Friday, October 31, 2014

Silver Weekly Chart Elliott Wave Count Update And Another Great Bear Trap for 2014!

My largest pattern I am working with silver has been a diagonal 5 waves in Intermediate degree with the 2011 peak as my wave 3 peak.  Since that peak the patterns have overlapped at critical turnings making a pure impulsive decline next to impossible to clearly identify.  

When this happens then I know that the decline in silver is a corrective decline and that eventually the entire silver decline will get completely retraced in a future bull market.  This future bull market will arrive when the majority are still playing silver down as they have been told to get out of silver for a long time already.  What else is new as this has happened many times before and will happen many times again in the future. 

I don't know if gold will stop on a dime at $15.90 but its bear market is ending fast as participants are in a silver bear trap.  They just don't know it yet but once the bears start getting stopped out all the time they may clue in.  The best time to buy silver is always when it is pointing straight down as past bottoms have clearly shown that. Buying on the dips thinking that the bull market is still in force, hardly ever works as we must wait for extreme bearishness to kick in first.  When the majority recognize that silver is in a bear market and the majority are playing this trend down then that is the optimum time when a reversal will strike.  None of this may make sense if we ignore the fact that the US dollar can implode and start its major bear market. 

Did silver retreat in a perfect 20% bear market decline, no it did no such thing as it was closer to 32%. You can't use the conventional definitions of bull and bear markets in commodities. Commodities are extremely leveraged products where fear dominates but the majority only use logical fundamental analysis. The only logic that exists in commodities are our emotions as we swing from one extreme and then back to the opposite extreme. Is it time for an extreme swing back up for gold and silver?   

Golds Bearish Sentiment Review And The Great Gold Bear Trap Of 2014!

The gold bearish mood has increased in the last few weeks as the experts continue to make bearish commentaries.              

                     Gold Equals 15 Barrels of Oil in Bearish Sign for Bullion - Bloomberg
Here is one expert that uses the gold/oil ratio but he has flipped it around and is using crude oil as money. I never use crude oil as money but always use gold so I can get more consistent ratio readings.

        FOMC Statement Construed As Tilting Hawkish For Monetary Policy; Gold Declines
                        They use fundamentals to justify the bearish gold price.

                 Any gold rally will fail as sentiment deteriorates - MarketWatch

  Here gold sentiment is declining which is actually very bullish for gold. If for an example 95% of the gold experts were bearish on gold then this is a very bullish signal. In 1999 there were only 14% bulls around and look what happened to gold after that!

For the amount of Elliott Wave counting experts out to today you would figure they may be seeing the end of golds bear market as well. Instead everybody is on golds bearish trend and have been increasing their bearish bets as well.   Elliott Wave Principle (EWP) can never work for the majority as it is a contrarian way of looking at the markets.  Gold crashed to new lows which trashed a wave count that I had been working on but it sure cleared up that triple bottom issue.  Now we have a clear cut new bear market low, which is what I would expect to end golds big bear market. It all makes for a better fit now than it ever has.  Can I promise that  $1162 will be golds bottom, no I cannot as all I know gold has fulfilled a pattern objective by creating a new low. 

Many may take this as a new leg down, but this is how markets also react when they come to an end.  Gold also gave a nice touch as a great looking spike is also forming on this daily chart. 
Very few people can take advantage of any Elliott Wave counts as they never have a plan in place to buy low.  I am sure those who are trading the XAU/GOLD units are not creating long positions on a downside breakout, as they do not have the net cash to do this and will always get forced out of a play exactly when they should jump in.   Very few wave analysts can have the confidence to yell buy at the end of a "C" wave crash as they would all be loaded with fear of it going much lower.  Most of the time they are selling low being controlled by their fear and too small of an account. 

The best time to buy gold is when it is pointing down not up,  as in the last year all those that chased the bull market got burned quickly as all bullish starts proved to be fakes. 

I am turning very bullish as these types of declines can change dramatically and next thing you will see hold at 1400 or even $1800. 

With a potential 4th wave bottom in progress gold can retrace its entire bear market  in very short order.   Silver has also crashed to new lows so in this case they are synchronized very well. 

US Dollar Daily Chart Elliott Wave Count Update And The Great Bull Trap Of 2014!

There are so many players betting long on the USD and betting short gold, that has become a  very popular sport.  Popular game plans never last for very long as the markets will not allow for this to  continue. The sad fact of the matter is that all bull and bear markets do come to an end. 
The US dollar is in a mini bubble and I am sure it will implode in a spectacular fashion. 
The bad part about it is that I can't give you the exact time or price that it will happen at. 

They never even saw this US dollar bull market coming so how do they know when it is going to end?   The best that I can do is track it, and that after any 5 wave sequence is completing we must expect a move in the opposite direction. 

The US dollar has finally broken to the upside completing my on and off again 5 wave run.  5 waves can also be the ends of a much bigger pattern, like a "C" wave bull market. You do not want to ignore the ends of any "C" wave bullish phase as their reversals will produce a 100% retracement from which the "C" wave bull market started from!  All these bullish players are going to get punished as the market will never allow any single group dominance for very long, and in this case it is the US dollar bulls who are being setup for slaughter! 

Bears attack from above and they always attack in stealth mode when they least expect them to attack.
Bull and bear traps is the name of the game as each trap will force "all" the players to change direction as they will not survive the next move.  Remember all  futures are extremely leveraged  so violence can ensue when its direction is going to change. 

We have the end of the month as well, so it would be fitting for the USD to turn. 

Thursday, October 30, 2014

GOX, Gold Stock Index Elliott Wave Count Review.

Gold stocks have been crushed lately and at this point the majority are not buying gold stocks. Different gold stock indices will give us different readings but most of them have set record bear market lows. We are now matching the 2008 lows yet the majority do not find gold stocks a bargain. 

There is no clear message if a bottom is near but when it turns it will be too late to jump on the ban wagon.  Some of the contrarians will be in the read on their gold stock ETF positions but by the time it turns and others jump back on the gold bandwagon they will be in the green already. 

It would be pretty normal after gold stock investors panic out of gold stocks just in time for gold stocks to turn and sail north.  Just to rub salt in the wounds gold stocks could hit record new record highs as an ending diagonal could be in progress.   Even after the very top in 2011, the pattern started going choppy with wave over lapping. These are patterns that even wave counters ignore as we see no bullish wave counts from any wave counters. 

There are no gold stock insiders that are selling, as it is only the day traders that panic in and out. 
In late 2000 all the fund managers were selling their gold assets just like they did in 2008, so why should it be different this time?  Markets always change and gold stocks are no different as we will never get exactly the same type of bottom or the exact same type of top. 

Mini SP500 Intraday Chart Update.

Another peak was reached this morning and with it another potential correction. Besides keeping this impulse wave count alive, we can be at a bigger top than what we may be expecting. There are a few diagonal looking waves on this last part of this run so a bigger than expected correction could happen.  We could also be at a "B" wave top after which this entire market could see a new bear market low.   Either way this crazy bullish phase has so many open gaps below, that will see them all get closed sooner or later. Only time can answer that question at this time. 

Euro Intraday Quick Review!

Since the beginning of Oct 2014 the Euro has been in a rally but has run out of steam many times. This has produced a very choppy sideways pattern that could have completed early this morning.  If a short "C" wave bullish phase is going to happen then the Euro should retrace and clear all Oct 2014 price peaks. 

Wednesday, October 29, 2014

Important Intraday Gold Chart Elliott Wave Count Review. Trick Or Treat Bear Trap!

Once this gold chart crashed and I saw the angle, then this gold decline could have finished or nearly finished today.  There may be a very small 4th wave still to finish but that $1208-$1204 range has some serious past support levels. If the trend is truly much more bearish,  then those levels will never hold.  The last thing I would want to miss is a 5 wave run or be caught in a gold bear trap. 

This will not take long to confirm as I have very little room to move and therefore it would not take long to trash this wave count.  I have already started a wave count like this, so it's just a matter of tweaking when we think we are close.  Imagine if we were to take off in a "C" wave bullish phase, and that this bullish phase should have 5 waves up in Minuette degree. 

The correction in gold has been about 8 days long so far,  but on corrections I would rather see odd Fibonacci numbers like 4 days or 6 days.  If the bottom is in then I can explain the entire 5 wave sequence in what I think may happen. It would be the exact same thing for any 5 wave sequence in any degree, in any future. 

When I post a chart review you can bet I have changed the wave count and even if it fails this time, the exact same logic would get applied to any other 5 wave sequence we may face. The thing is there are always 5 potential patterns from any turning point. As I mentioned, this should not take long to confirm especially once gold starts to roll out from under the grip of the bear.  Since this may be the potential for a wave 2 bottom and they are usually the shortest waves, then we know we have wave three as the longest length and even then a potential  5th wave extension. 

Before we know it gold is sitting at $1375-$1400 and we are all trying to figure out what happened? As soon as they get it figured out,  I am sure gold will reverse and come tumbling down to earth once more.  Once we see gold rally further than expected, then any correction must be from the family of "ABCs".  
Updated Oct, 30, 2014

Gold ended up crashing much deeper than I thought it would which just about puts this wave count into the trash bin of financial history.   I will keep it going for a little while longer as we should get a counter rally as well.  Any counter rally could take us back up to the sideways correction at about $1230 as the decline contained an extension.  Before we would get back to that price level $1215 would also be a price target for another turning.  This morning gold bottomed again but at the $1195 price level which leaves us about $16 or so  away from producing another record gold bear market low. 

Gold is determined to trick us as it sure supplied no treat for the gold bulls. Short term we are torn between two major wave counts in gold and we are coming up to the end of the month which can have very volatile consequences. 

Unmanned NASA-contracted rocket explodes -

Gold Intraday Action Elliott Wave Count Update.

At this time I am keeping my 4th wave top in play, until the gold decline tells me otherwise. If I get a counter rally that is very big and travels up much further than I anticipate then I will have to review most of my daily charts.  I have managed to short gold several times with my real money account but have closed off these shorts every time I thought I was in a short term bearish trap. If I thought the short term trap is going to turn into a short term bull trap I would close my short position. 

In Forex the gold chart already hit a low of $1208 from which it seems to be in rally mode.  If the 4th wave top is to hold then no new highs should happen until the 5th wave is fully played out.  This still may take until the end of November as there have been major turnings in this month in the past.

The USD exploded this afternoon so you can blame gold's demise on the US dollar.  Some analysts always blame market manipulations for the reason of any gold drop but this is a sad excuse for something that happens all the time and will happen again and again. Bear markets come when the majority least expect them to and the reverse is true for the ending of any bear market. 
In 2011 a  full 95% of all experts never saw the gold bear coming so I am sure they will not see any future gold bull market coming as well.  

Gold's bear market will come to an end and then gold will start behaving completely different then what we have seen since 2011.  The problem is we don't know the exact price that gold will bottom at  as many times it picks up downward speed just before any end can happen. 

Eventually gold should create a downside breakout at the $1180 price level as these triple bottoms rarely ever hold.  Some experts have mentioned $1050 as a low but they have no clue where gold is going after this price is achieved. 

The higher the US dollar goes the sooner its bubble will burst as all bubbles eventually do.  

Crude Oil Intraday Update.

I can still fit the crude oil charts into a 4th wave pattern with a bit more upside to go. In this case $84-$85 would be my target range. Any wild price moves well above these limits will force a review with the daily charts. In the end we may see $75 before we ever see $115 oil again.  Many are talking about the world oil glut and it may take a few more to recognize that same fact.  As soon as more people recognize that the glut is hear then the glut will be over and crude oil prices should start to rise again. 

Crude oil is a prime example where we don't need major suppressed low prices just to reflect a world oil glut. One major oil glut happened at the $10 price level, then the next one happened at the $34 price level and this time crude oil may still hit $75 for the third world oil glut since 1999.  I am sure there will be more oil gluts in the future. 

The world crude oil distribution system can get shocks from any direction, so don't let the glut fool you into thinking there is never going to be another crude oil bull market again. Markets will always act the opposite way than what fundamentals suggest as the bigger the glut the bigger the bull market we will get following the glut. 

Mini SP500 Intraday Update!

As much as I would like for this crazy rally to end, I think we still have a bigger correction to work through.  There may even be an expanded pattern in progress but the limits of this decline may only get us to the 1930 price level. This could send the VIX into a bullish spike were it would resume its decline for one more major bottom. 

We would also be at a potential H&S pattern which we know that they cannot be trusted. Sometimes we just get the right shoulder, before it turns and produces another great upside breakout.  

Tuesday, October 28, 2014

US dollar Intraday Wave Count Review!

The US dollar is still in a correction and I believe that eventually it has to make a new record high. Of course gold is also acting erratic and as long as the US dollar can still turn up then there would still be downward pressure on gold.   

I always have several or more alternate counts available at any degree turn as this potential smaller 4th wave could go vertical and never look back.  Diagonals can make wild and powerful moves that can surprise many of us, especially in the last 5th wave.  

There is nothing we can do once a sideways patterns start to play out as they can take a long time to  finish. Since early Oct 2014 all this sideways patterns should get completely retraced and the US dollar breaking that 86.700 price level will help to confirm it. 

Same thing would apply to the Euro as it would crash if the US dollar were to continue with a rally. 

Russell 2000 Daily Chart Elliott Wave Count Update!

The Russell 2000 can fit best into a potential triangle but there would also be a lot ground that it still needs to cover.  In other words the Russell 2000 can only correct in the next few weeks and then should also push to new record highs.   Triple top looking patterns can fool us into believing a bear market has started as we do have at least one lower high already developed.  But 4th waves or triangles can blow the conventional bear market indicator into confusion as they will not work  for wave 4 corrections. 

Mini Nasdaq 100 Intraday Another Upside Breakout?

Any smaller correction is already long overdue, which could happen anytime before the end of the month.  The Nasdaq is getting the closest to breaking out and creating another new record high.  At this rate maybe the Nasdaq will hit 5000.  Of course that is wishful thinking, but a much bigger decline is still ahead of us.  We can't ignore all the open gaps we have in all indices and these gaps will all get closed in due time. 

Any correction can take us back to the 3940 price level before it cranks up again and then breaks out to a new record high. 

Monday, October 27, 2014

Gold Intraday Review! Is There Still Some Bullish Life In Gold?

In the short term gold has been declining again which stands to reason as stocks have been pushed to their bullish highs again.   This pattern seems like we are in an expanded flat as the decline also has been making very choppy 5 wave patterns.   Gold has little room to decline in before my small expanded pattern gets thrown out for lack of confirming moves.  I am also keeping my bigger expanded pattern wave count alive, which could have completed closer to the Oct 21 date  which was a day or so before a new moon date on Oct 23. 

If my original Minuette degree 4th wave has completed then we know that there should be no new highs but gold could  then plunge back to the $1180 price level in which we have a triple bottom. The last thing I want is a triple bottom in anything especially gold, as they hardly ever hold and besides they are indecisive patterns.   At this rate we could see gold $1050 before we ever see gold $1800 which was the last triple top.  At that time the trend was still down so that triple top worked as resistance as gold pushed down from there with gusto. 

Which trend is still alive, the one that pushed gold south from the $1800 triple top or a bullish trend that has pushed gold north from  its last major triple bottom of $1180?  Hopefully we don't have long to wait as this triple bottom will have to get resolved sooner or later. 

My short term gold outlook may be bearish but longer term I think there is still a big move coming  as the US dollar is not going to float around in its bubble world forever.

In the future I will not be posting on Mondays or I will minimize my postings as most of the time Mondays are very slow as well.

Sunday, October 26, 2014

S&P GSCI Weekly Chart Commodities Elliott Wave Count Review!

Pretty scary looking chart if your bullish on commodities, as the majority see the exact same crash.  Sooner or later all those bears playing this index to decline much further will get into a trap. I don't need a fancy wave count to tell you that. I have always looked at pattern first, and if we go back to that infamous 2011 peak we have a declining pattern that has many overlapping wave structures. 

In other words you couldn't count out a great looking impulse if you tried except for the recent decline.  This decline fits very well into a part of a "C" wave decline or the tale end of a triangle and its decline will eventually come to an end.  What we see here in one direction , also happens in the other direction. When it is inverted I would call it a "C" wave bull market.  There may even be a very high probability that we could get exactly that again, as another "C" wave bull market may happen. 

When the bear market started in 2011 it instantly formed 7 waves all about the same size. 7 waves are corrections or in this case part of a bigger correction.  It does not matter if this index still crashes but what is important from my perspective is that this entire decline from the 2011 peak still needs to get completely retraced, eventually exceeding that 760 price level.  I am counting this out as one big diagonal 5th wave where any wave 4 bottom can enter price territory of wave 1. 

Here is a great example of a pattern showing us basic "deflation" in commodities , which also confirms the US dollars bull market that we have had since 2011.   If some crazy wave counter were to forecast a potential new bull market in the GSCI by the end of this year then we are effectively forecasting a  fundamental economic "inflationary" attack.  This should all get confirmed by the end of the US dollar bull market as without the US dollar all this deflation, inflation action cannot happen in the first place. 

Once this inflationary attack starts to get serious, you can also bet that gold and crude oil will soar in price.  

Apple Stock Elliott Wave Count Review.

Back in 2012 the Apple stock price pattern suggested that an expanded pattern had taken place, which always means that the peak of that expanded pattern will eventually get  retraced.  Mind you it took until 2014 to completely retrace it.  For all the smart wave counters out and who saw that expanded peak, already new that when Apple was at $55 in the 2013 slump that a $45 gain was in the cards.  This is  the power of the forecasting abilities of the "ABC" patterns in the EWP, yet very little of this is explained in the little blue book.  

Since the 2013 bottom we now have what looks like an impulse wave, but it is rather choppy so a diagonal 5th wave would fit this pattern the best at this time.  How Apples stock price jumped to new highs sure looks like another expanded pattern which means AAPL can slump again back down to the  $95 price level. At $100 AAPL opened a big gap which just adds to the other big gaps still open far below present prices.  If AAPL slumps in the next few weeks which could be a small degree 4th wave bottom, then Apple will  have another real chance to create a new record high, exceeding its latest high again. 

This would all eventually terminate at a Cycle degree wave three peak from which we should get a crushing correction that would retrace Apples entire 2013 and 2014 bullish phase.  This would eventually bring Apples stock price to the $55 price level closing all existing gaps in the process. 

You will never find those price level forecasts in the fundamentals of the company as fundamentals are a lagging indicator not a leading indicators. 

Saturday, October 25, 2014

VIX Daily Chart Crash Update And The Potential For A Reversal!

Before I get into the VIX rant, I had a look how the commercial traders were situated regarding their net long or net short VIX contract positions.  To my pleasant surprise they are virtually net neutral which I have not seen in a long time.  Stocks are pointing up while the VIX has crashed down with the USD all being up.  What this means is that I can't use the COT reports to give me any special insight. In the end I would like to see them start turning net short on the VIX.  

There is a real chance that the VIX is getting ready to crank up again and even create a new record high since this VIX bull market has started back in July 2014.  The target price would be well above 34 and even 40 can't be ruled out.  If stocks have one more leg down to go to  newer bear market lows then there is no reason why the VIX will not follow in lockstep.  I have two open gaps above present VIX prices and I think these gaps are going to get filled sooner than we think. 

If all the bottom gaps were left open then this would be just great as these bottom gaps will be the Aces up our sleeves in a future wave count, like a potential wave 3-4 in Minor degree. 

I have so many potential wave 4's in progress in many different assets and that is all a good thing as  these are telling me the markets are getting better synchronized.  I also have different degree levels of 4th waves in progress, such as the US dollar, and the Euro, even oil may still rally completing a 4th wave.  The violent move down in the VIX could be a "B" wave bottom which means that in the future the entire VIX bull market will get retraced as well.   

Under any present SP500 prices we have many protective sell stops being formed or moved to the last correction, so we could see a cascade of sell orders get triggered.  The real smart traders may even have two sell stops active in which case they would get stopped out, and be on the bandwagon heading south in one easy move. 

This could also be very bullish for gold in the short term.  

Friday, October 24, 2014

Crude Oil Daily Chart Elliott Wave Count World Oil Glut Update!

The news that oil is in a glut situation has finally caught up with the charts as many are realizing the same thing. When this happens its usually a sign that the glut will end but we can still have a small counter rally and one more new low. 

In Forex the same basic chart is equal to the West Texas Oil unit with the difference of a few points. 
I have a virtual Forex account where I am long in oil already and the next few days will tell if there is more upside potential. If I am wrong I just get out as one can always try again.  Lets say a rally is due but in reality it is a fake rally.  

If this were the case then $85 oil would be about my limit that any fake  rally can run to. My entire decline is a 5 wave decline in Subminuette degree with a very long 5th wave extension which may not be perfectly completed just yet. 

 It is pretty hard to imagine that eventually I will turn very bullish on oil in the midst of a world oil glut, but the markets will do the exact opposite of fundamentals just like they did in the midst of the oil glut in 1999 and in 2008.  Even gold was in a glut in 1999 and look what happen to the gold price after that. Of course analyst will never tell you that gold  was in a glut in 1999, but all participants flooded the market, as banks, countries and traders were unloading gold as fast as they could. 
Only 14% bulls were present at that time so the majority of experts never saw the gold bull market coming. 

Right now the gold/oil ratio stands at about  15:1 which is a bit above average. 

Mini SP500 Potential Bull Trap And Ebola Fears!

During a bull market virtually any external bearish news will have little effect on the markets but once the markets have already turned to the bearish side by even the smallest wave pattern then that news will reinforce the bearish trend.  
Ebola the little virus that can bring down the stock market has happen before, but  with the Spanish flue in 1918. Doctor tests positive for Ebola in NYC - CBS News

This Ebola scare is far from over and the numbers I watch are the new confirmed cases, once that number slows or stops then they may have the problem licked. 

Fear is fear and it does not matter much from which area it comes from. If an asteroid was discovered on Sunday heading directly to earth do you think there would be fear or no fear? I am sure the selling would start immediately on Monday.  

This rally has exploded dramatically and I have to come up with some alternate thinking as this move  could also be a "B" wave top, or at best a wave 1 top.  I have three open gaps below in the SP500 with three open gaps above in the VIX. That is a powerful inverse combination that I can't ignore. 

We are also facing a H&S pattern so the time is ripe for either a correction or a fast resumption of the bearish trend.  Since the decline fits well into a diagonal pattern, then the  "C" wave decline may show very clean subdivisions.  The Russell 2000 sure did not keep up to this torrid pace so there is a disconnect as the Russell 2000 has been working as a leading indicator for sometime. 

Gold And The US Dollar Weekly Chart Elliott Wave Count Reviews!

 I have tried many different degree levels for the 2008 bottom, but none of them held for very long. 
A little while ago I tried the wave 3 in Intermediate degree and so far have not been forced to adjust it.  Most of the time we tend to call something completed to early and this is especially true when it comes to the degree levels.  One thing I always like to remind my readers is that I invert the EWP when applying it to the USD.  I didn't do that just to be different, but I did it because I figured it out that the USD was inverse to the stock market.  

This also makes every bull market with the USD a 3 wave pattern or multiple 3 wave patterns like a potential triangle.  Once a wave three bottom has been identified then we have to look back at the monthly charts to see if it still fits as where I used to have wave 3-4 in Intermediate degree also needed adjustment. 

At this time wave three in Intermediate degree for the 2008 bottom is holding, making any part of the counter rallies strictly 3 wave affairs with any 5 wave runs being very small degree runs.  The biggest  5 wave run I can have in any direction can only be 5 waves in Minor degree.  In this case that would be 5 waves down in Minor degree, once this US dollar bubble starts to burst. 

All patterns since 2008 have been corrective then all these wild moves to the bullish upside will get corrected by 100% or more as the US dollar bull market has a limited life span. 

Our present little correction looks pretty small and trivial when we compare it to the rest and that's the way it should be.  The US dollar could still fall for a short term move as a possible 4th wave bottom may still need to finish.  This would follow by one more US dollar bullish phase that should finish and clean up this USD bull market. How high that last little push will go should clear all previous corrective peaks, closer to the 90 price level.  

Recently gold topped out at about $1255 and then has made a declining pattern which I find very suspicious as it should have completed my potential 4th wave top already and declined much faster than gold has been doing.  On Fridays close gold finished at about $1230 and to help  confirm a potential gold bullish move the old top of $1255 will need to be retraced. Further price confirmation would happen at $1280, with $1340 then starting to be the first serious resistance price level. Ultimately gold could hit $1400 before completing it's bullish run. 

Moves like this will force all the Forex Gold unit bears to change their positions which in Forex is not a big deal but with futures traders it is a big deal as the bears can never handle big reversals as they would suffer huge drawdowns. 

We also have a triple bottom in gold that I am sure gold will eventually still entertain us with a "downside breakout" as triple bottoms are unresolved patterns. 


Mini Nasdaq 100 Intraday Update.

Since the peak in the markets on Sept 19, 2014 we have had a very choppy decline which I can get into several patterns, all of them corrective so  far.   So far I have a wild impulse return rally which suggests we had a 4th wave bottom. If the 4th wave scenario is true then the Sept peak should still get retraced.  It would be nice if the markets gave us a complex correction and then resumed another leg up, but a slow moving choppy rally will bore us to death, but will also tell us that this rally is going to run out of steam. 

The VIX is still suggesting it may have more downside to go so this bullish cycle should also have more to go even though I'm expecting a stronger correction. 

We are also at a mini H&S pattern but we know we can't trust them as they can only produce corrections.  This wild ride up so far is a clear example in how protective buy orders can get triggered. Of course the same is being setup for another return trip heading down, as protective "sell" stops are being piled up below.  In Forex with the US NAS 100 units you can't see a single gap but in futures they are very clear. It is one of the reasons why I never  do Elliott Wave  analysis in Forex charts.

Creating wave counts in Forex charts has to be the most time consuming, mundane "chart slavery" I have ever seen, besides I don't think we can relay the information fast enough and clear enough to impact any amount of traders.  Besides any backlash would stop players out, and the market would roar without them.

It may take some time yet,  but eventually this entire rally will all get retraced and a new record bear market low will be achieved.

Thursday, October 23, 2014

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US Dollar Intraday Chart Elliott Wave Count Update. Is A Correction Due?

Since the beginning of October the US dollar looked like it started as a great impulse but it started to fall apart rather quickly and now looks more like a triangle b wave has completed.  I have always mentioned we could be in a 4th wave pattern and so far nothing has dispelled that.  This also means any short play in gold should be cleaned up and a possible long position in gold would be warranted. 

These types of moves even though they are very small in degree wise can wreak havoc on anybody that is playing the USD long on fundamental reasons.  If the USD suffers a bear attack and creates another newer low then this could force the bears back into taking short positions.  Of course that could also put the USD bears back into a bear trap situation.  There is no rest for the wicked day traders once your stuck in a potential 4th wave. Not too many futures traders can handle drawdown swings like this. The Euro would also have to respond with a strong rally as Euro traders may be in a short term bull trap. 

If I am wrong then the correction should be very limited as a running type triangle  may have already been completed. 

Crude Oil Intraday Elliott Wave Count Update.

The world is awash with supply bordering on being a world oil glut, but that does not stop oil prices from going up but may do the exact opposite.  Any lower oil prices the drillers would be shutting down and if Opec has any teeth left they will  curtail production.  Remember late 2008 we have more of a glut that we have now and what did oil do after that?  In late 2008 crude oil crashed to $34 and during one of the worst gluts in oils history it added on $80 before it slowed down and created another long bearish phase. 

The bearish phase may have come to an end on  October, 16,  2014 after which it has now formed its first big higher low. Higher lows are all formed by "ABC" corrections and is the conventional description of a bull market. Contrarians that do not use the EWP look for the markets to create these patterns.  All those super deflationist need crude oil and gold to keep crashing as the last thing they need is for oil to go on a super rally and break the $115 price level .    

The pattern is already bigger than its corresponding wave 1-2 so it makes sense to start into my impulsive wave count. The markets will prove me wrong when I no longer can keep the impulse wave count alive as it will fall apart very quickly.  This would start to happen at the $85.50 price level.  The gold/oil ratio is about 15:1 which is a bit above normal. 

I started my first wave,  one degree lower than my entire count that I eventually will need and that would work even if crude oil goes back up to $160.  

Some readers are searching, " is Elliott Wave Theory the holy grail" and I would have to say it is definitely not the holy grail.  I can give many reasons why I think that and one main reason is that EWP is a complete description how markets behave and markets always behave contrary to the herd.  
Modern EWP is also a promotion of one single wave degree which is GSC degree.  Since the little blue book has been published EWI has never wavered from GSC degree wave counts and has been pushing a deflationary depression for decades.  But it has never arrived and I doubt  it will. Sure we may see serious recessions but by the time they figure a recession is here it will already be over and the next bullish phase would be well on its way. 

Since 2000 the use of the EWP has exploded as the internet spread its use far and wide.  But EWP works best as a contrarian tool as you would buy low and sell high with the wave structures. 

There are not that many true contrarian investors out there as 2009 clearly confirmed. Where were all the Elliott Wave bulls in 2009?  Sure some closed off their shorts but that was far to late as all the real contrarians (insiders) were already buying their own stocks back.  The majority of wave counters should have been screaming, "buy stocks" but no, the majority were expecting another leg down. 

The big problem with EWP is that we are all working a degree that is far too high by a large magnitude and therefore we miss bull markets that never should have been missed. 

Calling for bull market when something has crashed also puts us into the crazy category, it's far worse  calling for a crash when everybody is bullish.  The secret to EWP is knowing your "ABCs"  and a clear imprint in your mind about what an extended wave three is supposed to look like and how it is drawn out.  

Mini SP500, Is There Another Correction Due On A New Moon Thursday?

I am pushing my luck every time I post an intraday chart as these reversals can happen so fast, or they can be very small and keep right on going. Any correction should not plunge all that deep even with wide open gaps below.  If the markets started going sideways for a long period of time in a very complex move then I would be looking for a triangle. Triangles are the warning patterns that there is one more "thrust" coming,  and that a bigger degree change will also be terminating after the "thrust" has completed. 

Another warning pattern would be if the markets started to produce inverted, "ABCs" where 3 wave structures start to overlap each other which are diagonal patterns.   The SP500 still has the look and feel, and the power to break new record highs as we have retraced about 2/3s of all losses. 

The new moon is today and these can be very bearish for stocks and also very bullish for the US dollar. My bet is that stocks are dominated more by stock mania and will ignore the new moon for now. 

Wednesday, October 22, 2014

VIX Intraday Chart Review.

I think those Elliott Wave analysts that never look at the VIX are missing out on the visual representation of human emotions which make the Elliott Waves go up and down. With this violent drop we can see how fast these emotions can swing, destroying and bearish wave counts in the process.  With the late 2008 peak of the VIX it ushered in a bullish phase that no wave counter clued and was about to happen. All the super stock bears still had very bearish wave counts in 2009 and they never gave up on these wave counts for well over 5 years.  Meanwhile the VIX was telling us that all the stock declines were just corrections as the VIX dished out one inverted abc after another. 

The question remains if the VIX has just stopped at a strong support base and that another chance to soar to newer highs will happen.  This would leave three open gaps below, which will then get filled at a future date.  This is a tough call to make as the VIX can just go sideways before resuming its downward path.  Only  time can answer that which may only take until the end of this week. 

Sure the VIX crashed but it's not at the extremes where I would like to see it as it gives too much room to go either way.

US Dollar Daily Chart Update!

When I posted this I realized that all wave counts were too high by one degree, but the wave count remains the same as there still is the possibility of a 4th wave just being completed and we still have to suffer through a 5th wave bullish phase.  Of course things can get very violent in this process but the pattern so far fits best as a correction. With my wave counts this always means a 100% retracement from where the move original started from.   Another example of this happened after the July 2013 peak as the USD declined in a very choppy fashion frustrating all wave counters along the way.  That decline has stopped in May 2014 and now has been completely retraced. 

I never had the confidence to say this about Elliott Wave ABC patterns until I realized it is an essential part of EWP forecasting capabilities which they do not talk about in the little blue book. (EWP)

Since I show a bigger "ABC" bullish phase, then this is already telling me that this entire rally in this daily chart will get retraced. In other words the USD should break the 79 support level in due time. 

This USD bubble will come to an end but we may have to see one more upside move before this can happen. 

Earnings season has not been good to Warren Buffett - MarketWatch

Gold Intraday Correction Update!

Gold has been on the decline as stocks have made a huge rebound and this is stock mania at work but on a smaller scale.  If there is one more bounce left in gold then I would be pushing my luck in saying so but wild moves do happen in reverse to the trend.  Every dip that gold created on the way up would only supply short term support if gold is going to resume its 5th wave heading down. 

It's the US dollar that is creating the headwinds for gold and other commodities  but it also supplies good opportunities for the smart contrarian to build on their gold stock portfolios.  They buy gold stocks in small increments with GTC orders already in place which always guarantees them to get the lowest gold stock prices.  The majority jump on the bandwagon once they think it has left the station so they are always buying high.  When they find out they were wrong they bail out in a panic and pass the low price of to the contrarians. 

I am very confident that eventually we will see the end to this 3+ year bear market in gold and then every correction will be an "ABC" pattern of some type.  It is all these "ABC" patterns that create the higher lows which is the conventional definition of a bull market. 

When all those "ABCs" start to turn into inverted "ABCs" then this is a sign that the bull market will come to an end.