Saturday, April 19, 2014

HUI/GDX Comparisons And ETF Inverse Stock Split Comments.



This is a look at the HUI starting back in late 2000. Back then they could not sell gold stocks fast enough, as the majority of the gold stock investors were selling out. Banks were dumping gold, and those smart fund managers were also selling gold assets. This ended up with about a 35 point price level bottom. As soon as the last of the fund mangers selling announcements were out, the bull market in gold stocks took off.  This repeated again in the 2008 gold crash, and now the HUI has done the same, but at a smaller and slower scale. The bearish mood that struck in late 2008 was worse than what we have, or had in late 2013.  

What I want to review all depends how good readers understand the difference between a true bull market or a large degree bear market rally. All the experts have proclaimed that gold stocks were in a mega bull market, and at the 2011 peak massive bullish forecasts were made, as sentiment readings went through the roof.   All those experts that still think we are in a bull market correction are looking for support levels, not resistance levels. In a bear market rally we always look for resistance levels.  Any bear market rally that has an inverted "ABC" will get retraced by 100% or more. To be conservative I have drawn a line creating a big double bottom, which would be a 100% retracement of the bull market. If the HUI was in a  true bull market then it cannot retrace 100%, as we must have higher highs. The chart above still displays a higher high so we can get fooled by this very easily.  

From the low in late 2013 we would still have about an 82% drop, just to get to a big double bottom at the 35 price level.  This is not going to happen in a single step,  as there should be a strong counter rally, sooner than later.  This counter rally would be my "B" wave top that I have talked about. If we are lucky our "B" wave rally could already be underway which would make the Dec 2013 lows a good position for my "A" wave as well. With a net calculation the HUI has also corrected a bit more than 60%. 


We know that ETF's are very prone to inverse stock splits, like  GDXJ has already executed. As for the HUI we know no stock splits can happen in an index, but they could adjust if they need to.  The gold stock indices give us a better big picture than what gold stock ETF's can ever do. 



Here is the picture of the GDX, and we know contrarians think this is low and many others have also jumped on the gold stock bandwagon recently. In late 2013 GDX settled just above the $20 price level, but still not as low as the 2008 bottom at about $16.  Lets say that GDX roars back to the $30-$40 price level and starts to die, confirming that we are still in a bear market rally.  The HUI can drop another 80% from the June 2013 lows, so there is no chance the GDX is not going to do the same thing. When this is all played out GDX could hit an ugly bottom of around $5.00.   I am sure this would trigger an inverse ETF stock split, and GDX would no longer be cheap.
  
Relying on gold stock ETFs as the primary analytical asset class, is giving us a false picture due to any potential stock splits that can happen when markets approach the extremes.  The real question is if the "A" wave bottom is already in, or the "A" wave bottom is still going to happen?



Thursday, April 17, 2014

Gold Daily Chart Elliott Wave Count Update.



There is bad news and there is good news regarding my wave counts in gold. 
The bad news is that a small downside move may still happen, but the good news is that gold may not make anymore bear market lows for the time being. It all has to do with the ending of my 5th wave, which I have counted as a diagonal decline. That bottom may have arrived right in the last days of 2013.  This could be my "A" wave in Intermediate degree at about the $1180 price levels. 

The rally from that bottom contained a few 3 wave structures, turning this rally into a potential "ABC"  liftoff. In other words, we could be in the "B" wave rally that I have been talking about, but I also have to keep my mind open to a potential triangle for the entire "B" wave in Intermediate degree. 

Any flat type pattern usually means a powerful "C" wave bullish phase ending as well. My small expanded flat in gold is still there, and if I count that in, then the rally can fit into a flat.  Even better yet, would be that presently we are in a wave 2 correction and gold $1280 will hold.  On a quick net calculation, the next move could reach the gold $1600 price level.  
                                                                

                                                                 --------------------
Updated April, 18, 2014

Many times Elliott Wave analysts will call a wave count complete before it's time, and I am not immune to that problem as well.  When this happens we, are compressing our wave counts,  and one of the ways to fix it,  is to move a higher degree wave position into the future. Moving the higher degree into the future, is the act of extending any wave count.  The above wave count has a "compressed" "A" wave bottom in Intermediate degree , but with the wave count below I have removed my "A" wave bottom again.



With this wave count I am keeping my Minor degree 4th wave rally alive, as any double bottom is always a problem. If I ran this in line style then gold would already show a lower low, bit in bar style it does not show. The 2013 decline down to the second $1180 bottom in DEC 2013, is an expanded wave, as it crossed with a 3 wave pattern.  These types of expanded waves happen so many times that I have to be on constant guard to catch them.

I have mentioned that the recent correction contained  another small expanded flat in Minuette degree , which always dictates that the markets will push up past that expanded flat. If  my 4th wave in Minute degree has completed then another 5 waves up in Subminuette degree is still in progress.  This 5th wave is also very diagonal looking, so we could explode into an (ABC3) wave count soon.  Gold should exceed the $1392 price level, and then push closer to $1450, in the next few weeks. 

After that all bets are off, as wave 4 in Minor degree would be completed, and we would head down  5 waves into my new "A" wave location in Intermediate degree.  How low that 5th wave can end at is uncertain at this time, but below $1150 would not surprise me.  Many times a 5th wave will extend, and extensions are very hard to calculate in before they happen. 

Many have used the $1000-$1100 price level, but there are no major previous support wave structures even at $1000.   Gold does not have to fall that low to stop at an "A" wave in intermediate degree, but we should see some more pessimism in gold when it does find a bottom. 

I think all the low prices in gold stock ETF's is tempting many contrarians to take positions but ETF's suffer from inverse stock splits,  because ETF custodians are not perfect when they create them.  Any 4 to 1 inverse split would certainly not make gold stock ETF's cheap anymore.  This is confirmed by the HUI, GOX, GDM and BGMI gold stock indices as they do not show a firm bottom that I would expect before a major reversal. 

Mini SP500 And The VIX intraday Update.



The VIX is a great help when think a run up in stocks is starting to get exhausted. The VIX did clear the expanded flat I had in the first zigzag, but it did not go as high as I expected. That's OK, as now we have another "ABC" crash, which should not go to newer lows. We can see how high up the "AB" developed and technically I would call it a non expanded flat.  I cannot see a clear enough 5 waves starting out, so when in doubt I use it as a flat.  Many times it can turn into a 5 wave sequence but that will take the early part of next week to find out, as most of the markets are closed this Friday. 

I am counting this as the start of a diagonal move, which should contain another zigzag type wave. This next impending wave should take out all remaining visible spikes, and gaps still open. I am starting it in Minute degree, but I may have to change it and bump it up by one degree.  We are getting higher highs in the VIX, but it can be a "C" wave bull market.  


Since the VIX comes from SP500 options,  we get a better look at the inverse relationship now forming.  As I have  mentioned several times, we are in a decline that has all the behaviour of diagonal waves, which already rules out any type of an Impulse wave, such as 5 waves in Intermediate degree, and most obviously it rules out 5 waves in Primary degree. 

I have my "D" wave top in Primary degree labeled, but I may have to move that peak back to the early March 2014  peak.  In other words I have a small expanded flat already in progress. I have no problem with that technically, but it will take several more weeks to play out.  Any expanded flat start, also indicates that we could get a non zigzag type pattern for my big "E" wave decline.

Think about this expand flat a bit, we know the majority of wave counters have no clue that it may be there, as they are looking for the big one down to the 200 price level.  Of course the SP500  will "never" get there in one move, as now we should expect a big "ABC" counter rally, and then crash below 2009 lows. 

If no new record highs were to be achieved, but an "ABC" crash down to the 550 price levels becomes a reality, then this little expanded flat forming now, is forecasting that the markets will roar back, and exceed this little expanded flat.  Once the general public all realize that a major recession or a mini depression has arrived again, the worst of it will be over! If this major bottom hits 550 in the SP500, you already would know, that at a bare minimum, the SP500 will pass the 1895 price level again. 

Mind you, it may take the roaring 2020's to achieve this goal.  In reality this is not Elliott Wave rocket science, if you understand "ABC" crashes.   Any wave analyst could have made the same type of call in 2009, if he recognized that the 2008 crash was an "ABC"crash.  



Nasdaq Intraday Update.





Since the March top in the Nasdaq we developed wave structures that can only fit into the start of a bigger "ABC" decline, I am hard pressed into counting true impulse waves, as many key turnings overlap. This would be typical for leading waves into an "A" wave.  They could also be part of  the leading 5 waves in Minor degree in which there would be much more downside to come. They will not be easy to count out, but I have what looks like another expanded flat, with a "C" wave rally in progress. 

The DJIA and the SP500 have also developed overlapping waves, so its not that the Nasdaq is on its' own right now.  My "D" wave top in the Nasdaq is on right now,  with no expanded patterns to be concerned with. We could end up at a wave 1 in Minor degree. Technically I am looking for an "E" wave Intermediate degree  decline to develop, which will have a leading pattern and a trailing pattern. This trailing pattern should also be another 5 waves in Minor degree. We still have some time before we get to that point.

Many have tried to compare the next meltdown to a potential 1929 crash, but in reality we have had many 1929 types of crashes, it is just that they are very small ones which the media never tells us about.  I have to stress that 1929 was not a wave 3 top, but I changed it to a wave 1 top in SC degree. Zigzag crashes fit very well into a wave two correction but I rarely see them in the 4th wave positions. Since this 2014 we could be in another zigzag crash condition, and the only difference is the degree. I saw a chart where in the spring of  1930 the markets peak exactly at an open gap which developed the previous year. This 1930 peak was a "B" wave bear market rally top which was completely retraced by 1932.  Many thought the worst was over in the spring of 1930, but the markets fooled the majority at that time as well.  The difference this time will also be the time it will take for this to all play out. It could take much longer than the tree years it took from 1929 to the bottom in 1932. 

Fundamentals will never show this to us right now, as the economy is firing on most cylinders. The VIX crashed again this morning but it looked corrective.When there is potential upside to come with the VIX, then we know that fear is going to enter back into the picture. 


  

GSCI, Goldman Sachs S&P Commodity Index Update!


During any big bear market rally phase, we can have tops that can be in their own patterns for long periods of time,  but once a major downturn is in our future, they will slowly start to sync up. In the 2008 crash all asset classes joined in, but gold and silver only corrected, as they travelled much higher after the 2008 crash.  At this time, I recall no other major commodity wave count that has done this.  Gold and silver has masked this action, fooling us into believing we are in a true bull market. 
The present lower highs also helps to make my longer term bearish case.   


I am working all commodities as a triangle in a Cycle degree wave 4, with the 2008 peak in the GSCI being a "D" wave top in Primary degree. Compare this to the DJIA, as it may be just in the process of completing the same "D" wave in Primary degree.  It would be very rare for this GSCI to create an expanded flat top with an Intermediate degree. Also from the 2008 top I had what looks like 5 waves down in Minor degree, which also restricts the GSCI from breaking new record highs.

We still could break that 2011 peak as my "E" wave top but I have no confidence in saying that it will do that "this" year or even next year.  Nothing short of a complete meltdown is in our future with this index, and it will travel well below 2008 crash lows.  Gold suffered a meltdown in 2008 so if we think that gold is immune from another meltdown then, I think we are fooling ourselves.

Oil makes up much of this index, so If the longer term picture becomes true, another world oil glut will also be in our future. Fundamentals do not dictate prices, price moves create fundamentals.  If we go back to the 2008 peak, all the analysts that use fundamentals in their forecasting, never saw this price crash coming, as oil was destined to go to over $200 in a Peak Oil shortage, gold was going to $5000 and silver to $200. None of that happened, and I am sure nobody is predicting another world oil glut, or even a world gold glut.  Remember, in late 1999 we had a world gold glut as investors and banks could not unload gold fast enough in those days.  To this day I keep shaking my head, in how the banks acted from the bottom in late 1999 to 2011. They are the poster child of the "Sell Low", "Buy High" practice, used by the majority.
The Swiss central bank lost an enormous amount of money on its gold holdings last year - Quartz
The stories are coming out already, and I am sure it will get worse if they see a lower gold price in their future.










Wednesday, April 16, 2014

Gold Intraday Elliott Wave Count Review.

As much as many see gold building a potential base, the bullish sentiment returned last March with a vengeance.  This was confirmed by the DSI readings that Elliott Wave International use. (EWI) Stories about gold stock insiders jumping on the bandwagon was also very uncharacteristic, as I have never seen it happen that way before.  Gold stock insider buying, was more in line with expectations back in June 2013. 
Having the gold bulls return so quickly gives little hope that a super bullish phase is still in gold's short term future. In order for gold to have a very powerful run, gold has to start from a very bearish bottom, not a bullish top. The bearish bottom that I always look for has not even come close at this point.  Price is irrelevant, but the mood or sentiment at any price is the most important indicator.    

If the gold price crashed to $1200, and the bearish mood of gold from early 1999 returned quickly,  then yes I would turn instantly bullish, and I would be calling for much higher gold prices. Instead, gold made a slow wandering decline where no single defining moment of bearish emotion erupted. 
The same logic applies to the stock market, where price is irrelevant but the intensity of the bearish mood will be everything.  Since gold has topped out far ahead of stocks, we are getting a quick peak into the future, in what may happen in stocks.  It is the intensity of the bearish mood in stocks that I will be looking for, not it's price. This extreme bearish news in stocks can intensify at the DJIA 14,000 or 12,000 or even 10,000, then if this happens any DJIA 5000 or 1000 price forecast, will never get reached this time. 

This extreme gold bearish sentiment has never been reached since the 2011 top , but bullish sentiment has now returned. This is a warning that gold has some very nasty big surprises in store for us. 


For this wave count I have closed off my 4th wave top, and need that wave count to hold for a long time. The gold rally since the early April bottom looks very impulsive, but it would have to impress me with the rest of the waves of the impulse.  My megaphone lines suggests another pattern may be in store for us.  If any further gold price rise is slow and erratic, then I would say gold prices are heading lower.  With the sharp decline I counted 7 waves, which is a correction. This still keeps a bullish scenario alive, and gold may end on a "B" wave top  in Minute degree. After that it will be free to fall and make new bear market record lows. 

I think gold and gold stocks have fooled us, because they are not acting the way they should, if they were over in the bullish phase already. Too many gold stock experts, and even contrarians are relying on ETF's for their analysis, and due to their low prices have been seen as a buy.  There is one big problem, and that is gold stock indices do not confirm a major bottom, like ETF's may be doing. 

ETF's are very prone to inverse stock splitting, giving us a false sense of a potential bottom. 
Even when we look at gold's entire run, and just calculate a simple "net" 61% correction, we come up with a gold price below $900. 

If you think that the 2008 gold crash was horrific for gold stock investors, just think if gold reached a 1930 stock peak equivalent.  Any "ABC" pattern does exactly that, and the only difference is the degree. 
That 2011 peak in gold was it's Golden Tulip top, as we had some of the most extreme bullish readings we have ever seen.  

The good thing is that we should see a powerful counter rally from our next major bottom, which could bring gold prices back to the $1400 price levels.  


Tuesday, April 15, 2014

Mini DJIA Intraday Chart Review, Was it just A correction?


I have removed my "D" wave top temporarily, as this market seems to produce more overlapping waves.  My first drop down was a perfect zigzag with an expanded "B" wave, and in the last few days  the markets have headed back up. April the 15th was also a special full moon, as it also enjoyed an eclipse from many parts of the world. This all has a look and feel of a triangle, and since my last drop was an "ABC" then this "ABC" can be completely retraced. Starting out, I had a funny correction but this was an expanded flat 4th wave, and we could be heading up to another wave 1.  These markets can get crazy, as the entire 5th wave can extended roaring up to new record highs in the markets. 

I try not to accept expanded flats in the wave 2 positions, but it is very tempting most of the time. Again, the Nasdaq is not confirming any type of Impulsive starting wave, so I have to assume a potential bear trap just happened 3 days ago. I am sure the markets are going to send us a few more surprises but the upside momentum on the bigger scale is decreasing. 

GOX Gold Stock Index Cycle Degree Review.



The gold stock bull market phase started back in 2000, and the majority treated this so called bullish phase as a true bull market. In reality all the wave counters, including myself had problems counting it out as a pure impulse wave structure.  It took the experts months to decide that gold stocks were now in a bear market, but from an Elliott Wave Cycle degree perspective, it has always been in a big bear market rally.  

There are only three patterns that I can have in "any" 4th wave correction, and starting from the 1980 peak, we can see that we can eliminate several of them. We can now eliminate  the single zigzag and we can also eliminate the single flat. This leaves us with one pattern called the triangle. Where we are in this triangle has always been the big task at hand. 

I have posted many wave counts before with a "D" wave top for 2011, but I flip flopped back and forth with an expanded flat. "D" waves have no problem in breaking out into new record highs, and "D" waves can always be mistaken for wave 1 tops.  Since the late 2000 bottom we had nothing but overlapping waves. These waves only got worse after the 2008 crash. The reason for this is because overlapping waves are a clue that the markets are running against the larger trend, and after 2011 gold stocks have resumed their larger trend.  

There is still a probability that gold stocks can push a bit higher, but they are running out of steam. I mentioned that bullish sentiment returned far too quickly pushing the DSI index used by EWI, to a maximum as well. From the 2011 "D" wave top I need another zigzag related decline, and I believe my 5th wave in Minor degree is not completed. 

We do have a big corrective base that all pivots around my Intermediate degree levels, and our next bottom could be just another Intermediate degree "A" wave.  It will be from this "A" wave bottom we can see a strong rally, but how high that rally can go is uncertain, because I can have about 5 different resistance levels. Once wave 5 is completed, then I will have a better idea, but I use .618 for general all purpose corrections.  Even "B" wave counter rallies can find resistance at 4th waves, so our present sideways pattern will be critical in the future as well. 

GOX has a 100% retracement price at 25, only 10 points lower than the HUI, so they will be good gold stock indices to watch. Wave counting ETF's have been fooling us, giving us a false low.

ETF's are also very prone to inverse stock splitting, and my bet is that several more gold stock inverse stock splits may happen in the future. 

HUI Gold Stock Index Cycle Degree Review!




My largest degree that I am working gold stocks in, is a Cycle degree 4th wave, and the entire so called bull market in gold stocks, is a triangle. Long time readers know I have worked gold stocks with a "D" wave before, but now the "D" wave is back at the 2011 peak position. This 2011 peak was close to the 660 price level, and many experts see our present rally as a support range. Support ranges only work in true bull markets, they don't work in big bear market rallies.  In bear markets it's all about resistance levels, not support levels. 

 When you translate the HUI over to ETF's , some ETF's look surprisingly cheap.  There is one problem with ETF's because they have been mispriced by the creators many times before. When they find that an ETF is mispriced, they will introduce an inverse stock split, and then gold stock ETF's  will no longer look cheap. The gold stock indices like the HUI, GOX and GDM, will never need inverse splits, and looking at the HUI it still has lots of room to fall. Pattern is more important than price, and if the bull market in gold stocks was a fake, then nothing short of a 100% retracement of the gold bull market will happen. 100% retracement will get us to the HUI 35 price level or a bit lower. 

Back in the good old days, from 2004 to the bottom in 2008, the HUI suffered an expanded flat correction with a triangle in it's Minor degree "B" wave. Those darn triangles dictate that a degree change is going to be forced on us, and it is usually a two degree change.  In order to confirm the "D" wave top we need another "ABC" in Intermediate degree, eventually terminating at an "E" wave bottom in Primary degree.  I have mentioned that the gold bulls have returned far to early already, and the DSI index that EWI has publish confirms this. There is a small chance that the HUI can still exceed my wave 4 top, but time will have to confirm that. Once a realistic wave 5 bottom shows itself, then I can see a "B" wave rally that can surprise us again. It will be important to notice "how" the HUI will rally, as that dictates how high the counter rally will go. 

Readers may think this is a crazy forecast, but you have to remember that the public does not know the difference between a pure bull market, and a Cycle degree bear market rally. From their point of view anything that goes up is instantly the start of a bull market. 

It took many years, but now virtually all my wave counts have had "D" wave tops in Primary degree and with that, we can see that they are all starting to synchronize much closer. 





Quick Gold Daily Chart Crash Update. Do Or Die!




No wave count is secure, as I also have to work gold as if the March 2014 top was my 5th wave.
Gold has to impress me by going much higher, otherwise a diagonal 5th wave could be in progress, and gold would have to fall below $1180 price levels. If this is the case then our present double bottom will not hold.

Every trader in the world has got his eyes on that double bottom, as there will be tons of sell orders underneath it.  The Ukrainian crisis may be escalating yet gold crashes.  One reason is that gold does not care what investors use it for , it only cares about how much demand there is on liquidity.  Besides any good idea that the majority are using gold for will no longer work when everybody is doing it.  Banks are going to be in big trouble if they continue to hold a falling asset like gold. 
Remember banks are the prime example of selling low and buying high, and they will  start to sweat once gold starts to fall under $1180. 




Walking, 'talking' drilling rigs aim to modernize fracking | Reuters


http://www.reuters.com/article/2014/04/15/us-schramm-shale-idUSBREA3E0NA20140415

Monday, April 14, 2014

US Dollar And Gold Daily Chart Review.



My larger US dollar wave count is back to being in flux, for now. When that happens it is important to identify all the little "ABC's" and 5 wave sequences, so later I can convert them to a larger degree wave count easier.  I am expecting this rally to still go a bit higher and that may send gold down some more, but it may not push gold to new lows.  Commercials are net short the USD so that is a good thing, They are also still net long on the CAD and the Euro but have a net short position on the AUD but they are not extreme cases yet.  

If the USD makes a flash move to the upside this may be very limited as well, as after that the USD can crash down to the 75 price level. This USD decline would have a dramatic bullish effect on gold and silver.  I don't see the USD making it's final big plunge to record lows just yet as I think I am too early for that.   What I had was an expanded triangle "B" wave top, and the decline is looking like a diagonal "C" wave, where the 4th wave did dip into wave two. 





The correction that from the March 2014 $1392 peak, still has the expanded flat in it, and I hate to ignore any potential expanded flat. The perfect "C" wave decline ended on a 4th wave bottom, and we are already in the 5th wave in Subminuette degree. We could be at a Micro wave "1" and a quick wave "2" should happen before gold pushes northbound one more time. If wave one and three were even then we could expect the 5th wave to be much longer.  

This would send gold past the March highs of 2013 and the August 2013 highs of $1430.
After that all bets are off as gold would be setting up for another major decline.  What gold would be crashing down to would be my "A" wave bottom in Intermediate degree!  Since "A" wave bottoms are buy signals, (depending on the degree), we should expect another huge rally sending gold right back up to our present price levels.  At any potential future "B" wave rally, I would expect the $1400 and $1500 price levels to offer some serious resistance. 

All those experts that are looking for support are thinking that gold is only in a bull market correction, but I will be looking for resistance price levels.


Elliott Wave International has posted some very real Daily Sentiment Charts, (DSI) and this has actually confirmed what I have mentioned, that the bullish mood in gold has returned too early. 

If you think that gold was not in an extreme bullish mood in 2011 then follow this link, as they created a perfect chart with all the indicators. This mood, and how all the banks behaved was the exact opposite of how they behaved at the bottom in late 1999! From one bottom extreme back to a top extreme can only be corrected with another extreme in the opposite direction. 

The little decline we had in the last three years or so has been nothing, It does not even register yet.  
  

Platinum Weekly Chart Review!


Over the years I stole many good indicators that smart contrarians have been using for years, which help them figure out tops and bottoms at major turnings.  This time it has to do with the commodities sections, and the currencies that correlate well with gold and other metals.  The commercial traders are the ones that have the least risk, and I look to see if they are net long in any of the metals or the Australian dollar, the Canadian dollar, and the Euro. Of course the USD would be an inverse correlation.   Only in the USD are they net short, but they are net short by only a small ratio. Nothing to get excited about at this time. What it means there may only be limited upside potential in any of the metals. Commercial traders are all net long in the CAD but net short in the AUD and the EUR. This has not happened for a long time, and it creates a downright bearish outlook in the metals.  That's only in the currencies, as the traders commitments in the metals are equally in bearish positions. Commercial traders have now added net short positions in platinum, palladium, and always have been net short gold and silver. 

The only oddball is copper where the traders are net long.  This all indicates that any rally we do get is not a big move to the moon, but that prices will head down before they rocket upwards. 

If you like, you can add crude oil traders commitments, which they are in an extremely net short position as well. For a big bullish phase to kick in I would like to see all those indicators reverse, instead they are all working against us. 





I changed the 2008 peak to my "D" wave peak in Primary degree, and I still need to work the wave count from the 2008 bottom. There could be a triangle in there or Platinum could be heading up a wave 2, This means eventually the 2009 lows will get exceeded.   If any wave pattern does not fit very well into an Impulse then instantly repeat this line, "If it's not a five, it's a three and a correction".  This platinum rally turned ugly well before the 2011 peak, and I would be looking for the top trend line to hold resistance.   


SP500 Intraday Chart, Experts ask, Can It Go Below 1750?

                           Can we see lower than 1750 in the S&P 500? - MarketWatch

When experts start to ask how low the SP500 can go, you know they are thinking a bull market correction. The author is also an Elliott Wave analyst, and his commentaries are extremely bullish, as he only sees a correction.

Just because the markets have travelled up for 5 years does not mean it is in a true bull market. The majority of investors never know the difference between a real bull market and a fake one. A fake bull market is just a bear market rally from an Elliott Wave perspective. From here on, provided we are over into the bearish side, the majority will always be looking for support, not resistance levels.
They have no clue a major bear market could be upon us.

The 1750 price level forecast is a pretty easy one to make, anyone can make that after it already has turned.  I think every support level that will get forecast by the consensus experts, will eventually get broken, until such a time when insiders start to do some serious buying. When Al Gore starts to buy his Apple stocks back, or Tim Cook does the same thing, then the markets are only going to see short term support.  I am only using them as an example, as I am not saying that Tim Cook's and Al Gore's Apple stock buying is going to hold up the entire markets.

 The key will be how all the counter rallies behave! Every time they rally and we get inverted "ABC" waves, then this market will turn down again and create another low.

This process will form the famous lower lows that smart contrarians and smart investors know all so well.  Lower lows work, but they can also fool us when we are in 4th waves.

 My triangle in Cycle degree is back on the table, and our top in April may be my "D" wave in Primary degree. I have explored this wave position many times before, but this time it fits better. I was working my degree levels far too low on the scale, and this is a clue I have to review, and look for a higher degree bear market rally, which started in March 2009.

All bear market rallies get completely retraced, except for a few rare times when they may be truncated.
This also works in both directions since I have  a "D" wave top in gold as well.  When we get a major crash or a major decline in stocks then look for a potential "ABC" decline, if we have one, then the entire bear market crash will get completely retraced as well. If the SP500 fell to 500 in the next 5-7 years, then we already know that it will roar back and break new record highs again.

The general public will be selling out like crazy at bear market bottoms exactly, when they should get back to being fully invested.  During a bull market the majority investors are the winners, "On Paper" , but that is where it stays.  Any stock is just an electronic version of "paper" but I think it is worse, as at least when paper stock certificates were issued,  we could nail them up on our walls.

 


Mini DJIA Intraday Chart Review.




I am working stocks with a "D" wave top, but to be cocky sure that the top is completed, I am unable to do that.  The markets can still make a wild counter rally but we can look for lower lows to form. 
I can give you a clear idealized description of the next pattern or script that I need, but many times readers may assume that it will happen all at once as everybody may have 1929 or 1987 on their minds.  I am sure it will be none of the two I have mentioned as every crash and even every single wave pattern is different, just like billions of fingerprints are all different.

They say history repeats but it is financial history that repeats more often frequently. I use the 100 year cycle so I look back at 1907 or 1915 stock and metal charts, to see what happened in those days. 
Besides every major crash in stock market history produced a major bull market with complete retracement. 

The next stage that we should have is a zigzag type wave.  As long as it ends up being corrective by the time it's finished I would be happy with that.  Above all we have to keep our mind open as calling something too early is always a major problem.  I need an Intermediate degree "A" wave crash and where we are in this part of it is still unclear, I will start out trying impulses waves and will adjust the degrees along the way.   My degrees have been far too small, so a major adjustment had to be made anyways.   

Right now stocks seemed to be still charging up so we will see if they run out of power before breaking my wave two. 

Sunday, April 13, 2014

(Video) The Sequel: "Sentiment Has Spiked Again in Gold" | Elliott Wave International


http://elliottwave.com/freeupdates/archives/2014/03/31/The-Sequel--Sentiment-Has-Spiked-Again-in-Gold-.aspx#axzz2yoGWeiJ4

Silver Weekly Chart Elliott Wave Count Update.


Even though I have published 3 or 4 wave counts on silver in the last month or so, silver does not even get picked up in my stats counter.  I can understand that, as gold is far more popular in the world today.
From my perspective silver is more important to watch, as it is showing us the real bear market rally, as for gold has masked it all. Gold is pulling a con job on us as, silver is displaying the truth. 

Silvers so called bull market, was not a bull market, it was a bear market rally, which is the main reason why silvers bull market was so difficult to see perfect impulse waves. 
 Since 2011 it has returned to it's major trend, and we may see better defined wave structures heading back down.  

 Of course most analysts are calling this a bear market, and many are always looking for support ranges.  Those that are looking for support ranges are thinking silver's bear market is finding support, and a new bull market in silver is about to begin.  All efforts in trying to find a bear market bottom support price will be futile. If I said that the support price level for silver will eventually be below $5.00, many would think this is crazy.  I can understand that,  but those that think it is crazy do not understand that the entire commodities bull market was a big bear market rally, and bear market rallies get completely retraced. 

Even Elliott Wave International has been very bearish on gold and silver, and to my surprise I agree with them on the bigger picture. 

Assuming anything that goes up qualifies as a bull market, gives us false confidence, and this is one reason why investors always get surprised when they get caught in a crash. 


Silver is not going below $5 all at once, as there are always counter rallies.  I am working a potential zigzag decline, and it sure seems that we have one more downside leg to go before we hit a potential "A" wave in Intermediate degree. Any rally that displays choppy and erratic behaviour , silver will be telling us that it is just a counter rally, and more downside is to come.  I have mentioned many times that in order to see a return to a bull market we have to hit a very low in silver psychology, this has not happen, and now many metal bulls have come back already.  Insiders have jumped on the gold bandwagon, and even this was very uncharacteristic of them to do.

Many other indicators that work against the metals, like the Australian dollar are shifting. The commercial traders have recently gone to a net short position with the Australian dollar and also the Euro, even though it is not by a large margin. This just indicates there is little extreme upside pressure for metals.

Saturday, April 12, 2014

Gold's Slump Forces Swiss Central Bank to Cancel Dividends | Elliott Wave International

https://www.elliottwave.com/freeupdates/archives/2014/01/14/Gold-s-Slump-Forces-Swiss-Central-Bank-to-Cancel-Dividends.aspx

Mini DJIA Monthly And Idealized "D" Wave In Primary Degree Review.



I have produced many idealized scripts on this blog, but many of them were also produced in SC or GSC degree. SC and GSC degree is a myth, as SC and GSC degree has never been confirmed prior to  2000 or since then.  There are many reasons for this and the biggest reason is that wave counts have never been extended making wave three the longest. Majority of wave counters today are working from a 4th wave base, when in reality we are working from a wave 2 base and wave three is the longer wave.  Wave three should never be the shortest wave, otherwise we are breaking a major rule using the Elliott Wave Principle. (EWP) 

Once we break down the requirements into sections, then these sections have a certain degree of impulse waves, and a certain degree of "ABC"s.  These waves have never been reviewed even though EWI has many expert wave counters on their payrolls. Since 2000 many thousands of wave experts have joined in the fray, all claiming to have a better SC or GSC degree wave count.  With thousands of new wave counters out today I find that they are all chasing the same degree. One of the biggest failures in wave counting history was not seeing the bottom in 2009!  Many contrarians knew a major bull market was about to start, yet wave counters refused to capitulate until 3-4 years later. Every major wave count failure should be a chance to learn from it, and to find better fitting wave positions. 

Cycle degree wave 3 in stocks completed 20 years after gold and until all Cycle degree wave structures are clearly identified and confirmed, no SC and no GSC degree wave counts can exists. 




  
I deliberately left the bull market chart above unfilled, as these parts are still far away and into the future. The 5 waves I show would be five waves in Primary degree. What I am showing is the "D" wave top in Primary degree, which would be a 2014 peak, once it is completed.  The "E" wave bear market should take the shape of a zigzag type pattern, that can have many variables. It does not have to be even, because that would be just too easy. The leading 5 waves could be a diagonal, with the trailing 5 being some type of alternation. Once this all becomes more clear, then we will end on a Cycle degree wave 4 bottom. This bottom may not arrive until after 2020, also ending on a 20 year cycle. 



This is the real world chart that we are dealing with, and my triangle is starting to look much better again.  The megaphone pattern is just the same as for gold, but investors are still in complacent bliss, and are ignoring all megaphone patterns. Changing the 2009 to 2014 rally to a Primary degree run, allows my wave degrees to jump up by at least two degrees. Readers know I was scraping the bottom of the degree barrel, and it was a hint that I had my wave counts extended too far.  My wave three in Cycle degree has been solid, and from this base it saves me time, as I no longer have to review back to 1837. 

I view all the markets from a 100 year cycle matching 1907 to 2007 as they were both money panic dates. From about 1900 to 1920, we had another 20 year cycle, and this era was also a triangle wave 4 in Cycle degree. There is no sense in comparing past histories when the wave degrees and patterns are not similar.  The real difference is the amount of players, and this shows as the wave patterns today are more smoothed out with far better resolution.  Sure, we will always have contractions and crashes but a full fledged depression like 1929, is going to be an extremely rare event, as long as our electronic world is still functioning. 

My Cycle degree wave zero starts in 1932, with commodities also hitting a bottom. Gold would have reflected this crash very well if it was not fixed by the governments of the day. Silver was not fixed, so it fully displayed how metals behave during a deflationary attack.  Deflation or inflation is a function of money velocity, which gold has always reflected perfectly.  

No two crashes are ever really the same, but they do repeat every one hundred years. WD Gann had this figured out very well, but hopefully without the Spanish Flu, (1918-1920) as these types of plagues can also work on 100 year cycles.

As ugly as what the above triangle may show in the next 6 or 7 years, and we end down at the Dow 5000 price level, you can be assured that the markets will roar back, and retrace the entire crash and blast off to much higher highs.  This will be especially true if our next big decline contains another "ABC" crash. 








Gold Daily Chart Rally Review.

I have to keep posting stuff on gold because this so called expected bull market is not happening the way I would expect any other bull market to get going. Sure, any market turning has it's individual fingerprint, but there is also a certain power to them when they turn. The point to all this is that there is a potential for gold to still be in a bear market rally, and that the 2011 peak was much more of a critical turning than we all think it may be.  Expert consensus has declared gold in a bear market, and many participants have declared this bear market over.  Insiders have jumped on the gold stock bandwagon, which was the first time I have ever heard about them making an emotional leap like that. This did not happen in the 1999 bottom and it did not happen at the 2008 bottom.  Sure we had "normal" insider buying in June 2013, and the media did a good job of reporting it.  

 I have changed my Cycle degree wave counts back to a triangle, and it will take some time to count them all out to double check them. There are only three choices as to what type of a correction I can have anywhere, and my Cycle degree triangle is back on. The difference between a pure bull market and a bear market rally, is that the pure bull market contains well defined 5 wave sequences, and it is easier to count out.  This is all degree specific, but the bottom in 2013, was not nearly bearish enough, to produce a sustained bullish phase. The gold stock 2008 bottom only produced a three year sustained bullish phase, and much of it has already been retraced.  Just because something is low and at an extreme, does not mean that it cannot get into more of an extreme. 

Many asset classes are pointing to a potential "D" wave top  in Primary degree, and gold now has the same wave position for 2011.   To confirm this, gold cannot make a new record high but only in an extreme situation.  The last thing I would be looking for is an expanded flat in an "E" wave in a triangle. 
This may not be very good for gold bullion buyers that bought at record high prices.  


There is a very high probability that gold and silver are still in a bear market rally, specifically a 4th wave rally.  I am working the decline as a diagonal decline pointing towards a potential "A" wave bottom yet to come.  This "A" wave would be my Intermediate degree "A" wave, and it would be at much lower gold prices.  It would get there in sympathy with the DJIA, when it starts to get serious in crashing. The DJIA may have already started but a violent counter rally could still happen.  There is nothing that I would like better than to be wrong this time, but it is the US dollar's future direction that is the key to gold's bull market.

Of course, I want to have gold confirm or deny my outlook as soon as possible, and that can only start to happen at the Minor degree and lower levels.  Since 2014 gold has been on a good run, while silver has lagged behind. Again, I think it is gold that is fooling us, and not silver. 

If we look at gold's bullish phase, I see that it can contain an expanded flat at the Minuette degree level.  This means that gold should still break out past these $1392 highs. A  4th wave rally can push to the extreme, but then $1500 could see some real resistance.  Even at gold $1450, this would be enough to satisfy my 4th wave requirements.   

If gold ever did break to newer lows in the next 3-8 months, it could do it as the general markets also crash.  It would be pretty scary if stocks and gold crashed in sympathy with each other, as it has done this before in 2008. 

Even after a potential "A" wave bottom may happen, then the "B" wave counter rally could contain a drawn out triangle as well.  Gold could be over into its "E" wave world, but  many people are looking for price support levels.  
When experts are all hunting for gold support price levels, this tells me they are still thinking as if they are in a bull market. Those experts that are looking for resistance levels are thinking from a bear market rally perspective. 


You can doubt all wave counts but, if you take a monthly gold chart, and apply megaphone trend lines, it looks no different than what the DJIA would look like.  Markets will follow the path of least resistance, and only time will tell us what this path really is.  







Friday, April 11, 2014

Crude Oil Cycle Degree Monthly Chart Review!

The crude oil chart below is a completely new wave count starting from the 1980 Cycle degree wave three peak. When some or many of my Minor degree moves are having problems then its time for a "Reboot", as I have a virus or even many viruses in the past.  In any correction I always have 3 choices as to what type I should expect, but it is very degree specific. I need a Cycle degree correction between waves 3 and 4, and I have a choice from three.  Zigzag, flat or triangle, I can rule out one for sure, and that is the single zigzag. The highest corrective degree for a wave 4 in Cycle degree is Primary degree. I have to rule out a single Primary degree flat, but my Primary degree triangle is looking better all the time.  I have never used the "WXY" waves, as they never made sense when I first started with Elliott Wave, and they make even less sense now.  Most "WXY" looking patterns are just parts of triangles or even diagonals. 

I know there is a commodities crash coming, but setting off alarms too early is like crying wolf, so I want to avoid that if at all possible.
If we are expecting a stock meltdown in the DJIA, and it contains two big oil companies, like Exxon (XOM) and Chevron CVX), then why should we expect crude oil to stay up?


I reworked everything as a triangle with Primary degree turns making the 2008 peak a "D" wave in Primary degree. This makes the 2008 bottom in crude oil another "A" wave in intermediate degree, with the "B" wave still in progress.  It is this "B" wave that may contain a triangle, and it may be seeing it's last days, or last weeks. Crude oil is struggling to maintain direction and this alone is an indicator crude oil will eventually crash again. That final bigger crash should take crude oil well below the $20 price level, and technically it could visit the $10 price level.  In a little more than 5 years the USA went from Peak Oil fears, to full production on the domestic scene. This just goes to show that fundamentals are never what they seem. In 2008 we had a world glut in crude oil and I am sure we are going to see another oil glut in our future. 

Any event like a crash will be accompanied with a big rally in the USD. Commercial traders have a huge net short position built up and this also will keep the lid on oil prices, or at least stop oil prices from going to the moon.  Crude oil may break my $115 price level, but we can flip a coin if this will happen this time or not.  




   

Mini SP500 Monthly Chart Cycle Degree Reboot Review!

The chart below is a major revision of my Cycle degree bear market, and it looks like my Cycle degree is in a giant triangle. I only have three corrective waves that I need to deal with in any correction, and the triangle is back in play at this time.  I have already mentioned that any future big decline  should take the shape of a corrective wave, and a "D" wave top for 2014 will allow for this to happen. 
There is still one more upside push to come, then there should be another setup for another bigger decline. 


The megaphone or triangle lines are one of the best ways to box in a potential move. This does not suggest some future mythical decline to below 200, but any low below 2009 lows will do the trick. 500-550 would be the initial target range, but I stress it will not do that in one move. It could take until 2021 before this final bottom is reached. 2021 will also be the end of a 20 year cycle, as it will also be the 89th year anniversary date from the 1932 bottom. 1932 is my wave zero starting date for my set of 5 waves in Cycle degree.   Wave three in Cycle degree peaked in 2000 and this has been solid as this review has not forced a change to the Cycle degree position. 

On the intraday level there could be more upside to come, but at the extremes is the best time to review the largest pattern I am working.  This all allows my wave counts to come up one degree level, as during much of the last part of the waves, I have been working down into my lowest 3 degree levels. (levels 13,14,15) 


Heartbleed bug: what you need to know - CBC News Vancouver at 6 - CBC Player


http://www.cbc.ca/player/News/Technology/ID/2447940486/

Mini DJIA Intraday Chart, Bear Trap Review!



As of this morning my perfect looking zigzag decline could be at a triple bottom, but it is also  part of a triangle. This has only one meaning, and that is stocks are going higher, and they should break out and make record highs again. Any time I mention a bear trap, it means that the bears or short players are trapped because the markets are going to force them to change their direction.  I know there are large short positions out on the indices, but to protect themselves they have to have alternate buy stops in place. The bears actions always sow the seeds of their own destruction, as they leave protective stops in their tracks. The bears are the ones that are stepping into traps that they themselves create. 

We have a Head & Shoulders pattern, and if I draw the trend line across the top, readers may think that I am using it as resistance. No, as many times theses H&S patterns blow the lid off the tops, as the right shoulder can just blast upward again. 

I have mentioned that even if the markets crash deeper,  any decline will be part of a bigger correction. It would be fantastic if this market top turned into a Primary degree "D" wave top in a Cycle degree triangle.  All those idealized triangle scripts I created, will come back into focus at our next major top. 


Thursday, April 10, 2014

US Dollar Weekly Chart Elliott Wave Count Reboot!

 Wave counts that refuse to cooperate very well on the intraday levels, usually means I have a bad wave position somewhere in the past. These bad positions work just like any virus would, that has infected our computers or our programs. To kill a problem, (Elliott Wave Gremlin) there is only one choice, and that is to "Reboot" with a fresh, monthly or weekly chart. I print them out on a full 8x10 landscape sheet, and then start to look for an alternate wave count. I do this before I put anything down with my pen.

To really put a twist into hunting wave counts in the USD index, I flip the EWP upside down.
This means that all rallies always produce 3 wave structures, and the only 5 wave runs have to be lower than my highest degree. Most of my 5 wave structures will be no higher than Minor degree at this time.
In the case of the US dollar I had to go back to the late 1970's, and start again with a potential expanded flat. This gives us a  new wave position for the 2008 bottom!  Without very good knowledge how the USD is trending, or will switch trends in the future, then gold and silver's future direction will also be a mystery.


I don't particularly like using trend lines with my wave counts as they can lead us into thinking all sorts of mythical scenarios.  The one pattern I do like, and that is the triangle or megaphone pattern, which is drawn inverses from what you normally may have seen them.  All you need is two important points for each line, and we end up with the USD stuck before the halfway point to the bottom line. 

Higher highs indicates a bull market is in progress, but in Elliott Wave language, it would still be a bear market rally. 



 I realized that a Cycle degree triangle could be in progress, so all my wave counts reflect a potential Primary degree "C"  bottom in 2008. This frees up degree levels, which also makes more sense as I was working from the bottom of my list most of the time.  I bounce up one degree overall,  but in a different location of a triangle. I always have 5 choices of patterns to chose from and they are all degree specific. I used a bit bigger set of fonts this time, and once we look down to the 2011 lows, I now have a "B" wave in Intermediate degree.  The was also the beginning of the gold and silver bear market.  This makes our present rally part of a potential "C" wave bull market, but my "C" wave is a diagonal "C" wave. Specifically, an ending diagonal "C" wave.  An ending diagonal can have the 4th wave fall very deep, right to the bottom of it's corresponding wave two. 

There is no room to play as these 4th wave bottoms have to come to a screeching halt, otherwise it destroys the entire wave count instantly.  I have talked about this 75 price level before so now it has come back to haunt us with a completely "Reformatted" wave count.  This all helps with the confirming process.  Once the USD gets to the bottom support line, then it will be important to notice what the gold stock insiders are doing, and how the net long positions of the commercial traders are. 

Out present decline makes more sense as the decline itself is also diagonal in nature. The last leg down can extend to the point everybody is convinced that the US is crashing. In reality we could be looking at an expanded "ABC" wave 4 decline, and all "ABC" crashes get retraced, by 100% or more.   

DJIA Intraday Crash Quick Review.



The markets are coming down like a lead ballon, but we need to take out my  "A" wave bottom which is in Micro degree.  We could be at a potential wave 3 this morning, and wave 4 and five would still need to be added on. If this turns out to be the case, then we would be facing another "C" wave bull market, as part of my ending diagonal. 

I am already scanning my past wave counts as this could all be pointing to an end that does not include my "A" wave top in Minor degree. In other words, I may be hitting my "E" wave top instead. 
This has scary implications, as my "B" wave in Primary degree would also come back into play.


Silver Daily Chart Elliott Wave Count Review.

I am sure readers to my blog have heard me complain how silver still has to fall to new lows, in order to satisfy a 5th wave.  I have also mentioned that if silver did not complete this last 5th wave, but continued northbound, then I would have to call the entire impending bullish phase another  bear market rally.  This will have huge implications in how high silver can eventually go. 

When patterns do not complete, in what should have been a simple wave 3-4-5 in Minute or Minuette degree then, I get very suspicious.  This should always trigger a complete review of the entire silver bear market, which started in 1980.  I always do a complete review, with a few printouts in 8x10 landscape, as this has alway been my way of doing a reboot! Any problem wave count, acts like it has a virus in it, so the only way to get rid of it is by printing a fresh chart.  

 Looking at any wave count with a new perspective always produces a better fitting wave count.  My 1980 peak as a Cycle degree wave 3  has not changed, as it is still secure going on 34 years.  If I move around just one wave position after 1980, then this forces me to recount every other single wave as well.  For the time being the 2011 peak is now a "D" wave in Primary degree, making the June 2013 bottom my potential "A" wave in Intermediate degree.     



I have a new position for the June 2013 bottom in silver, and so far we still have higher lows developing. This is also a prime example how using higher lows as a pure indication to a bull market can be a fake.  It definitely suggests an upside breakout to come, and silver would have to add a full 5 waves in Minute degree. Wave two may be in the process of completing soon, as a bit more downside can still happen.  Of course a small truncation may have happen, and in this case no new lows would develop.  

The late August 2013 peak is now my "A" wave in Minor degree, with the correction down into late Jan 2014 being a triangle "B" wave.   I can call my entire impending "B" wave in Intermediate degree  a flat, with a 3-3-5 count, and I am sure there will be nothing even about it.