Daily Archives: February 14, 2018

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.