can make bearish moves during this entire  time masking the big bull market in gold yet to come. If the trend in stocks is down, traders will jump on anything that seems to be going up, as these day traders are truly the emotional bunch. 

DJIA Oct, 20, 2014 Are We Going To Get A Black Monday?

It's been about 27 years to within a day that the 1987 crash produced a Black Monday.  The markets snapped back very quickly in the last few days and I have a problem with that as a mini vertical move is in the process of developing.  The VIX dropped in response leaving a huge gap in its wake. 

I think all bets are off as we could already be in a much bigger sell off condition.  I had trouble starting to count clean waves so this move sure looks like it is a corrective move. If I am correct this market is going to move fast in both directions and it's going to be touch and go as I figure out where in an impulse pattern we are. 

Thursday, October 16, 2014

Important Crude Oil Weekly Chart Update! Has the Bear Trap Snapped Shut?

Once I saw this last spike pointing straight down it sure looks like the bottom may be here already. Crude oil reached $79.20 after which it started to bounce. We will know more once the rally goes further than I expected. Once we go back to the 2011 peak and review what type of patterns we developed, we have 5 "ABC" patterns that all fit into a triangle. Since 2011 the pattern has been corrective and therefore we should get a complete retracement of this running triangle, which means crude oil has to break that $115 peak.  

The $115 price would only clear a Minor degree peak, as we still have the 2008 Intermediate degree peak to retrace as well.  The triangle is a warning that we have one more "thrust" to look forward to and that a major degree change will be coming once this "thrust" is finished.  That peak would be a wave 3 in Cycle degree and it does not have to hit $200.  Even the smallest price level past the 2008 peak of $147 would do. 

The best Elliott Wave 5.0 Peak Oil price that I can come up with would be closer to $160. That may take until late summer 2015 to play out. If we use the average gold/oil ratio and a $160 crude oil price we would come up with a $2240 gold price.  With those numbers I just don't see the ratio staying average as it would be below average at best. Today the gold/oil ratio hit about 15.45:1. 

Another Crude Oil Elliott Wave Count Update.

This wave count is progressing along quite nicely as a vertical move seems to have terminated.  If I'm  correct then the last 5th wave in this run should play out in the next few weeks or so.  In the final days it could slow down dramatically especially if diagonal wave structures start to materialize. 

This spike also dropped the gold/oil ratio down but it's still a bit above normal.  I don't expect the ratio to radical unless it happens closer to the end.  I would love to see crude oil to hit the $75 price target but a bit more will not hurt this wave count at this time. 

T-Bond Weekly Chart Review!


I don't have enough time or the will power to update the T-Bonds but I do check them from time to time. 
This time when I checked it I saw a massive spike that just completed and technically these T-Bonds should drop and create a new record low in the next few weeks or so.  Any decline would send real interest rates up which could spook the markets at a later date. Eventually we should see T-Bonds at new record highs as it is obvious that investors still use T-Bonds as a safe haven retreat.  Of course they will get screwed as any fast fear induced move never lasts. 

DJIA Weekly Chart Review And Some Anti "WXYXZ" Wave Rants!

Some readers have been searching, "When to use WXY waves". The short version is that I never use any part of the WXYXZ wave system as they have little to no forecasting value and the "W" wave can be anything it wants.  Sure I can fill my charts with, WXY waves but they would be irrelevant if the degrees are off as well.  It is more important to keep the degrees in sequence before using any  WXY waves.  

One aspect of the WXY waves is that they are all 3 wave structures and mostly zigzags. This all sounds like ABCDE waves to me?  I also only use 5 wave patterns as my core  group,  and WXY waves would make that 6 patterns. 

I also follow the idealized Cycle degree sequence which I use as a script or as a blueprint for all other bigger or smaller 5 wave sequences. I have never used any WXY waves in any of these blueprints. Without the blueprints, how do we know what and when we are supposed to be looking for pattern changes? 

When I see any WXY wave in Primary degree with this DJIA chart,  then I know they are working in GSC degree already. Who has confirmed anything regarding GSC degree? Nobody has and nobody will if the entire 300+ years of GSC and SC degree wave counts have never been reviewed? 

Recently I dropped my Cycle degree peak again,  as this bull market has traveled over 5 years and much higher than I would like. It was that 2010-2011 correction that screwed up any triangle bull market, this forces me to look at a diagonal again.  This morning the markets are rolling upward and hopefully there will be more staying power behind it in the weeks to come. 

 Another panic attack could happen if the VIX developed an "ABC" decline but the bullish mood would have to return sooner than we think as well. 

There are three sets of patterns that are almost identical and sometimes can be interchangeable on a short term basis.  
These three sets are, WXYXZ, (triangle), ABCDE, (triangle) and ABC1, ABC2, ABC3,  ABC4, ABC5 (diagonal).  The key is knowing "where" these patterns do occur most frequently.  Any "Y" wave has no passion to it as  it produces no confidence calling for a 100% retracement. 

Quick Gold Intraday Elliott Wave Count Update.

Gold has gone sideways in its pattern so that instantly calls for another update.  At this time it's all looking like a triangle with one more little leg up left to go.  $1280 would be my extreme maximum for me to be able to keep this wave count alive. Once a wave count is broken then the entire daily chart has to be reviewed,  as we could then be in an "C" wave bull market in gold.  Ideally I want gold to head down as I would eventually be looking for choppy wave going down as well. 

Over a trillion dollars have been put back into consumer hands via the crashing crude oil prices. Where is this money going to go?  It takes time for this effect to be felt by consumers and maybe they will go shopping sending the cash back into the economy, of course if there is too much of it then the gold price would rise. 

Crude oil rallied a bit this morning as well, but the ratio remains somewhat above normal at 15.3:1 

US Dollar, Intraday Elliott Wave Count Update.

The US dollar did make a very sharp bottom but it is the sideways movement that could produce one more leg down,  completing a potential zigzag. If this were to happen then that would certainly be bullish for gold.  Even that would have it's limits as it would have to keep creating  downward impulse  waves. Instead of an "ABC" I would use "1-2" as my count.    I have that gap down at the 83.800 price level so that would be a great place for any move like this to terminate at. 

Wednesday, October 15, 2014

Citigroup Sees $1.1 Trillion Stimulus From Oil Plunge - Bloomberg

Euro Daily Chart Update. It's Only A Correction!

The Euro sure seems to be in a great looking impulse decline with wave 4 just recently completing. 
We have a very short wave 1 ending in June and now we have wave 4 ending in October.  Since wave three is the longest we could expect wave 5 to be shorter but could extend as well. 

I would like to see a clean 5th wave but at the end diagonals should start to form.  The big question will be if the Euro is going to create an all new bear market low which started in 2008.  If this feat were to come true then the Euro could be at a terminal 4th wave bottom in Cycle degree.  Until this impending 5th wave plays out no big Euro bullish trend can happen.  Once it does then we could see a massive Euro bullish run that is impossible to imagine at this time. Because it is impossible to imagine at this time, chances are very good that it will do exactly that.  Markets will always do what the majority never expect because if they did, it would be too easy to forecast and trade. 

 We do have a small gap up in the month of September and that should provide a turning point in the future. 

US Dollar Daily Chart Update!

I don't have to fill in many wave counts with this chart as when one section does not come in the entire weekly charts have to be recounted. This run with the US dollar is looking more like an impulse and a 4th wave has completed this morning.   Many may find it hard to understand that we may get a stock mania attack in which the US dollar can resume its bullish run north.   If this all plays out, then after any 5 waves in any direction must present us with another correction or the termination of a larger pattern. 

I am sure the Euro would have to resume its trend south as well. 

SP500 Crash, Daily Chart Bear Trap Update.

The VIX created a spike upward as the SP500 dropped like a rock, again. It's what we are ending with as on this daily chart the spike is straight down.  This horror show or fear fest  is an indication of speed which usually happens at the ends of runs not the beginning.  The whole world knows about it already and it is selling into a low in stocks.  This story repeats itself over and over as the majority love to but high and then turn around and sell low in a panic. 

It is the VIX that gives us a visual in how much the herd has already spooked.  Do you still believe in that expert that says that the stock market is safe when the VIX is low?   I am sure we will no get all the experts saying it will get much worse. Even the SC and GSC degree wave counters will have very bearish wave counts.  So they will not see any bull attack coming! 

VIX And The DJIA Crash Bear Trap Update!

We are only a few days away from the anniversary date of the 1987 stock market crash. Just like  after the 1987 crash ended up being the biggest bear trap in history, so will this market turn into a bear trap.   Any market has the ability to turn dramatically and this market is no different. 

The VIX added one more leg up and vertical moves like this can't be maintained.  I now have 4 open gaps below and they will get closed and they could get closed before the year is out.  Fast up Fast down, is my motto and the VIX has a very well established track record for doing exactly that. 

If there is even a small sliver of doubt that this entire VIX was just a fake run, then I look for it,  as these charts can only go one of three ways, and one direction has already been used up! 

On the daily charts the DJIA added on one more leg down,  but what happened is a very sharp spike has taken shape in the daily charts.   The DJIA also has  many open gaps above present prices so all of them can still get closed this year.   Even the Russell 2000 did not drop as much as the other indicies did, and Apple looks like it created a 4th wave bottom as well.  

For the amount that the DJIA dropped today the HDGE ETF barley moved making it open to a new record low as well. 

Gold Intraday Chart Update! Bull Market Or Bull Trap?

Finally gold broke the $1240 price level in a very fast move. Most moves like this are just  the bears getting trapped as all the buy orders kick in.  Since stocks dropped and gold soared, this is the anti stock mania behaviour  I have talked about.  What would happen if gold decides to crash?  I think a stock market rally will return in a dramatic fashion. 

With the US dollar dropping like a rock overnight, it looks like it may have completed its 4th wave as well. If there is any further building of this bullish phase then $1224 would be the next base to starts from otherwise gold is going to make a new record bear market low. 

I was long on the Forex Gold unit at $1224 last night with real money and instantly closed off when the XAU/USD  hit $1244.  Now if I can only stay short again for a few more days. 

Tuesday, October 14, 2014

Crude Oil, Intraday Crash Update.

Oil has resumed another leg down which I suspect was another 4th wave. I am working very small degree levels as it would be a big mistake to engage too high of a degree. Just because crude oil is undergoing a big slump does not mean big degree levels as well. Most of the time it is the exact opposite as wave patterns extend.  I am down to the Submicro degree level as we could be in the last 5th wave in Subminuette degree.  In commodities is where we will find those pesky 5th wave extensions so hopefully all wave structures will still play out in the coming weeks.  We are a little more than $5 away from my $75 price target but a little lower will not hurt the overall wave count at this time. 

In reality the 5th wave that is extending is being created with a potential wave three extension in which we could see a short 5th wave in Micro degree.  Either way,  a complex 4th wave could still show itself. 

With this drop in crude oil the gold/oil ratio also changed as I measured a 14.22:1 ratio. This makes oil cheaper than average when using gold as money.  If we use a $75 crude oil price and the average ratio of 14, we would end up with a $1050 gold price.  

I am sure the crude oil market will have surprises us, but we would need the USD to decline to reverse this present bearish trend in crude oil.  

Russell 2000 Weekly Chart Review!

 I am going to eat some crow regarding the 2007 to 2009 decline. I have maintained for a long time that this decline was a 3 wave decline but once I removed my Cycle degree wave three, I was left with a choice of a single running flat as I had to drop down two degree levels. This now ends the 2009 bottom on a "C" wave decline with a super long 5th wave and an ending diagonal for late 2008 early 2009 bottom. This makes it the same pattern as many GSC degree wave counters have but overall I am one degree lower than they are. This also makes the 2009 bottom as my 4th wave in Primary degree and the subsequent bull market a diagonal 5th wave.  

Nothing would be better to see a new high crossing with a 3 wave pattern.  I think the VIX has run out of steam and should drop  in the next few weeks. In case the VIX does drop and the Russell 2000 does not even make a new high, then we know another down leg in stocks is about to happen. 1180 would be the maximum price level for this to come true.   

Mini DJIA Daily Chart Update!

Recently it has been a big thing to report that the DJIA had crossed the 200 day SMA.  I only use them on very rare occasions as they can be manipulated very easily. Just by changing one other parameter I can go back to 2009 where the 200 SMA had crossed many times and each time the stock market went higher.  The deeper it crossed the 200 day SMA the higher the markets traveled after. 

With the VIX potentially seeing an extreme, a counter rally is due, if not a complete reversal.  When the markets started in 2014 the pattern changed and this could be an ending pattern with one more move up to play out.  Of course if the larger decline has already started, then the 200 day SMA will be resistance. Of course many are thinking this but the stock markets will always disappoint the majority thinking they have a trend as their friend.  I would love to see any crossing to new highs contain a 3 wave pattern as that usually signals a diagonal wave structure has completed, and another degree change must be ready.  I am kicking in my 2009 bottom as wave 4 in Primary degree and this entire bull market is a bad impulse wave or a diagonal. In other words my Cycle degree wave three is pushed into the future. 


VIX Weekly Chart Elliott Wave Count Review!

It is always a good idea to go back and review the largest peak or the highest wave count that we have had since 2008.  This would be the inverse to the stock markets to the 2008-2009 bottom.  It was late 2008 that the VIX had bottom but many of the stocks did not bottom until early 2009. 

In hindsight early 2009 was the best time to buy as the VIX topped out and insiders were buying like crazy. Insiders do not buy their stocks on an emotional basis as they know when their stocks are extremely low.  Seeing something in hindsight is all fine and dandy but that knowledge should be converted to foresight planning.  This is especially true with the EWP where long and short range planning is only separated by degrees.  Since 2009 how many times has the VIX spiked and then returned to its largest trend before creating newer lows.  Is it different this time?  Sure we can say that , as every wave count or jump in the VIX is different. No single pattern ever has the exact same behaviour just like fingerprints are never exactly the same with billions of people. 

Every run-up with the VIX , ended with a near vertical spike which represents speed, as you can't go any faster in charts that only have three directions.  I ended the late 2008 VIX top as my Primary degree 4th wave top, so after that we should get some type of a 5 wave decline which must be five waves in Intermediate degree.  This has produced an 8 year double bottom in July 2014. 

Since then we got another wild move sending the VIX into a vertical spike again. These vertical moves are impossible to maintain without a correction or a resumption of the largest trend, which may have started this morning.  The pattern from this July 2014 bottom sure looks like an inverted "ABC" and if that is the case then the VIX would retrace 100% of its entire move. 

This will kill any SC degree bearish wave counts that the majority of wave analysts have been working on. What else is new, as the VIX has killed every major wave count since 2009. Trying to make a call against the trend of the VIX is futile for many reasons but one big factor is that the trend of the VIX is "always" down. It works the inverse to the SP500 which the EWP shows us is always up.  Of course these upward trends are  "always" interrupted with those pesky bear markets that wipe out many participants in the process.   

If by chance the VIX drops substantially but stocks only recover by 50% then we know that the next new leg down in stocks would be close at hand. 

Monday, October 13, 2014

Mini SP500 And The VIX Review!

The VIX shot straight up today sending the VIX  to the $24 price level.  I have three wide open gaps below present price levels and some call them "open windows".  Open windows will eventually get shut or the gaps will get filled in.  Many traders trade off these gaps but it is also important when the  vertical spikes appear. Vertical moves like this rarely can be maintained as it is hard work to maintain fear for very long.  Besides the VIX's major trend is always down like the US dollar is.  Any counter rallies in the VIX are always 3 wave affairs and it's not rocket science for those 3 big gaps below to eventually get filled.  
We would need a good VIX decline or a stock correction before another leg up in the VIX can happen. 

The mini SP500 has now also touched the bottom part of my triangle so a correction should be due here as well.  Gold reacted very well to this as it has pushed to the $1238 price level already and it may see the $1240 price level yet.  Stocks completely ignored the full moon on the 8th and charged south when they should have charge north. The important thing is we got a major reaction just shortly after that date.  The top trend line will be the resistance trend line if the bigger trend is still bearish, but if it blasts past that line, stocks can see a big counter rally if not some wild move to new highs one more time. 

We are also in a crash month but we are still 5 calendar days away from matching the 1987 crash.  No market crash or bull market is ever the same as they always alternate and do something different. In Elliott Wave it is the guideline of alternation that keeps us all guessing. 


Ebola’s economic effect, if it spreads more, could be like SARS - MarketWatch

Sunday, October 12, 2014

Crude Oil Is There still More To Go?

Even though crude oil had a sharp bottom last week my wave count suggests crude oil is not finished with it's bearish phase. Besides ample supplies and every country in the world pumping like crazy, events can happen like a very cold winter, when supplies may see a shortfall and prices would rally. 
In the longer term it will be a crash in the US dollar that will push crude oil prices up again and any supply fundamentals will be a lagging story. 

I move my wave 4 position a bit so this will give crude oil lots of room to still fall. When oil bearish news becomes very intense in the next few months then I can see another major bottom.  This may happen closer to the $75 price level or a bit lower. 

Eventually we should see a complete crude oil price recovery as since the 2011 peak we mostly have had corrective waves and a 4th wave bear market coming to a close.  Maybe this will coincide with gold, but that would be pure luck and not really a necessity.  In the 2008 crash gold and oil joined together when they both bottomed about the same time. 

Saturday, October 11, 2014

DJIA Cycle Degree Monthly Chart "Reboot"!

I already posted this VIX chart but in this case I am inserting it again because the VIX could plunge in the next few weeks sending stocks higher one more time. 

I print out my charts on a regular basis and most of the time I stare at the raw data before I put a single wave count to it. In other words, I want to see my pattern before I lay down the wave counts.  Any fresh printout always gets rid of all mistakes and it constantly forces a complete recount or review. 

 99.99% of all better fitting wave counts are found looking back in chart history. We will never find a better fitting wave count if we only make cosmetic changes. It is very easy to get caught up in cosmetic wave counting as I did that for a good many years following SC and GSC degree wave counts.  Only when all Cycle degree wave locations are found will we ever pass into any SC degree world, and GSC degree can only come after all SC degree locations have been found. 

For now I have deleted my Cycle degree wave three position for the 2007 peak and moved it into the future. In other words,  the DJIA has "not" passed into a Cycle degree world,  but we are still in a Primary degree world. This rally that started in 2009 has been going on far too long so I recounted the entire wave structure starting in 2000, looking for a potential triangle.  I have done this many times before, but always at a much higher degree level.  At a minimum I like to confirm this down to the Minor degree level on any extended waves. 

Now my quasi diagonal wave count is back on, and most of the diagonal pattern came after the 2011 bottom.  This would make the 2011 to present pattern a 5th wave extension coupled with stock mania at the same time.

We could see another rally push to new highs, and we would also see a corrective pattern following the real peak once wave three in Cycle degree can be applied again.  Any correction can be one of three patterns and I think I can rule out a Cycle degree triangle, when we just finished one. This gives us a potential flat or a zigzag for a Cycle degree wave 4 crash. 

Any flat could turn into an expanded pattern but the zigzag can't. We should also see a big counter rally in the Primary degree "B" wave but we can only apply the generic ratio to this counter rally as there are about 4-5 choices. I think most ratios are just figments of our imagination as I learned EWP without any prices attached to it. Besides, who can apply ratios if nobody knows what degree we really are in.  

Any Cycle degree decline in the future will throw a monkey wrench into all higher degree wave counts, and I am sure they will miss every counter rally and bull market going forward. 

This would all work with a potential bottom for 2021-22 and this also could mean a potential running pattern may develop or a big double bottom. 

S&P 500, Nasdaq suffer worst weekly loss since May 2012 - MarketWatch

Comment On: Coca-Cola Hits Record as Investors Seek Safety - Bloomberg

When I read this headline, I just had to look at Coca-Cola's chart to see where they are jumping into Coca-Cola's stock price.  I guess that is the reason why KO is already pointing straight up.  They are not jumping on the trend because it is a sound and logical thing to do, and it sure has nothing to do with buying on any dip.  They are buying because of fear and that it is going up. Investors just love to buy high, hoping it will go much higher.  They have been brainwashed that the,"trend is your friend".  Of course all trends will eventually stab you in the back as they reverse. 

When you take a moment to think about this, Coca-Cola is a stock that is in the DOW 30, so all they are doing is switching cabins in the Titanic before it hits the iceberg!  I think they still have awhile before they hit the iceberg as we could be in for another rally starting next week. 

I also reworked the DJIA, or gave it a "Reboot" as I am not happy with the Cycle degree program I have been running.