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Category Archives: GSCI

GSCI – Goldman Sachs Commodity Index (GD) Review

 

 

At this time I think the Goldman Sachs Commodity Index or the GSCI gives us a better picture of the bullish phase that started in early 2016. It represents oil more that it does gold, and it also shows the diagonal better leading into what could be the “A” wave in Intermediate degree.  Even after the June 2016 crash the following bullish phase is very foggy as so many critical waves overlap. 

A zigzag with an expanded running flat could have sent us to the first wave in Minor degree. After all, we are in a bullish run that has some extreme diagonal waves in it. Waves 3,4 and 5 will also be very choppy, and it is also a good reason why this bullish phase can still take so long to play out.  Even that last 5 waves were so choppy that they fit better into an ending diagonal, than a logical 4th wave triangle.

Crude oil rolled over long before that,  and is a bit out of  perfect sync, to this GSCI. I would have to start from scratch,  and build a Gold/Gsci ratio with a few calculations from at least two extremes. Four extreme readings would be much better. Any potential wave 2 in Minor degree may not be finished as well, so in the short term anything can happen.  Tomorrow on the 27th we start a full moon phase, which can be very bullish for stocks as well, even though it may only be a short term thing.

GSCI – Goldman Sachs Commodity Index 1999-2016 Review

 

This S&P Goldman Sachs Commodity Index, will also be in a new category under Indices, but in the future I will post it as GSCI.  The chart below is as good as looking at the oil chart, but with some differences which I will try and explain. I have subdivided critical parts into 3 degree levels, lower than my largest Intermediate degree. 3 degree levels should be the minimum that needs to be done, when a detailed wave count is needed. Three degree levels have to fit well into the bigger sequence, before it starts to make sense. 

Since the 1999 bottom, GSCI had started a bull market, which many have called 5 waves up in Primary degree. I was also sucked into this wave count when I first started. I had to wake up to the fact, that diagonal waves rule the markets, not impulse waves. In Chapter 4: Page 143 of the EWP, it shows a small version of a diagonal 5 waves going down. It also shows the labeling which is best explained using labels, that make it very clear, that we are in a diagonal.

I use ABC1, ABC2, ABC3, ABC4, and ABC5  for all diagonal counts, including any ending triangle as well. This is all specific to the degree we think we are working in. 

The majority of diagonal 5 waves can be found in any “5th” wave, and in any “C” wave. This applies to all moves up or down, and at all degree levels as well. What is good in one degree, I use across all degree levels. This simplifies things and technically gives us an indicator for a potential location.

This is a short explanation about my take on diagonal wave counting, and I call it, “The Enhanced Diagonal Wave Counting Method”.

 

gsci-1-oct-1-2016

 

1999 was a major bottom, which would be wave 2 in Intermediate degree. Many were brainwashed into using “WXY” waves, but “WXY” waves do an excellent job of hiding diagonal wave structures. This usally sends us off into some higher degree that we should never be in. Forcing a 5 wave impulse from 1999 to the 2008 top, is wrong, as we should never force any wave counts.  Just because it’s the easy thing to do, doesn’t mean it’s right. Only the masses see the “easy” wave counts first, so I rely on them to waste their time in chasing some mythical pattern. 

From the 1999 bottom I counted 7 waves, not the full 5 we would need for a true impulse. Once I applied the diagonal wave count to it, that bull market started to make more sense. What we see is part of a Primary degree diagonal 5th wave. The majority were convinced at the 2008 top, that prices were going to the moon, suppling us some wild and ridiculous forecasts at the same time.

My favorite contrarian saw right through the bullshit, (BS, or bullish sentiment) 😀 at that time, as we were both calling for oil to crash.  When the majority were convinced that the trend is only up, then the GSCI did the unthinkable, and started to implode. Many saw the 2008 crash coming, as only the majority were caught in that bull trap. 

The crash ended in early 2009 before it started to rally, which the majority were also calling a bull market. Of course, that proved wrong again, as the entire trip to the 2011 peak has now been retraced. 

Bear markets are just corrections to bigger bull markets yet to come. In this case we would be working an old bull market, that started closer to 1986 along with crude oil. From the 2011 peak, which matched the peak in gold and oil, this market started a decline that defied the rules of any pure impulse, and that’s because it was just another diagonal 5 waves down in Minute degree. Diagonals are joined together with zigzag like patterns, which always alternate with each other. One zigzag ended in early 2015, and then it added one more diagonal wave down, into our present 2016 bottom.

This also makes a good case that Intermediate degree wave 4 has completed. We need to visualize a new pattern, for Intermediate degree wave 5 which I already started last year.  

Eventually the 5th wave has to be confirmed by market action, but we can knock down our choices at thos time, between 2 core patterns. I will be looking for a zigzag, and I think we are still a bit away from getting close to the “A” wave in Minor degree.  It will be the “B” wave correction, which will give us wave counters a real hard time, as the “B” wave can have 4 choices, which includes the complex choices.

All this is pointing to a potential wave 3 peak, in Cycle degree, which could still be a few years away. The 2017-2018 time period matching the 100 year cycle, would be my best bet at this time. 

When I find a high degree wave position, then I want that position to last forever. When they only last a few weeks or months, then the more we have to swing the degree positions around, the less trustworthy they are. The 2009 stock bear market decline clearly confirmed this.   Missing a complete big bull market because our wave degrees are all screwed up, is not acceptable to me anymore, and I will do anything to use the best contrarian indicators to help pick strong tops and bottoms.