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Category Archives: Misc.

HMMJ, Another Look At The Marijuana Related ETF

I’m going to make this HMMJ ETF the mainstay ETF that I will track the high flying marijuana stocks. It’s in Canadian funds but there is a US dollar version out as well. The last time I mentioned that the vertical move this ETF has made could not be maintained, and this correction is a result of going too fast, too far.

I will not post intraday results, but only post when a strong turning can happen.

It can take years to build a decent wave count, but the rally between my two arrows, is one of the best real world examples of an impulse, I have seen. Wave 1 subdivided very nicely with wave three also extending as it contains a perfect 1-2, 1-2 and a third 1-2 wave structure. The last 5th wave did the real heavy lifting as it extended dramatically.

The near perfect 5 wave sequence suggests that there are no leverage products involved, so these moves are organic and no slippage or other detrimental leveraging tools seem to be present. From my perspective, this is a very good thing. Is the dip down to $19 enough of a correction or is there a bit more to go down to the $15 price level?  Gaps are present, but if gaps appear under more volume than I will use them.

From the bottom arrow to the top arrow, there was over a 300% gain in just 5-6 months. I manage to catch most of a single stock for a 660% gain, but will look at buying in again with 3 other hemp related growers.  Some of the single marijuana stocks are moving like Cryptocurrecies have moved, which is a unique opportunity for investors with Canadian funds. Jumping on any bandwagon could be the end of a run, so as soon as a person buys in, it dramatically corrects.

It may take the rest of the month before the correction is finished, but it could end early and the bull market would resume without me.

I am also starting to track the Gold/HMMJ ratio and so far it has been fluctuating in a pretty crazy fashion. The bottom low was close to a 150:1 ratio with a top ratio touching 51:1. Today it sits at 62:1. I don’t have enough history just yet to make the Gold/HMMJ ratio useful, but over time the ratios should become  very useful.

Solar Cycle #24 And DJIA 1975-2018 Elliott Wave Review

The sunspot number has now been updated to the December end of 2017. The majority couldn’t care less about any influences our sun has on the stock markets back here on earth. Many have researched this connection, as I have done for the last 20 years. Each black dot is a month end calculation of sunspot activity.

We had two major peaks in sunspot activity, one correlated well with the 2011 gold peak and the January 2014 peak coincided before my wave 3  in Intermediate degree ended.  The 2002-2008 sunspot count starting to decline, but the markets loved it at least until 2007.

It may still take a full 3 years until sc#24 ends, and when sc#25 starts from this 2021 time frame, then the markets should follow suite.  Many times the markets experience great upheaval just a year or so before the solar cycle hits a bottom. With the Fed change coming this February, there is usually some upheaval in the markets as well, especially if the markets have already crossed over to the bearish side.  In the end sc#24 produced the biggest bull market since the depression, lasting well over 8 years now.

In the next 2-3 years the stock bears can do a lot of damage, but once 2021 rolls around and the sunspot polarity has started to flip, then we had better look for a brand new bull market to start. If you think investors are any smarter today than what they were with the 2000 or 2007 peaks, then you are sadly mistaken. The average majority will never learn that the “majority” can’t win at this game of accumulating wealth.

The sad part about the solar cycles is that even the wave analysts ignore them, as in March of 2009 they still had very bearish wave counts still to be completed.  Yet the markets turned up in 2009 and never looked back as the bearish wave counting herd were caught in a bear trap. When we are caught in any type of a trap we are ill prepared for what comes next. The markets were already showing signs of an impending reversal in late 2008.

 

I just love to show readers the linear version of the DOW as the bullish phase from the 2016 bottom to our present top is one of the most vertical moves I have ever  tried to count. I show 2 sets of 5 wave sequences in Intermediate degree, with no other degree levels labeled. I use no other indicators or prices, and I spew out little or no fundamental reasoning when markets go up or down. Markets will always act in such a fashion to never let the majority win. Sure, during any bull market it is perceived that the majority are winning, but that is only wealth on paper. During a big bear market, all this paper wealth starts to disappear and years of bullish progress go up in smoke.

The first set of 5 waves in Intermediate degree,  are much bigger physical moves. The 2015-2016 bearish phase contained a much smaller intermediate degree 4th wave. There is nothing wrong with that as there is a one degree difference between the two 5 wave sets. There are 2 sets of wave 3 positions not labeled which is deliberate, so it will force any wave analysts to scratch this time, wondering what is supposed to be between the 2 sets of 5 waves.

This market has soared since the 2016 bottom, but it also shows next to no corrections from a monthly chart perspective.  This is a bad omen in the bigger scope of things, as the markets do correct back down to the previous 4th wave of one lesser degree.  The DOW 15,000 price level is a previous 4th wave alright, but it’s the previous 4th wave of a Primary degree that a Cycle degree has to correct down to.

In 2009 the markets went a bit lower than the previous 4th wave of one lesser degree, which has no real meaning or future implications at this time. Many 4th waves travel below previous 4th waves of one lesser degree. Besides the markets have a tendency to fool the majority of participants and so to piss off all the mega bears, the markets will “not”  go below the 2009 lows again.  They could  turn earlier than expected, and start to soar. You can thank solar cycle #25 for the next big bull market, as those investors that follow or believe in the “grand” or “super” theory will be left empty handed again.

I see this as a massive missed opportunity, which makes the Elliott Wave Principle very inefficient,  if we keep on missing major bull markets. As long as wave analysts are happy painting mindless numbers and letters on the charts, then they will never enjoy catching a 5 or 8 year bull moves when they do come.

Every failed wave count must be followed by a serious look at the “entire” wave structure. A minimum of two higher degree levels than the failed wave degree must be initiated instantly.  In 2009 Primary degree wave 1 failed so the “ENTIRE” 5 wave sequence in Supercycle degree must be counted again. Modern wave analysts have refused to do this as it’s just too much like work. If you spend your time looking at many other wave counts, virtually every wave position today is still spewing out SC and GSC degree wave counts.

For the last 5 years I have shifted to Cycle degree wave analysis. Until all 5 waves in Cycle degree are found and confirmed, “NO” SC or GSC degree wave counts can find a base.

HMMJ, Hemp ETF Bull Market Update.

This chart is a bit old, but this morning’s action doesn’t change any of the wave counts. HMMJ is already at $20 this morning.

Talk about a wild ride with this Hemp related ETF. It peaked at $25.56 before it reversed in a dramatic fashion. Any move like this cannot be maintained and it must correct. To go vertical it does so under high speed until no more suckers are left chasing a bull market. As a herd they have to take a break form buying as well.

I counted the bottom as a truncated 4th bottom, but with a small degree. If there is more to this bullish phase, then we should get some type of a 3 wave declining wave structure, much bigger than any correction we have seen. We have gaps open well below present prices, but they can’t be trusted for potential reversals at this time. If we are in any type of a wave 1 top, then a 50-60% correction could happen.

The $13 price level is my previous 4th wave of one lesser degree, which also matches the bottom trend line. On Monday I sold my Hemp stock after going ballistic, but I will buy it back once a sufficient correction unfolds.

Finding a great bottom with this HMMJ ETF will not be a walk in the park, as we can be far off the mark when it happens. Now if the 6 o’clock news is full about crashing Hemp stocks, then chances are good any bearish phase has ended, and a reversal would be near. Of course we have no clue at what price level that can happen at.

Our entire planet runs on price and fundamental analysis, but everything I do is pattern related. The pattern has to show itself first, as it matters little if a wave 2 bottom is $5 or $50

Cocoa and The Impending Shortage of Chocolate.

Stories  are wild about another Cocoa shortage looming in the world today. Oh, the horror of it all, if this world runs out sweet chocolate again.

Big Chocolate Makers Drop $1 Billion to Head Off Worldwide Cocoa Shortage – Eater

With cocoa charts still pointing down, it’s hard to imagine a supply problem is actually here. There is the potential for another flat in the ending  stage, which could still produce a massive spike to the upside. Supply has been devastated due to crop diseases, with Ebolaalso  killing off many of the cocoa farmers.  They also blame global warming for the sad state of cocoa production.

I posted cocoa with a best estimated wave count, but I assure you that any wave structures in cocoa are diagonal in nature. If this is to be confirmed in the future, then any impending rally should contain an inverted zigzag.

This is not going to happen overnight, as the probabilities of more short-term downside still exist.  Even Coffee is reported to be in a shortage. Withdrawal from sugar and coffee, could send investors wild without another fix!  😀

VIX Intraday Crash Update

The VIX crashed pretty good at the start of 2018. We are also at a 2 month long base,  just below that $9 price level. A record high for stocks and record lows for the VIX does not bode well for 2018. Analysts will twist the VIX results to justify the continuation of the bull market, giving even more incentive to stay long in these stock markets. Many question how much higher this market can go, but in reality they should be spending their time in figuring out how low these markets will eventually go.

The contrarians can scream off the top of a mountain that this stock market is expensive, but we know that the majority have never been listening in the first place.

At this recent VIX bottom the charts look like the algorithms are back at it again as the patterns are very tight and near vertical up and down.

The Mini SP500 soared to new record highs this morning as well, topping the 2728 price level. Another VIX bear trap and stock bull traps seem to be setting up at this time.

December, 31, 2017 Year End VIX Update

A year end look at the VIX can give us some insight as to what is going to happen in the next 3-4 years. The VIX peak on your top left matches what I have is the Intermediate degree wave 4 top. What followed this VIX top was a long drawn out decline, with many counter rallies, that all ended with  vertical spikes. A person would be hard pressed to find any clean set of impulse waves during this decline,  except for very small degree level sequences.

What it boils down to is that anything with the VIX are all diagonal wave structures. Our “Little Blue Book” only shows what they call an “ending diagonal”. The fact is, these so called, “Ending Diagonal 5th Waves”,  can and do extend dramatically, far beyond what they ever show us in the EWP book. In the book they also show us pretty idealized charts, all subdividing into nice even wave structures. The simple truth is that you will “Never” find these pretty wave structures, because nothing in the markets is ever even.

What the VIX really shows us is a declining market with a potential wedge like pattern. For the last 3-4  months the VIX is setting up a massive base just below the $9 price level.  The two previous upward spikes came to a screeching halt, at the top trend line, before heading south again.  This base is now the lowest since the last major low in December of 1993, 24 years ago.

With the bottom base line being flat, the VIX bears are getting squeezed into a box. These boxes or uneven triangles can produce wild upward thrusts, that shock  us when they do happen. We will get a surprise if we choose to ignore these VIX bear trap situations.

The first peak we have to beat is the $21 price level, and then the $30 price level. Technically speaking, the VIX should exceed or retrace this entire VIX bear market, so hang onto your hats folks, as the VIX winds are going to start blowing to the northeast, sending stock markets southeast.

10-Year T-Notes 1998-2017 Review

In general, when any bond declines in price, the rates go up. Government paper works on what they call the 10-Year T-Notes. Did this party end in late 2012, or are we still faced with a record move to the upside?  This bull market has been going on since 1982 from an inverted Cycle degree wave 3 base, and technically should end with a Cycle degree 4th wave top.  The entire bull market is a very messy pattern as it is next to impossible to find any decent or high quality 5 wave impulse sequences. Stocks are heading down in a potential 4th wave decline, so in that respect we want to keep our options open.

Investors can still seek refuge in T-Notes when carnage hits the stock markets. Long term this Cycle degree 4th wave rally should get completely retraced, but that could still take years before we will know for sure. Following the 2000 bottom, T-notes developed a typical diagonal wave structure which is a challenge to count out at anytime.

Elon Musk plans to launch a Tesla to Mars!

Elon Musk plans to launch a Tesla to Mars — blasting a David Bowie Song — on a SpaceX rocket | Toronto Star

I follow Elon Musk and his space program. I’ve watched most of his rocket liftoffs, and his spectacular failures as well. Elon Musk is certainly a visionary and I respect that. In January 2018 he plans on testing his Falcon Heavy rocket, but he has repeatedly warned that this launch could go badly and even blow up.

Elon Musk plans on launching his own Tsla with this Falcon Heavy launch, so it will prove interesting either way.  Since the 2016 bottom TSLA’s stock price soared in a vertical move as it followed a pattern that works best as a single inverted zigzag. It also fits great into the bigger diagonal wave pattern that TSLA seems to have an abundance of.

In the bigger picture any inverted zigzag can get completely retraced, which means that the $140 price level should get exceeded in the next few years to come. The last high happened in September 2017, ending with a $389 price level. For the last 3 months TSLA stock has been over in the bearish world already and I expect it to continue. This decline is starting like another diagonal and it would be silly to expect anything else.

When TSLA first started every expert analyst on the planet seemed to hate the company, yet the stock price soared. This just goes to show how wrong the expert forecasters can be, and I sure don’t expect this to change. When the media paints us a rosy picture of the future, it coincides well with a major top as there is nobody left to come in.

The Gold/Tsla ratio is at 4.14 today, which is on the very expensive side and until this ratio becomes sane again this TSLA stock will be very expensive.

Elon Musk Introduces the New Big Falcon Rocket – Highlights – Bing video

If  you think the Falcon Heavy is a big rocket, “you ain’t seen nothing yet”, as he is also developing the BFR, Big Falcon Rocket”, in the next few years.

HMMJ, Horizons Marijuana Life Sciences Index ETF (ETF)

I do not give “Buy or Sell” recommendations on any ETF or single stocks. I can only relay my feelings if I’m bullish or bearish at any given time. I have several Marijuana related stock positions myself, but which ones that will move into a bull market, takes many years of due diligence. Or you trust someone that has done his due diligence already.  I have some people I meet that want to jump on the Hemp bandwagon, but yet when you ask them if they have a Canadian trading account set up, they say, “No”.  These kinds of investors are jumping in with an emotional decision and are many years behind or late.

These types of investors that are getting in because they hear about the Hemp bull market in Canada from friends and news networks, are far too slow or late.

The HMMJ,  Horizons Marijuana Life Sciences Index ETF (ETF) is a prime example of a well advanced bullish phase. HMMJ can keep right on going, but chances are good when you jump in, a correction ensues and this ETF could drop 30-40% in no time at all.

Sure Canada has a great new bull market, but all this hype could end once the legal supply and demand numbers get filled. Unless the numbers tell me different, Canada’s hemp users are not growing by leaps and bounds, but the numbers could eventually run into a brick wall with no new users trying the product.

Any grower has to follow strict Canada Health Board regulations, so there are major hoops that any legal grower has to abide by.

December, 13, 2017: VIX Intraday Crash Review

In early December the VIX spiked and then reversed and crashed. Vertical moves like this can never be maintained as they are also the fastest moves we can have.  $14.60 seems to be the price to beat and if my zigzag decline is correct,  then this $14.60 price level will get retraced.  We have an open gap just dead ahead so that could provide some resistance again, but at the same time could supply support, for a much stronger VIX move. 

The markets are at euphoric bubble highs with the VIX at record lows.  The VIX is where the real fear is shown with charts, and at this time investors show no real fear, just yet.   The fear will come back into the markets as bullish record highs always traps the majority. Thinking that good times are still to come,  always means  the end of a bull market, not the beginning of one.  

The VIX Intraday Spike Review

With this bar type setting the VIX produced a sharp spike to the downside. I like to see this happen towards the end of a long decline, but this spike was computer generated as it corresponded with Black Friday as well.  The spike back up, still has a small gap in it which should still get closed off.

This spike does “not” show up when I switch to a line type of a chart. Technically speaking the VIX would still have to drop to the $9.00 price level before all the gaps are closed off.

There are a few gaps still open well above todays prices so these open gaps work like a magnet, drawing prices to them.

That $8.60 bottom represents a huge VIX bear trap, which is the opposite to the SP500 bull trap!

VIX Intraday Gap Review.

The VIX cash contract has been heading down again, with a certain urgency to it.   Once we have a good look we can see that there are a few gaps that can throw a monkey wrench into the bullish and bearish scenarios of the VIX.   The first gap down at the bottom is still open, while we also have two gaps still open above present prices. Which set of open gaps is going to get closed off first? 

We can see a huge single spike to the upside, which can remain as the spike to beat, but it may get matched with an equally long spike to the downside.  I would love to see the opening gap in November get closed off, before the then next rally of fear,  starts to take off again.  Even if it doesn’t get closed off  we could get a H&S type setup as well. 

We also have a big open gap at the $23 price level so long term, any bullish run with the VIX, means a bearish run in stocks. 

Berkshire Hathaway 2009-2017 Review

Since the 2009 bottom Berkshire Hathaway Inc has created what looks like a decent impulse, with some diagonal patterns thrown in to confuse us. BRK.  From the 2015 peak down to the 2016, $190,000 price levels, BRK has followed,  the stock markets very well.  I believe a  correction is coming and it may be bigger than most expect. 

I mean a correction that is big and long enough that can be followed by another 8 year bull market. If BRK gives us a zigzag or a flat correction is irrelevant, but I favor the flat at this time. BRK.A shares peaked at $285,950 for one single share. Since the 2016 bottom BRK.A gained about 150% in less than 2 years. 

The expensive Gold/BRK ratio reached about 221:1 and today it is sitting at 213:1. From my perspective, Berkshire is very expensive when we compare it to gold, so eventually this ratio should start to expand in the next 2-3 years.  Nobody knows how deep any correction has to go before BRK is ready to reverse back into another huge bull cycle. 

Are we at a Cycle degree top or a SC degree top? I favor the Cycle degree wave 3 top, and markets can fall all the way back down to the previous 4th wave of one lesser degree, which in this case is $70,000. Sometimes markets, even go under this previous 4th wave of one lesser degree, and the experts have forecast a DJIA 5000 price level to do just that. Warren Buffet just about owns the DOW,  so why should Berkshire behave any differently and keep soaring?

Just to get anywhere near the previous 4th wave of one lesser degree, Berkshire needs to go below $150,000, with $100,000 being more realistic. 

At the very least, BRK should retrace all of the 2016 and 2017 gains, after which we may see a pattern start to emerge that we can recognize.

Lumber, Monthly Chart Quintuple Top Review

Recently, analysts are all excited about the shortages of lumber.  Due to the forest fires, fear of a duty on Canadian lumber exports, and hurricane Harvey, they claim we are heading into a shortage.

Stud Lumber Shortage & Record Prices Predicted | Wood Markets

Could a framing lumber shortage be underway? | Construction Dive

News – Tolko

Harvey recovery could mean labor, lumber shortages in Texas | Business | qconline.com

When we look at the chart above, we can see that lumber prices are approaching $500 per 1000 board feet.

Contract Specifications:

  • Symbol – LS
  • Name – Lumber (LBS)
  • Exchange – CME
  • Trading Months – FHKNUX
  • Trading Unit – 110,000 board foot
  • Tick Size – 10 cents per thousand board feet ($11.00 per contract)
  • Daily Limit – $10.00 per thousand board feet above or below the previous day’s settlement price
  • Trading Hours – 9:00a.m. – 4:00p.m. Mon-Thur, 5:00p.m. – 1:55p.m. Fri CST
  • Last Trading Day – Business day immediately preceding the 16th calendar day of the contract month
  • Value of one futures unit – $110
  • Value of one options unit – $110

Without a doubt the entire lumber market is related to the diagonal world, where impulse wave counting is no help at all. No way is this wave count perfect as it is just a rough start of one.  It can take years and years to build a decent wave count, and many will never tackle such an insane pattern in the first place.

Ok, we have a massive top? If this fundamental shortage is going to continue then lumber would have to initiate an upside breakout, and keep soaring.  Well, we could also be heading right into severe resistance,  and lumber prices could implode right along with other stock markets.  I tend to believe the huge resistance line is going to be a tough barrier to crack,  and nothing can really help except that markets can and do behave the opposite of the fundamentals.

This is where the Lumber COT reports can help, if they are extreme enough in their net long, or net short positions.

This is what the traders’ commitments show us as of Friday. Commercials are net short lumber by a ratio of 3.85:1 while the non-commercial traders are net long by a ratio of 2.0:1. There is nothing balanced in these ratios, especially from the commercial trader’s perspective.

With winter coming on, demand for winter building could drop unexpectedly in the next few months.

When stock markets dipped in 2009 and again in 2015, lumber prices in general followed along, which suggests lumber prices can crash again, in sympathy with the stock markets.

T-Bonds 1981-2016 Review

If we start back in 1981 we can see that T-Bonds started a rally that carried on for 35 years until it popped in 2016.  The first thing we see in this bull market are massive price swings in both directions. The waves in this bull market constantly overlap at critical times, which doesn’t allow clean impulse waves to form, except for very small degree sequences. 

These are not impulse waves, but you could force them into a 5th wave bull market. I counted the entire bull market as a Cycle degree 4th wave, which means that T-Bonds were in a huge 35 year bear market rally. This is about as close to a Fibonacci 34 years as we can get, and the only question is if the bonds are still going to add one more leg up?

Recent fundamental news had traders create a sell off, as the government drags its heels on tax reform.  As bonds decline this will keep the pressure on rates to go up.  Governments can only change rates when market forces allow them to do it.  We can already see that with the crash of the Fed Fund rates. 

Our present rally was also very choppy so that increases the odds of another leg down and not up.  At present, any rally was very choppy so the pressure could be for bonds to head down as well. 

In the long run, the wave pattern would be a 5th wave decline, so we have to wait and see, if the decline will be a better formed diagonal. Technically speaking, we should get 5 waves down in Primary degree, which is the opposite of the Primary degree 5 wave bull market I anticipate in the general stock markets. 

Solar Cycle #24 Update

It takes them a little less than a week into the new month, before they update this solar cycle chart. Each black dot represents the previous months solar activity  and we can see that in October solar activity has crashed. We are now pushing 6 days in a row with no sunspot activity. In total 2017  had about 74 spotless days.  This is well over double the spotless days we had in 2016.  Before this decline is all said and done, our spotless days will increase every year for a few more years yet.

 

 

Just because there is no sunspot activity at this time does not mean there are no solar winds. The opposite is true as big black holes open up at the northern part of the sun, sending geomagnetic winds towards earth.  We see these storms in the Northern and Southern regions near our poles. They have many satellites taking readings of the sun 24 hours a day, and many sites will be tracking the sun when the sun flips its poles one more time. 

In 2008-2009 solar cycle #23 ended and solar cycle #24 started. It was the solar cycle that caused the stock markets to soar,  which it has done many times in the last 100 years or so. The sun has a heartbeat of about 9 beats per 100 years and solar cycle #24 should end close to the 2020-2021 time period. 

You don’t want to be bearish when solar cycle #24 has ended, as solar cycle #25 could kick off the next great business cycle.  Any so called depression, or recession at that time, will come to a screeching halt followed by another 8 year bull market. At this time it would be solar cycle #25 that will make my vision of the idealized  Cycle degree 5th wave go!  

Even though we could see a very bearish bottom in a few years, the future is a lot brighter than what all the Doomsayers are preaching. Fear is a tool they use to manipulate peoples emotions, and once they control you it is extremely hard to break free from this manipulative trap.   

Apple Stock Breaks New Record Highs!

Last month, Apple’s stock chart started to go vertical and is now forming a spike. I use one trend line which touches close to 3 peaks, and now is on its 4th peak. All this under the anticipation of the iPhone X  release.  This is nothing new that hasn’t happened many times before. What’s just a bit different than any other time is that all major stock indices in the USA, are also at world record highs this past week.

Apple’s charts have diagonal qualities to them so I used zigzags with this wave count.  Sooner or later every bull market will start to act like nothing can take it down,  so investors feel “Safe” inside the herd of investors. The VIX confirms this, as it also crashed to another extreme new low price.  The Apple $200 price forecast is pretty common, but that is a safe forecast.

How deep or long of a correction Apple will have, all depends on the degree of correction, that we may see in the next few years. Any bottom trend line would be pretty useless as it would only touch one point while the top has 4 touch points. There are two major price bottoms of $89 and $55 which we can use, but they are just visible targets on the charts.

Insiders left a long time ago and they are not rushing in to buy. What really stands out, but few will ever know about or even use is the Gold/Apple ratio. The cash, gold price divided by Apple’s stock price, will give you the amount of shares you can buy with one gold ounce.

At this peak the Gold/Apple ratio has hit a record extreme of 7.5:1. This is the most compressed number since I have been tracking this ratio, and it shows how expensive it is when we use real money. Sorry, Bitcoin is not real money, it’s invisible speculation money.

Apple could be at a wave 3 top in Cycle degree as its ability to innovate are being hampered. At a minimum Apple could hit that $85-90 price level again, which is barely a 50% correction. The $150 and $140 price level also needs watching as that could supply short term support.

The only important support is the price that will kick of a new bull market, and nobody knows where that may end.

Harry Dent has forecasted a DJIA 5000 price level to come, and Apple is part of that. So when the big markets start to crash will Apple stock holders be,  “safe”? I doubt it very much.

Making a DJA forecast of 5000 means little if we can’t forecast the bull market that will be sure to follow. Besides, there is “NO” previous bull market support down at the 5000 price level.

VIX Intraday Crash Review

The VIX shows how violently it can move in both directions. It may travel to new record lows, but it is best to keep alternate bottoms just in case no new lows develop.  It also shows has fast the VIX can drop once a vertical spike has developed. On the larger scale the VIX spiked in late 2008 well before the stock market hit bottom in early 2009.   Steven Jon Kaplan called the end of the VIX bull market in late 2008, and he was right on the money. 

There is a small gap that opened around the 11.30 price level, so we know that a VIX bounce is coming again. 

VIX Intraday Bullish Phase Update

The VIX has been reacting like it should, which is a visual representation of fear in the market place. Many don’t care about the VIX  as they think the lower it goes the higher the bull market will go.  It also means that more and more investors were caught in a VIX bear trap.  All gaps below have been closed off, and one big gap in early September has now been closed off as well.   Since today was a very steep rally we should expect a correction, but not break new record lows again. 

VIX Intraday Review: Gaps Closed!

The bullish move of the VIX in October has now reversed, and looks like it may still go lower. Any inverted zigzag can completely retrace itself, except if it’s starting a set of 5 diagonal bullish waves.  Stocks are starting to correct again as I post, so this could give the VIX a little kick. We need a big bullish move with the VIX, to give investors a wake up call.  Of course most investors don’t care about any VIX, as all they care about is that markets keep going up. 

The commercials are still net long, so until those positions reverse, the threat of the VIX eventually heading back up is real. The big open gap we did have, has now been closed, so any gap to the downside would be a welcome sign.  Even a spike to a new record low would also be very bullish for the VIX. 

Copper Weekly Chart Review: Is it Ready For A Correction?

Copper sure is having a great run, but all great runs must come to an end sooner or later. In this case copper can still push higher, but I think a correction is due soon. The wave pattern looks like a great set of 5 waves up, but it just about looks too perfect which is very rare.  If a wave 4 correction is coming then the 2.50 price level could give the copper price support. 

Last weeks commercial traders were still in a net short position and growing. This ratio is about 1.57:1 while the speculators have the opposite positions. They are chasing the bull market, but could find themselves in a short term bull trap.  Commercials have already been net short for some time, and don’t consider them as speculators but more like hedgers. 

I think early  2011 could be the Cycle degree wave 3 position and we are in the “B” wave rally of a Primary degree bear market rally. What if copper still soars to new record highs?  Then this copper rally could turn into a “C” wave bull market, but for now we have to take one wave at a time as copper is a very choppy and wild market.  

Sunspot Number Progression

For the last 20 years or so I have been following the solar cycles.  Each dot represents the previous month’s tally in how many active solar spots occurred during that month.  The count was well above the 25 level, but it’s not finished yet. This solar cycle #24 still has a few years to go as it should roll around the bottom for many months as well.

Spotless Days
Current Stretch: 5 days
2017 total: 61 days (21%)
2016 total: 32 days (9%)
2015 total: 0 days (0%)

2014 total: 1 day (<1%)
2013 total: 0 days (0%)
2012 total: 0 days (0%)
2011 total: 2 days (<1%)
2010 total: 51 days (14%)
2009 total: 260 days (71%)

Updated 13 Oct 2017

In the last 5 days no sunspot activity has been recorded, I’m  sure long stretches of inactivity will still get recorded before solar cycle #25 comes along.

Huge solar storms still come in from big holes in the sun, which produce the beautiful auroras to the north. Tourists from around the world regularly visit places in Alaska and Sweden to witness these stunning displays. Many planets in our solar system also display auroras, but with different colors. Storms from the sun can produce massive disruptions on earth and the astronauts in the ISS have to go into the safe room until the threat passes.

Without the protection of our magnetic field our DNA would get resequenced, basically exterminating all life on earth. One of the last solar cycles that was this low happen back in the early 1900s.

Solar Minimum is Coming | Science Mission Directorate

VIX Intraday Crash Update.

The big open gap has been closed off and the VIX continues to head back down.  We could end up with a big double bottom and a H&S type of a setup. 

In the next two weeks we could run into some volatility with the 1987 stock market crash anniversary date next week.  Most trading was done in the pits at that time and the system got overwhelmed with sell orders. There are many more safeguards in the markets today, where they will halt trading first. 

The VIX does not have to create a new record low, but we can’t rule out anything in the short term.

VIX Intraday Rally Review

The VIX has been on a bit of a rally, but a wide open gap formed on the way up. I call this more like a Scalene triangle with an open end. Pattern wise it could be a diagonal 5th wave, but if this is the case, then the VIX should see yet another record low.  I would love to see this gap closed before the VIX pushes higher, but there is never any guarantee that this bottom gap will get close anytime soon. 

There is one big open gap above present prices, which will get closed, but it also could produce unexpected resistance. In early October there were many gaps that opened up,  which now have been closed. Even when they are already closed off, they can supply a strong support price range. 

The VIX has been rolling around record lows just like stocks have been rolling around record highs, so in that respect there is good inverse synchronicity. 

VIX Intraday Update: The Attack Of The Algorithms

Even with the VIX we see that algorithms were in control at one time, but it is starting to look like the human VIX traders  are starting to break free again. There is no real way of proving that these tight wave formations are computer generated, but no human or groups of humans can trade this fast and within a very tight price range. 

The VIX did drop down a bit lower to the $9.11 price level before it violently moved back to the upside. All bottom gaps are now filled with two gaps open well above present prices. The COT reports are not updated until the end of the trading day, so I quickly scan them to look for ratios that are out of wack or very distorted. My bet is that Commercials added long contracts this week while the speculators  added to their short positions.  Both groups can’t win as one group would be in a bear trap and the other would be a bull trap. 

As much as this start to a bullish phase can turn out to be nothing, as stocks may yet prove to still have life in them. 

VIX Intraday Record Low Update

This morning the VIX imploded setting yet another record low in the last few months. Will this be enough before the VIX starts on a bullish run? On this intraday scale, there are two gaps still open above present prices, which must get closed off. How long that will take is always uncertain, but the big gap good give  the VIX a realistic price level to struggle with.

Last weeks COT report had the commercials at a net long position by a wide margin. This Friday they may add to their bullish positions, which is what I would like to see. The little arrow I show is the start of a potential bullish phase, which bottomed at the 9.13 price level this morning.

All the indices have gone nuts this morning with virtually all indices that I cover,  pushing to new highs. Just like there is a potential for a VIX bear trap, the reverse would be a bull trap in the 5 indices I watch. 

Indices don’t stop on a dime, but they do create blow-off situations where they do look like they stopped on a dime. It’s like trying to stop a speeding semi on the freeway, and forcing a complete reversal. 

For now the new VIX bottom has to hold, but if other gaps open on the way up, all bullish bets could be temporarily derailed again.   

VIX Intraday Gaps Update.

The VIX reacted this morning, but at the same time left a couple of huge open gaps that eventually must get closed off. I would like to see them get closed off sooner than later, as this is pretty early in the game to allow these gaps to remain open.  The 9.30 price level is also another double bottom record low going back to 1993.  Since the 1993 bottom we have three big VIX bottoms around the $10 price level, so this makes for a potential strong base.

A 24 year tripple bottom is pretty bullish for the VIX in my books, but that doesn’t mean a major reversal is due today. Longer term I’m bullish on the VIX, but with gaps showing up and VIX bullish run can get delayed.

VIX Intraday Record Low Update

This morning the VIX created another low after which the VIX started to move up again. End of the month and the end of another quarter shows how complacent investors really are. When the stock bulls are so complacent, then the attack of the stock bears is not far away. This will inject fear back into the markets again.  There is a big gap open above present VIX price levels, works like a magnet attracting  prices to the gap. 

At a minimum it would be nice for the gap to get closed off, but a new gap on the way up can reverse the VIX just as fast. At $12.60 we have several resistance levels that the VIX would also have to contend with.  October can be one of the most volatile months out of the year, with the 30 year anniversary date of the 1987 stock market crash due as well.   

Even though the markets have been pushing to new record highs, I have to remain bearish on stocks until the public gets very bearish on stocks again. 

Tesla Implodes Again

Tesla shares suffer their worst losing streak in months – MarketWatch

Tesla topped out close to $389 a few days ago, before it turned and started to head south one more time. Is the bull market over for Tesla? I would like to think so, but as usual we want to see the decline continue until most of the doubt is removed.  Since the beginning of 2016 Tesla soared up with a 5 wave move and then it fell apart as TSLA plunged into a bearish phase.

In December of 2016 TSLA started back up, and now has formed another double top, with the secondary top being a diagonal 5th wave.

From 2016 to present day, Tesla has formed a great looking zigzag, which is part of a bigger diagonal wave structure. It could also be a setup for a triangle, but even then Tesla should fall well below $141.  At best I can put Tesla into a “B” wave triangle top, but any inverted zigzag can completely retrace. Some wave analysts may start this wave count as a 1-2 wave count, but we have alternating waves that fit better into diagonal structures.

I track gold ratios, but I don’t have too many samples with Tesla. At one time, Tesla had a low ratio of 64:1 from its IPO days. The majority of analysts hated Tesla when it first came out, but started to love it as the price went higher. Recently the Gold/Tesla ratio has compressed to a 3.33:1 ratio. This makes Tesla expensive by any stretch of the imagination.  Everybody is jumping on the electric car bandwagon, so Tesla will get some stiff competition in the years to come.

It is never safe to buy a stock where the insiders have sold out and the Gold/Tesla ratio is so skewed. Not until these indicators flip once again will it be “safe”.

VIX Intraday Update

The VIX has been grinding downward for most of September, but it has made another turning just yesterday. How far that will take us is still a guess, but that big open gap may give us a short term resistance price level.  Another price level gap is at $23, but we should see several corrections before the VIX ever gets to $23. There is lots of room for the VIX to move up which means there is lots of room for stocks to move down.

Since last week the VIX COT report with commercial traders positions is still on the side of the bulls. It will take a long time for this scenario to reverse, but when it does, then a strong stock counter rally would ensue.