Monthly Archives: May 2017

The Bitcoin Mania: Has The Bubble Popped?

 

The Bitcoin Mania seems to have gone vertical, but has now backed off substantially. In no way, shape or form, would I agree with Bitcoin being an investment, as there are just too many things wrong with it. 21 million coins will not cut it for Bitcoin to go mainstream. There are many competitive E-currencies coming out which I think most of them will fail as well.

I do not have the time to create detailed wave counts for Bitcoin charts as  it is not an asset class, and has no real correlation to other assets. In May on about the 25th, Bitcoin peaked at about the $2766 price level, and has now proceeded to crash in what looks like a clean impulse wave at this time. Bitcoin prices seemed to move at extreme speeds, and it still has to fall well below $1600, before any bottom could happen. It would not surprise me if Bitcion eventually fell below that $1000 price level.

Since we  have no real Bitcoin coinage to touch and feel, you are paying the price of an invisible electronic dollar.

It is next to impossible to figure out if Bitcoin is cheap or expensive, and it would be a good idea to create a Gold/Bitcoin ratio. I have started one, but need to do more calculations to get a better picture.

In July, 2016 Bitcoin was low in price, when we could buy 2.74 Bitcoins with one gold Troy ounce.  With the recent top it took 2.74 Troy ounces of gold, just to buy one Bitcoin!  This is a very dramatic shift in the Gold/Bitcoin ratio.

Another interesting point I noticed, was that Bitcoin crashed exactly on the new moon date.

I only posted this because Bitcoin is in the news, and intense news usually can give us a major top. 

T-Bonds Weekly Chart: Head&Shoulder Review

It seems that I have been working on the T-Bond bull market off and on for decades, but the 35 year bull market was so choppy that impulse waves were next to impossible to find. It wasn’t until about 2013 that I started to focus on looking at the markets from a diagonal perspective. 

 Good impulse waves are next to impossible to find, in a diagonal bull market, but yet many experts count them like impulse waves.  They should be counted like zigzags connected together, with the ABC1, ABC2, ABC3, ABC4 and ABC5  labels. A diagonal sequence belongs to the 5 wave impulse sequence, and in the book they call it an ending diagonal. Triangles can act just like diagonals as well, but that still  may be much harder to confirm at this stage. I’m pretty sure that the T-Bond bull market is a Cycle degree, but at this time it is unclear if this was a triangle 4th wave rally or a 5th wave diagonal rally. Both options are just about always open. 

T-Bonds are sitting right at a H&S pattern, and they have started to rally. This bond top, sure looks like there is a potential expanded flat hiding in plain sight, and that the May crash bottom is just the start of a “C” wave bull market phase in Minor degree.

All I would have to do is drop the Minute degree start, down one degree level, and nothing else would need to be changed. Any potential start sure has been looking like pretty good impulse waves, so that would mean most all the other waves will follow along, until we run into 5th waves. This “C” wave sure would be a nice refresher for a change.

I labeled the potential peak above the new record high, but it can go much further  as “C” waves in a zigzags can stretch far out of proportion. Nothing is even in the waves of the real world, and the 1929-1932 crash is a clear example of how zigzags can get bent out of shape. 

The T-Bond bull market may not have died in 2016, and exploring the options would be the smart thing to do.  Either way a new record high would have to be achieved in the longer term. Short term we need 5 waves up in Minute degree, so we have a long  way to go before it is completed. 

US Dollar Daily Chart, Bear Market Review

A bear market would not be the right description if the US dollar erases 8 years of upward progress. There is still a very high probability that the US dollar bull market was a big bear market rally itself, when we completed a “D” wave top in Primary degree.  I think I was too early with my Minute degree wave count, so I have started to extend our present pattern. The recent May crash could also be ending at another zigzag, so we may get a surprise fast move up. 

The US dollar is not going to jump back into a bull market for several more years, but we should see a rather large counter rally when we reach a potential “A” wave in Intermediate degree. This will correspond well with a potential strong top in gold.   The commercials are still net short, with the speculators net long. When all this reverses, then the US dollar would be in a position to produce a very strong rally. This should still be a long way off. 

Short term we may see a small rally, but longer term, my bearish outlook has not changed.  The stock mania regarding the US dollar has gone into hiding, but we could see it return with any good stock market rally. Many will be just short term moves.