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US Dollar 1980-2018 Update

 

Way back in 1980 the US dollar bottomed and then soared in an insane vertical move which I think ended with a wave 3 in Cycle degree. We can say that Regan was responsible for that rocket move. 1980 was also the peak of solar cycle #21, so the US dollar repelled up from  the sc#21 peak.

Then from the 1996 sc#22 bottom, the US dollar did the opposite thing and soared again until the peak of sc#23 in 2000. From this sc#23 peak the US dollar repelled in a big move south that didn’t end until sc#23 bottomed in late 2008! For about 8 years the US dollar rallied with the run up of sc#24, but then the USD also repelled from the SC#24 top in 2014.Now the US dollar is heading south as sc#24 is also heading south.

By 2020 or so sc#24 will end and then we start up in sc#25. SC#25 could be a huge bullish setup for the US dollar. The big thing is that the US dollar, solar cycle action, always seems to alternate. This alternation action doesn’t happen in the main stock indices, as the solar cycle bottoms can produce real wild bull markets. These bull markets can also be maintained right through the entire solar cycle decline which it has done on this sc#24 decline. A few of my contrarian indicators also have to be lined up, when it’s the right time.

We do have a few years time before extreme indicators show themselves. The majority must hate the US dollar first, but right now you are lucky if the crowd even suspects that a US dollar bear market is in progress. Conventional meanings of bear markets and bull market corrections, mean very little to me as commodities, mainly run on leveraged fear. Fear has nothing to do with logical! A 61% crash can just be a wave 2 correction, and many 4th waves can see a 40% drop. Both moves would still be a bull market correction from an Elliott Wave perspective.

I also see a potential huge wedge being setup so that sure could send the US dollar soaring as well. This will not happen next week or even next year, but looking a few years ahead should be our constant focus.

SP500 Index 2000-2018 Review

For many years I counted everything using Supercycle degree (SC) and Grand Supercycle (GSC) degree wave counting methods. The 2000 and 2007 peaks were relatively easy to track even with my degree levels being from another planet. The bottoms never inspired  the confidence to make extremely bullish calls.

The entire planet works on price, but price is only a small part of what has happened. You can see there are no prices in the chart above, but the majority of wave analysts include, every conceivable price you can imagine! Still the majority of all wave analysts did not see the bull market coming in late 2008. Since 2000 we have seen three sets of wave 3 peaks with the 2007 peak being a bit subdued compared to other ones. This is ok as it still broke higher than the 2000 peak.

The reason that the SP500 has three sets of wave 3 peaks is because none of the wave 3s of the past has ever been extended. The entire wave counting world is working from a 4th wave base. I’m working from a wave two base, all the time. Thinking that all the extensions are 5th waves, will always put us into a much higher degree level, than we actually are.

From the 2009 bottom to our present top is one move, but subdivided into 5 moves in Intermediate degree. Once 5 waves in any degree level are completed a correction must happen. How big the dip may turn out to be, is entirely related to what degree level our present top is going to be. If Cycle degree wave 3 is the real target, then a Cycle degree 4th wave correction must happen, otherwise it’s back to the drawing board playing with our paint by numbers set. This is just a cosmetic wave counting method, and in reality you have to go back a minimum of 100 years and start a completely new wave count each time. I’ve done it 1000’s of times hunting each time for those missed wave three extensions.

Going back 100 years sounds too much like work, so it never gets done, which causes false degree levels to be perpetuated into the future. From my perspective and in sequential order, SC degree wave 3, GSC degree wave 3 and Submillenniun wave 3, are still far into our futures.

If we’re lucky we might hit a SC degree wave three, by 2029, and GSC degree wave 3 by the 2129 time period.

While all the analysts are busy forecasting an ever increasing rosy future, I’m busy looking at and building the alternate future.

I have two lines in the chart above, with the first one at the 1800 price level, which would retrace the entire 5th wave in Intermediate degree. The 2009 bottom fell well below the previous 4th wave of one lesser degree, which was in late 2002. Not quite 2 years for an Intermediate degree correction. It only took 3 years for a SC degree correction from 1929-1932, so a Cycle degree 4th wave correction might only last three years as well. We sure are “not” going to get some 600 year, GSC degree bear market.

At 1800, the SP500 would not even get close to any required previous 4th wave of one lesser degree, but anything below the SP500 1000 price level would. All the smart technical analysts will draw the megaphone bottom, which points to the SP500 price level around 500.   Everybody on the planet will see the same thing, which usually means that it will never happen. The markets will pull out all the stops to try and fool us a again, and it may do that by “Not” falling below those 2009 lows.

Just because the SP500 may have dipped 10% does not mean that the correction is finished. Like I said, price has little to do with it, but the pattern is everything. Only one completed set of 5 waves in Minute degree does not complete a correction. You can wish hope and pray all you want, but you can’t turn a single 5 wave sequence into a completed correction.

Sure, all the 5 indices I covered soared again late last week, but that can all be due to short covering. Many traders are trying to short DIA and SPY ETFs already, to a point where no more DIA can be borrowed.

Protective sell stops are stacked up below present prices, and once they start to get triggered, we could get the next leg down. All the SP500 has to do is fall below 2530 again, which will help to confirm that, “The Big Dip”,  is in progress.

Mini SP500 Index Review

This is just the index chart of the SP500 and only moves during trading hours. It does not move at night like the real contracts do.  Some of the wave patterns come out more defined that those wild contracts that many investors trade with.  This chart shows much better the record low with no truncation or double bottom like it shows with the mini contracts that I normally use. There is no way I can ignore this index to double check in helping to confirm any wave count.

The SP500 index soared from the 9th bottom with only one main correction so far. This is a sign of a zigzag that may have just topped out.   Stock bulls are thrilled with this run as they think the 10% bull market correction is over!  Maybe so, but this move is too vertical and a correction must happen.

The fast decline from the top does not suggest that a correction has even taken place.  I would have to see a completed correction like a full fledged flat or zigzag, in order for me to call it a correction.  Just because this index dropped 340 points does not mean a correction has taken place.   The majority of all investors work on price, they care little about the pattern that has actually developed.

I believe that a Cycle degree 4th wave bear market is coming which I call “The Big Dip”, 😉 . All those that think they are buying into the little dips have no clue that this market has a long way to crash.

Steven Jon Kaplan has sent me a very detailed description of what’s coming in the next few years, and I am the last guy on this planet that will argue with him. EWI also thinks a major top is in and they are pretty good at picking tops. Picking the bottoms by wave analysts needs to be improved dramatically. If the younger investing crowd has no desire to learn what happens at bottoms, then they are following a strategy that the majority practice.

Most investors also ignore the sun cycles, even though the sun cycles control all action on earth. The switch from sc#24 to sc#25 may happen anytime close to the 2021 time period, and when sc#25  does start up,  all our bearish thoughts, bearish wave counts, and opinions will get trashed.

DJIA Intraday Bullish Phase Update.

These futures charts do not produce the same wave structures as most of the ETF’s do, as there are far more intraday spikes created in futures than any other asset class. Many of these spikes happen so fast that I know or suspect many of them are computer generated spikes. In line type many spikes disappear, and when they do, I count the bar charts bypassing the spikes.

We had a truncated 5th wave just before the DJIA charged back up again, even leaving the previous 4th wave peak in the dust. I cover 5 indices and only the DJIA and the SP500 have made shortened 5th waves.

The rally since the 9th fits into a zigzag so if this market were to charge much higher, I would need 2 more full zigzag patterns for wave 3 and then wave 5. Waves 2 and 4 can just about be anything.

We’ll see if this rally lasts to the end of the day, but my take on this at this time, is that a new record high will not happen. Besides the wave count being false, the Gold/DJIA ratio had been bouncing off the 21:1 range many times. In order for this super bull to actually continue this 21:1 ratio would have to keep on expanding. It will take more and more gold ounces to buy one unit of the DJIA.

Recent reports mention that  Warren Buffet has been buying into Apple stock at record highs! Wow, even Warren Buffet is buying into this historic stock market peak. This is not what a true contrarian would ever do, but they will wait until the insiders start to buy again.


I thought I would add the DJIA big picture showing that Warren Buffett has been buying into the tops of  this historic bull market.

Warren Buffett more than doubled his holdings in Apple in 2017

Apple board members receive $262K in restricted stock


Buying into anything following Warren Buffet has produced serious downside moves in the past. Warren Buffet has lots of cash sitting around so he can buy something just because he likes it. Every major investor loves Apple stock, as it is one of the most widely held stock by institutions. Apple is in the DJIA and it will suffer in price once the “Big Dip” reveals itself again. Think that it’s a good time to invest as the DJIA records a record spike to the upside?

From the 2009 bottom the markets create 5 waves up in Intermediate degree. Not 5 waves in Minor degree and not 5 waves in Primary degree. If this record bull market has another super leg to go, then at a very minimum, the DJIA would still have to correct down to 15,000.  5th waves are never fundamentally strong like 3d waves are, so we will not get multi generations of 5th wave extensions. This has never happened in the past and it sure is not going to happen this time.

US Dollar Intraday Crash And Rally Update!

The US dollar has resumed its downward path recently while the Euro charged up. This is the great inverse relationship that also influences the price of gold in US dollar terms. As long as the US dollar remains bearish over all, the gold price should keep on benefiting.  It also works the other way, when the US Dollar is set to rally, then it usually crushes the price of gold as well.

The gold price got crushed in 2011 as stocks took off  and the US dollar charged up during that time.  The US Dollar hit another record low this morning  before it reversed and charged back up  ending with another small spike to the upside.

To finish the 5th wave down I need 5 waves down in Minuette. Since it’s a 5th wave decline, this 5th wave can extend dramatically so there still could be some downside left in the short term.  Sooner or later we  may end at a wave 1 in Minor degree and then a strong US dollar rally should happen.  It could be a slow move or a violent wave 2 counter rally, but in the long run the US dollar should resume its bearish trend.

A rally does not make a bull market, but a rally big enough sure can fool the crowd. The easiest crowd to fool are the speculators as they always get themselves into a trap. Recognizing that a trap has formed or is forming, allows us to get out of or into positions,  that otherwise very few people can ever execute.

In order for the US Dollar to turn back into a real bull market, we need the commercials to switch into an extremely skewed net long position. They are net long already, but not nearly enough for a super bull to materialize. The bearish phase can still last until the end of the month, so until I see all 5 waves down being completed, this bearish phase is still active.

If we are approaching a higher degree wave 1, we could get some very choppy declining patterns indicating that diagonal waves are starting to dominate again.

Bitcoin Is The Bear Market Over?

Has the Bitcoin decline stopped and has now returned to a bull market.?  I doubt it, as this present rally is not producing the impulse waves required. Bitcoin definaly sliced through the top trend line so that alone will bump the degree level up by at least one degree.

Iceland to use more energy mining bitcoin than powering its homes | Metro News

Bitcoin mining takes up a massive amounts of electricity and computing power,  where the miners in Iceland consume more power than the entire Icelandic grid needs to run its homes. Many miners are moving to places that have the lowest electricity rates like Quebec.

Even though this rally looks impressive I think Bitcoin can still fall well below $3000 per coin. Of course, this rally could just be coinciding with the stock market rally,  so we will see how long this rally will last once the markets resume their bearish trend. After all it was the Nasdaq bull market that spawned this Bitcoin Mania so Bitcoin Mania can also keep dying right along with the Nasdaq.  A $4000 rally does not make a bull market, but it sure gets the bullish investors excited again,  with the injection of “Hope”. Hope that Bitcoins keep going up in price.

The Gold/Bitcoin ratio touched 7.48:1 this afternoon, which is about a 50% crash from its high ratio of 15:1.

The amount of new Cryptos seems to keep going and now registers 1533 ICO’s,  with a total capital base of $467 billion US dollars.

Investors think they can hide Bitcoin gains from the government, but I think this is a big mistake in their thinking. Bitcoins are unstable at best and nobody in their right mind will hold Bitcoins when they start crashing again. Imagine buying a house with the price of $20,000 for a single Bitcoin,  and as soon as you get these Bitcoins they start to crash to $6000 in little more than a month. Bitcoins will crash faster than any real-estate will, so your Bitcoin windfall can turn into a disaster very quickly.

Crude Oil Explosive Rally Update!

 

I was expecting a 4th wave rally and the markets did not disappoint us. There was a strong small counter rally that may put a crimp into this wave count, but eventually the crude oil should resume it’s southerly path to what could be a new wave 1 but in Minor degree.

So far the Gold/Oil ratio of 22:1 has been improving, but it will be a slow process. I constantly look at the daily and weekly oil charts, but switching  from a daily chart to a weekly chart will dramatically change the wave counts. Until all the oil bears have come out of their caves and sliced every oil bull in the process will we be in a position when oil can start another huge leg up. Maybe crude oil can turn back into a glut when the US government sells off its reserves.

Fundamentals are lagging indicators so if the experts see that an oil glut has arrived, chances are good the glut is over and a new bullish phase will start.  The markets will always do the opposite of what fundamental reasoning suggests, as the biggest gluts produced the biggest oil bull markets.

Until I see a great looking corrective oil crash playing out, I can’t turn bullish for the longer term.

The VIX Crash Daily Chart Update

The VIX spiked up to 50 after which it turned south with a vengeance.  It was an ugly correction and if I’m right,  then another leg up in the VIX will happen. We can see that the VIX  developed a “wedge”  which every technical analyst is taught to recognize, yet they never saw this explosive VIX rally coming.  Everybody on this planet was betting against volatility, but in doing so the VIX bears painted themselves into a bear trap.

Yes the commercial traders ended up becoming net short the VIX, but that can all change dramatically in a very short period of time.

One thing we can always depend on and that is investors can easily get into a trap, and recognizing this fact before it reverses is very important. The VIX is a world full of diagonal wave structures so don’t expect some perfectly formed impulse waves to develop. It isn’t going to happen,  no matter how much we wish any pray for it to happen.

In late 2008 the VIX had already peaked out at 90, yet the bears persisted in forecasting lower lows in stocks.

Insiders were buying stocks in late 2008 already, so the VIX bull market was doomed at that time. Will this happen again?, of course it will, nothing will stop it. When the public and the VIX are in general agreement, then the VIX will see a dramatic reversal. This will not be easy to catch as the VIX may have to score 100+ before a big reversal becomes a reality.

Mini Nasdaq Comes Back From the Dead.

The Nasdaq plunged to record lows on the 9th of February but came alive and then soared in a stunning rally.  Today is a new moon date, which in the past have produced some stunning reversals. There is never any guarantee of a reversal as it has never been reliable enough, to use on a constant basis.

What the media calls a 10% correction is just a Minor degree move in the language of Elliott Wave. That’s just a “Little Dip”  in a world where the “The Big Dip” can show up. A Cycle degree “Big Dip” can still take a few years, but many time markets have crashed just before the bottom when solar cycles arrive. This may take until 2020 or even 2021 but it sure will not be some obscure 600 year bear market.

Until all the 5 waves in Cycle degree are found and confirmed, there will be “NO” SC or GSC degree bear market. It is sequential and mathematically impossible to be in a SC or GSC degree wave count, without all the Cycle degree peaks being found first.

Yes, the Nasdaq has a few quirks that produced a different pattern, but we can still use it as a 5 wave count since the 2009 bottom.

The counter rally was very powerful but most of that came from protective buy stops that were in place. Protective sell stops are piling up below present prices, and they sure are not “buying the dip orders”.

We could still see the markets rally a bit further, but sooner or later investors running with the bulls will become tired and drop out of the race. If they don’t drop out,  I’m sure the sharp horns of the bulls may change their minds.

Any counter rally like we are in, would get completely retraced, if the big bear market is going to come back and haunt us.

Mini SP500 Intraday Bullish Phase Update

Is the stock rally running out of steam or is it going to soar to the moon with another super leg up?  Many experts say that this is just a healthy 10% correct and that this bull market will return and soar once again.

Blame Ontario Minimum Wage Hike for Canada Job Plunge. Or Not. – Bloomberg

The experts see no recession on the horizon in the US markets, but in Ontario, where they voted themselves a minimum pay increase  massive amounts of layoffs were announced. I doubt it very much that the USA will skirt a recession while Canadian fundamentals implode.

Fundamentals are lagging indicators, not leading indicators. It took 9 years for the fundamentals to change from horrible in late 2008 to great in early 2018. When the markets start to turn down again, you can bet that the experts will come up with all sorts of fundamental reasons why the markets are going down. The second deep plunge in February sure looks like a nice declining impulse, but in reality it counts out much better as a diagonal making it a potential 5th wave.

Today is also a new moon date, which in the past has produce some dramatic or very energetic reversals.  The February double bottom will never hold if the “Dip” so far, is actually just the start of the  “Big Dip” in Cycle degree.  The blame game will continue as they always need a scapegoat to blame stock market losses on. It’s never about stupid investors or stupid money managers that always get into a trap, but they will blame computer trading as part of the reason. The fact is behind every computer trade is a human with an itchy finger sending Algorithms crazy.

Below todays present prices, the protective “Sell stops” are piling up, and we don’t need any fancy computer to figure that out. Traders have been brainwashed to move protective stops up, which will easily get triggered once the “Big Dip” resumes. “Big Dip” I mean a Cycle degree 4th wave dip, not some pussy Minor degree correction that we are presently in.

They had a “Big Dip” from 1929 to 1932 as well, which was a Supercycle degree dip. That only took 3 years to play out. I’m sure any Cycle degree “dip” will not take any longer.  In the long run solar cycle #25 will put a screeching halt to any bearish wave counts or bearish fundamentals that we can dream up.  Solar Cycle #24 also destroyed all the bears by early 2009, so never underestimate the power of the sun on human affairs on earth.

The Gold/SP500 ratio has been hitting 2:1 on the expensive side from a (.75:1) ratio on the cheap side.  When the bearish mood returns, then this 2:1 ratio will never be exceeded for many years.

DJIA Bullish Phase Update And The Gold/DJIA Ratio!

Once I realized that this decline is not running as smooth as a 5 wave impulse decline should, I looked for an alternate. Yes, I labeled it a truncated 5th wave, but the other 4 indicies I cover do not contain any obvious truncation.

The majority are still in an extremely bullish mood to a point that they are foaming at the mouth. Running with the bulls will only last so long, but sooner or later the bigger bearish trend will take over again. Over and over we hear the experts constantly issuing bullish statements, which basically tell us that this bull market has a long way to go.

Hate to break it to you folks, but the experts have said the same thing at every major top since 2000. Those experts that are preaching the stock bull market are easy to spot as they get front page billing most of the time, or they may be looking for “value”.  In Canada, we had our employment meltdown, and are heading for a recession, so are US stocks going to soar while our TSE keeps imploding? Some wave analysts only cover one or two indicies, but I cover at least 5 of them, so I will be right or wrong on 5 indices.

I recently saw a DJIA wave count from EWI and they are also extremely bearish on the stock market. They are good at picking tops, but that only serves a very small percentage of traders. The biggest thing is to catch a big bearish bottom early enough, to take action to deploy more funds. The last thing we would want is to end up with a small token position,  because we had no confidence that a major bottom was approaching in 2009. The bear market was already over in November of 2008, well before the real bottom in early March 2009.

Overall the DJIA gained about 410% in about 9 years and they think it’s just getting started. The Gold/DJIA ratio sure does not confirm any part of this bullish rhetoric as it peaked at about a 21:1 ratio. It took 21 ounces to buy a single unit of the DJIA, the highest amount I have ever calculated. In order for this super bull to charge much higher this ratio “must” also keep spreading wider. 21:1 is a far cry from the 7:1 ratio in early 2009.  I believe this DJIA will return to a single digit ratio again. Yesterday’s ratio was 18.48:1 which is compressing  from 21:1 not expanding.

Since Apple is in the DJIA it will not be safe to buy the DJIA until Al Gore buys a bunch of Apple stock again. 😀 Just kidding folks, but you get the picture.  Insiders have sold out a long time ago, so until we hear of massive insider buying again, this bearish phase is still ongoing.

In most part, the commercial traders are net short most of the indices, so until those numbers obviously change the big bull market is not going to materialize.

Gasoline Crash Update

This is the April gasoline contract with a daily chart setting. Since about June 2017 this contract charged up, in what looks like a pretty good looking impulse wave structure. Gasoline topped out on January, 26th and then proceeded to nose dive. So far gasoline has completely retraced below what could be the previous 4th wave of one lesser degree, but it’s far from being finished.

I can switch this daily chart to a weekly chart and you will never see this pattern to help confirm it. When I turn it to a weekly chart setting,  gasoline fits better as a single inverted zigzag, in Minor degree.

An inverted zigzag can mean that a 100% retracement of the entire bullish phase can happen. The little double top in gasoline did not happen like it did in crude oil,  which is a good thing. At this time gasoline is making a 5 wave declining run, but we should get a 4th wave rally for the next few weeks or so.

Not until I see a clear cut correction completing,  can I turn bullish on gasoline,  so be prepared for a long ride south bound. Well below this June bottom is the mother of all gaps which has never been closed off.  This gap is one of the largest in any futures contract I have ever seen. Open gaps work like magnets, but can also repel prices once the “Big Gap” is closed.

Even after this Minute degree 5 wave decline plays out, we could be looking at another 5 waves down in Minor degree. I may need to adjust this bearish phase degree level, down by one degree, but I will do that once this set of 5 waves is completed.

GSCI – Goldman Sachs Commodity Index (GD)

With oil crashing, and gold showing bearish signs as well, I thought I would look at the GSCI. This GSCI fits better with the oil charts and  has not been in a bearish decline. This could work as a potential “D” wave with the first “A” wave, already completed.  So far the decline has not displayed and type of a zigzag. I would rather see a flat correction develop in a “B” wave of a zigzag, as a zigzag correcting in  a zigzag is very rare indeed.

Not until I see a great looking correction starting to finish, can I turn bullish with this chart. How much Natural Gas will play a role in any counter rally,  is not clear at this time.

Natural Gas Is There A Summer Rally In The Charts?

I labeled a wave 3-4-5 in Intermediate degree, but this could be one degree too high at this time.  Our present rally seems to be crashing or correcting. I see it as a potential correction of the flat variety. We are about as close to a running flat as we can be, but it sure would look better with a bit more downside.  A Flat inside a zigzag always works for me which would end up giving us a summer rally as air conditioners crank up for the summer months.

Commercial traders are net long Natural Gas, not by very much, but it helps to make a bullish case for a summer rally. This is a weekly chart and switching to any smaller scale distorts the charts so much it’s impossible to show a decent wave count. One thing is certain and that is that Natural Gas is another one of those charts that show some pretty wild diagonal wave structures. It would not surprise me if this zigzag was part of a triangle “D” wave, so if this is true, then we should see some very bullish NG news headlines in our future.

10-Year T-Notes Crash Review

The fear of higher rates turns bullish stock investors into chickens. When bonds implode this sends interest rates skyward, which the Fed is powerless to stop. If Russia and China are dumping only higher rates might stem the tide. Due to the nature of the choppy decline, there is the strong possibility for this T-Bond chart to soar to new record highs one more time.

We are still a bit short of touching my invisible bottom trend line, so a bit more downside can still happen.

The entire T-Note bull market is an insane example of a diagonal wave structure. Longer term the entire bull market can get retraced which does not bode well for rates in the longer term.  Until this potential 4th wave bottom is cleared up a complete implosion of T-Bonds is not in the cards at this time.

Eventually T-Bonds will also hit a Cycle degree 4th wave peak, which would coincide well with the stock bottom in Cycle degree wave 4.

Nasdaq 100 “Big Dip” Update.

The Nasdaq did not display a double bottom as it crashed well below the previous low, followed by a wild rally as well. We could be on the second set of a 1-2, 1-2 wave count, and a small third 1-2 wave may also show itself.  After that, any 5 wave structure will be harder and harder to see, but we would also be running out of degrees after a wave 4 in Minor degree has finished. This could take all of February to play out, so it’s not going to happen overnight.

Usually all 5 waves play out in a rapid fashion, but then this market will give us a hard time once an “A” wave in Intermediate degree has finished. There are still many variables that can happen, so until a new record low is achieved, this market can give us a hard time.

As I post the Nasdaq is pushing higher, but mid week can also be great reversal days.  Between the 5800 and 5600 price levels we could run into some strong resistance, so any 5th wave in Minor degree should be ending at that time as well.

Sp500 Intraday Rally Running Out Of Steam?

The SP500 created a double bottom in February before it rose in a violent fashion ending on the upside last week. At this time I’m going to count this as a 1-2 and then another 1-2 count, which would mean a longer wave 3 count. All we need is one more 1-2 wave structure to complete, then we would certainly be getting a long wave 3. It can all fall apart very quickly, but the main idea is to eliminate wave counts as soon as possible.

This great looking double bottom should not hold if we are over into the big bear market side already. ( The Big Dip) Fundamentals have not really changed, but that has always been the case as fundamentals are lagging indicators, not leading indicators. It took well over 8 years for those horrible fundamentals in 2009 to change to better fundamentals by 2018. At the extremes, fundamentals will always tell us the wrong things, just like they did in 1987, 2000, 2007 and now in early 2018.  Rate increases might be enough bad fundamentals to push this market down, but other fundamental reasons may appear at anytime.

EWI is also bragging that they they have hit the top, which they seemed to be pretty good at doing. Creating a great short trade setup can only benefit a very small percentage of traders, but they seemed to miss more bull markets than we can shake a stick at. Missing any major bull market is unacceptable as the older we get, the fewer bull markets we can afford to miss.

Steven Jon Kaplan started to call for a bull market back in late 2008 already, as the VIX peaked and insider buying reports were flooding the mainstream news sites.   This is when the stock bulls should have been screaming, “buy”,  but sadly enough all the wave analysts were bearish just like the majority were.

I’m sure this same setup will happen again and all the wave followers will miss another 8 year bull market. From 2009 to January 2018 the SP500 gained about 430%, which was only an Intermediate degree 5 wave run. The next bull market will be a 5 wave run in Primary degree, which I’m sure will give participants, 500% or more gains, in another 8 year bull market.

All the fancy wave counting in the world is pretty useless if we keep missing bull markets. We are still some time away from a real, meaningful bottom as a simple 10% correction will not do it. Even a 50% correction will not do it, as that would only suggest a move back to the average.

When solar cycle #25 arrives, then you no longer should be in any  bearish positions, as our sun makes or breaks all bull and bear market cycles.  The sun overrides the power of the wave counts at anytime, and it will be no different when solar cycle #25 starts.

VIX Explosion Update

The VIX has demonstrated what it can do after it is boxed into a corner or a wedge like condition. To the majority this was a surprise move that they never saw coming, but there are the few that did see it coming. The commercial traders sure saw it coming as they were net long for sometime already. Of course the non-commercial speculators were extremely bearish towards the VIX. How can you lose on a sure trade betting against volatility?

It’s easy if you owned a bunch of XIV shares and don’t know how to read charts. Of course, someone will always get blamed for, “taking down the house”.  In my experience, it’s always the speculators that get into traps. The speculators, trend chasers, or managed money people, is always the group, being quoted in the financial news. When they are quoted,  they are just about always in a trap as well.

The XIV will disappear as it sounds like they will stop trading in XIV by Februray, 20, 2018.

Last Friday they posted the COT report in the VIX. We can see a massive change by the commercials to a point where they are now in a net short position by about 45,000 contracts. Of course the speculators panicked and did the exact opposite.  In other words, they are chasing the VIX bull market. Eventually the speculators will get into a bigger VIX bull trap and the markets will force another reversal.

There is a good chance wave 2 in Minor degree has finished with waves 3-4-5 still to complete. After these 5 waves up in Minor degree have completed, then we should see a massive VIX crash that will shock the majority again.

The VIX peaked at $50 and eventually the VIX should cross the $90 price level. The VIX may not do it on this trip, but by the time this bear market is finishing I’m sure the VIX will far exceed $90

XIV, Death Of An Elliott Wave Count!

 

Once I switched this chart to a daily type setting,  the big long spike had opened up into a massive gap. This ETN is history folks, as they plan to stop trading it on February, 20th, 2018. It will disappear into the dustbins of history and take this wave count with it.  You can add a Cycle degree wave 3 to this peak, but you will never ever see Cycle degree wave 4.  The gravitational pull was so great that not even light could escape from it.  Just like centers of universes have black holes, this ETN is also imploding into a black hole.

Credit Suisse ends obscure volatility security after an 80% plunge

 

Crude Oil Crash Update

This is the April 2018 contract month, but it’s a bit too far ahead in time. It’s not a big deal as we still have to figure out what the potential wave count is.   We do have a double top kind of a pattern which I’m working as a diagonal set of 5 waves down. On Friday we ended with a sharp spike to the downside which can produce another rally push crude oil right back up to the $60 price level.

Even now this crude oil slump has not gone deep enough for the bearish phase to be called finished, so this impending rally could be another fake as well.  I’m looking for a possible zigzag correction in Minor degree which I can’t call completed at this time.

The Gold/Oil ratio has improved somewhat, but not by any great leaps and bounds. At 22.34:1 it is now back to where the ratio was in early December of 2017.  The ratio may not be any help to us at this time, unless it shifts dramatically in a very short period of time.

In the short term I may have to shift my degree levels a bit, but I might do that after this rally completely fails to materialize.

S&P E-Mini Midcap Stocks Update

All the January 2018 gains this market has made, have now been wiped out,  joining all the other electronic bits and bytes in the great digital graveyard 6 feet under.  Of course, many Bitcoin remnants are down there as well. What the majority once thought was real money,  has now started to evaporate.

You can bet that a big cluster of sell stop orders are congregating,  just below present prices and they will get triggered on the next leg down. Buying on the dips is a one way trip if the little expected dip turns into the, “Big Dip”, like 2002 or 2008.

This market has broken many records on the way up, and I’m sure it will break many records on the way down. One record saw the biggest one day point drop in history.

At the very minimum this Midcap chart should fall below 1200 which will take out my entire 5th wave which Trump takes credit for. He will also get the blame for any stock market crash that will come down the pike in the next few years.

If this is to come true, then my bottom trend line will get sliced in two, sooner than later.  It’s not rocket science to draw trend lines that everybody can clearly already see, because if you don’t see 2 or 3 points to connect, you are in the wrong world. Trend lines are so abused by the majority, that they look like a bunch of kids playing with rulers. Trend lines sure did not help in seeing the biggest bull market in history coming, so it sure will not help now in seeing the biggest bear market since the depression.

Gold, To Die Or Not To Die Is The Question?

Gold has executed a pretty choppy decline, which I see as a good thing. Choppy declines can just be part of bigger corrections, and this gold decline has no shortage of choppy declining wave structures.  I would rather see a nice spike to the downside and then the reversal, so more downside may still be the order of the day. Gold reacts more to the US dollar than any other economic fundamentals, like oil might do, so I remain bullish on gold in the longer term.  Short term anything can still happen, so we have to remain open minded for more downside to come.

US Dollar Bullish Cycle Still In Progress.

There still is a threat of the US dollar to head a bit higher as sideways movements can’t be trusted for very long. We could add on a wild little spike to the upside, which can always produce fantastic reversals. From my perspective, this is a 3-3-5 move which means its an inverted flat and a fake.

Nasdaq Intraday Downside Breakout!

The Nasdaq decline, we’ve had in the last few days, not longer fits as an impulse very well. I started to get some 3 wave moves, that work better as zigzags, so it’s better to switch to diagonal wave counting for now. There is the potential for a downside breakout situation to end at another “A” wave in Minute degree. We may have to wait until next week before this starts to play out, but there are many sell orders being stacked up below present prices, especially at any potential double bottom.

When the market has switched to the bearish side, then bad news should keep forcing the markets lower. Over time the “Bad news” will no longer work driving the markets down, but instead they will start to recover shortly after the “Bad news” comes out. This usually means we are going to be switching back to a bullish cycle.

With this market crash, fundamental analysts see no change in the fundamentals at all, so they remain very bullish on this market. Fundamentals don’t drive prices, but prices change fundamentals.

Predict a price crash when great fundamentals exist, and you will see the economic fundamentals change after the price change.  The fear of rate increases could be the new “fundamental problem”,  even though they already have known about the higher rates for months already. The biggest fundamental change is that Janet Yellen is “out” and Jerome Powell is “in” which happened on February, 5th, 2018

The Fed – Jerome H. Powell, Chairman

The markets had already started to crash as Jerome Powell stepped in,  so maybe the markets will hate what the new “Fed” still thinks it has to do.

All that money that was dumped into the markets in January 2018, has now been wiped out! Sent to a digital graveyard, in a puff of electronic smoke. The majority has no clue what’s going to happen in the next 2-3 years as they think just a simple 10% correction is going to happen and then the bull market will continue on its merry way.

Good luck with that, as in order for that to happen, we need the majority to hate stocks again. The public is still, “in love” with stocks so we are far away from any meaningful correction being completed. At a very minimum the Nasdaq should travel well below the 4000 price level,  and that’s just to get warmed up, as some simple minded 10% or 20% correction will not do it.

The Explosive VIX Review

The VIX had one of its biggest one day price jumps in its entire history, which the majority was betting on that it would never happen.

The dumb money or (managed money) were already in a massive bear trap, while the commercials had built up huge long positions.

Those investors that think they are investing will always get fried as you don’t invest in anything that is extremely leveraged and a futures contract that is all about volatility in the first place.   When you are playing with fire, you can’t expect to not get burnt, but these emotional traders will blame others first for their mistakes.  Being complacent in a violent and volatile world is the biggest mistake we can make.

The commercial reports don’t come out until Friday, but we should see the commercials closing off their long positions, but could also be building up their net short VIX positions.  This doesn’t happen overnight, but can be a long  process.

The VIX spiked to the $50 price level, but the $90 price level is the number to beat as that is the 2008 peak in the VIX.

Mini DJIA 30 Intraday Bull Rally Update

The counter rally has now already played out and is now resuming its decline. There is always the potential for this market to turn, but this correction should still go deeper before it is ready to do so.  Not until, this bullish counter rally is completely retraced will I be satisfied that the bigger bearish phase is in progress.  Hopefully we will know by next week sometime as a wave 3 decline can be pretty devastating.

The entire January bullish phase has been wiped out already devastating  those investors that thought they were “safe” investing at an extreme high.  What very few investors understand is that “Bull” markets, are the breeding grounds for bear markets and they only money flowing into this market is the dumb money.  Not a single contrarian, I respect would buy into this peak as they are too busy setting up their short positions. At the extremes, fundamentals will always tell you the wrong things and this time it’s no different.

Close to a 9 year bull market, many wave analysts keep raising their degree levels as they falsely think that the bigger the bull market the higher the degree levels should become. It works exactly the opposite way as the higher the market goes, it’s the smaller degree levels that are extending, which you would never see in the weekly and monthly charts.

From 1929 to 1932 was a SC degree correction so our present Cycle degree correction should not last much longer, There is no 600 year bear market coming so you can put those bearish thoughts out of your mind.  Sure, chances are very high that a recession is also going to arrive, and when the mass media recognize that fact, then the recession will be over, and a huge new bullish phase will develop.

Euro Bull Market Daily Chart Update

Since the beginning of 2017 the Euro has been in a bullish phase, that has been running inversely to the US dollar. I think a correction is completed, which means another 5th leg up in Minuette degree,  should play out. 5th waves are notorious for extending so we don’t want to call an end to it too early.

Once this set of 5 waves in Minute degree has played out, then the Euro could suffer another serious setback (correction) but the final 5 waves up in Minor degree should still happen.

The commercials are net short already which is the smart money.  The non-commercials or speculators, is the dumb money, which is the group that the mainstream analysts always talk about.   The speculators are the ones that always chase the trend as the commercials never do chase the trend, as they do the opposite. When the commercial traders are overwhelming net short then the bull market in the Euro will come to an end.

Right now the speculators are chasing this Euro bull market and they have about a net 2:1 long Euro positions. What they call smart money is already painting themselves into a corner, as they build themselves into a bull trap.

This will not happen instantly as it takes a long time for these net long positions to develop.

Crash OF XIV Inverse Stock Split Coming Up?

XIV trader: ‘I’ve lost $4 million, 3 years of work and other people’s money’ – MarketWatch

I read the story above about the huge losses this XIV trader suffered. I’m sure he was not the only one as XIV crashed dramatically this week. This XIV ETN followed the bull market up as complacency dominated the stock market again. I don’t have any sympathy for those that think they are investing in double leveraged products, without thinking how much of a bull trap they were in, in the first place.

Smart money would already have been short, long before this topped out. This XIV crashed all the way down to $6.15 and I don’t think it’s finished by a long shot.  Since it is very close to that magic $5 price level, any inverse stock split is highly likely. Usually we would be looking at a 4:1 inverse split which would price this ETN at about $24.

A simple tight stop loss would have protected most of your gains. Investing for the long term means nothing if we can’t see a potential crash setup, where all gains can get wiped out. The real VIX spiked up just like this ETN spiked down. I’m sure there were tons of stop loss orders crammed under the peak, so it takes very little to roll over and trigger these sell orders.

Bitcoin Futures Rally Review

In the last day or so Bitcoin has surged which is not the start of a runaway bull market, but can be a simple inverted zigzag. This grinding bear market has not acted like some fantastic looking flat or zigzag. The moves would be far more violent than we are presently getting.

None of the declines have been sheer vertical drops typical of a C5 wave in a flat or zigzag. I have said in the past that, any asset class that starts from “Zero” can end at “Zero”.

The funny part about this is that the mainstream media is starting to talk like that!

Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says – Bloomberg

The total Cryptocurrencies numbers have actually dropped in the last few days from 1514 back down to 1506. This number may even decline some more if they keep shelving projects due to lack of interest, bankruptcies, or just too costly to implement.

The Bitcoin ratio is 6.32:1 which is and extreme reading, but who says that the Gold/Bitcoin ratio can’t hit 1:1.  One of the lowest readings I have is a ratio of 1.74:1, so any 2:1 ratio would not surprise me. Does this mean that Bitcoins can start into a super bullish phase? I doubt it,  as all Cryptocurrencies can flat line just like Tulips did.

US Dollar Intraday Rally Update.

The carnage in the stock market seems to have done little to the US dollar as it just kept right on its bullish path since early February.

The US dollar rally is a bearish rally, which could still fill a wave 4 rally a bit more, to match the wave two rally that this 4th wave is part of.

Everybody on the planet has to hate the US dollar before its bearish phase will come to an end. In the long run the US dollar decline could end at a wave 1 bottom in Minor degree after which another US dollar freefall trend should happen. It would be great if this US dollar rally were to finish later this week, but that is a best guess scenario at this time.

The commercial traders are net long the US dollar, but not by any extreme ratio, so they still have very little power behind them.c