Tag Archives: Bull Trap

DJIA Monster 5th Wave Extension And Impending Bear Market.

 One of the main reasons I always review the big picture, is to check if the wave counts still fit in the big sequence I think I’m working in. From the 2009 bottom to our present top we have what I call “One move”, but it is subdivided into 5 waves in Intermediate degree.  The 2000 peak also ended with a wave 3 in Intermediate degree, but it was the 5th wave in Minor degree that extended at that time. 2002 ended with a wave 4 in Intermediate degree just like a 4th wave in Intermediate degree ended in early 2016.

Folks, it’s the last 5th wave that has dramatically extended, and to be honest, I have never counted or seen such a 5th wave extension anywhere in stock market history. It is a near vertical move that even the 5th wave from 1921-1929 couldn’t match. Due to the fact that our present 5th wave is vertical on weekly and monthly charts means that this rally cannot continue.

Investors are pouring record amounts of money into stocks

The bulls are enticing many to invest at record highs, and some of the recent money flows suggests huge inflows. Buying high and then selling low in a crash is what the general public loves to do, as investors have done this on every major peak since 2000. They call them investors, but investors should not be confused with “Smart Money”.

It’s all emotional money as investors chase a bull market. As long as it keeps going up, everybody is happy, but as soon as these buyers start to take a rest, this market could start on the “Big Dip”.  Besides the potential for a Cycle degree decline that can fall below 2011 lows, this present 5th wave will get completely retraced.  It’s all about smoke and mirrors as the consensus paints us a rosy picture of the future.

Every major peak in history, the talking heads painted us a rosy picture, but what followed had no rosy ending. In late 2008 investors were fleeing the stock market in record numbers, yet the market did the exact opposite thing as the biggest bull market since the depression unfolded. The bull market in 2009 unfolded with a very “big” push from the sun, as solar cycle #24 started.

No little 20% correction will do it, as it might be a 70% correction instead, depending where we count from and if we use a gross or net calculation.

In the bigger scope of things this is not going to end well, as the markets will put those emotional investors through a meat grinder.  Slice, Dice, Hack and Slash will chop all the stock bulls up and get them ready for the fridge.

There is no chance in hell that I will turn into a super stock bull, just because it hasn’t started its bear market yet. If the DOW reaches 7000 or so and the talking heads tell us the DOW is falling to 5000 or even 1000, then I will make a call for the DJIA to roar to 34,000 + by 2029.

From 2009 to present,  we’ve had a 400% run in the DJIA  chart,  so I’m pretty sure the DJIA could make a 500% run up into the  2029 time period.

Mini DJIA Record High Bull Trap Update

This Mini DJIA contract reached a peak of 25,414 yesterday, followed by a wild counter rally that also looks like a counter rally. It may take the rest of the week to clear up, but if this counter rally is over on the bearish side already, then no new record highs should happen.  One main reason is due to the many extensions we have had, but also another main reason is that we are in a much higher degree level than the 2000 and 2007 peaks were. Even a normal correction would retrace this entire small degree 5th wave before the next leg up can occur.

Any bigger correction will have no problem in trashing the 24,650 price level. Any previous bull market low can provide limited support, but eventually we need to end up with a 3 wave Primary degree correction that would send the markets into a very deep bear market. Markets always tend to head back down to the previous 4th wave of one lesser degree, and sometimes they even go “under” the previous 4th wave. In this case the previous 4th wave bottom would be the 6500 price level. That 2009 crash bottom went well below the previous 4th wave in Intermediate degree, so technically the markets could do the same thing again.

Markets do have a twisted knack of fooling all the players and non players alike, so just to frustrate us this time around,  the 4th wave will “not” dip below 2009 levels. 😉 Even if it does, it will mean nothing in the big scope of things.

The Gold/DJIA ratio is just a bit above 19:1 where it’s been for over a month already. It takes 19 Troy ounces to buy one unit of the DJIA, and it’s  the highest expensive ratio I have on record.

Crude Oil Intraday Record High Running Out Of Gas?

Crude Oil seems to be running out of gas and has started another move that could fall much lower or deeper than what the majority think will happen. When I think it is important, I will post multiple wave counts.Since I dropped the degree level down by one degree, but used the bottom of Minscule degree.  I will no longer post any wave count that is smaller than the official list of 15 degrees. By using only 15 degree levels, it helps to better gauge the end of a run across most intraday charts.

Simply put, “once we run out of degree levels, the bigger trend is also coming to an end. The size of the 4th waves get smaller and smaller, as we get near the end of a run. I have gone back to using the fixed degree list for some time already, which most readers will never notice the change.

Yes, I may still be a bit early, but we have to be a bit early so more readers can adjust their thinking.  If we go back to the daily chart, we can see a major bottom on June, 22, 2017 of $44. This would be a very bearish downside price target, which is hard to imagine, but I would consider a decline like that as pretty normal.

We are dealing with wildly leveraged commodities contracts, that have a very bad reputation for making crazy moves that are very hard to catch before they happen.

It will remain to be seen if we have more upside left, but I sure like the idea of a triangle in a 4th wave which was followed by a “thrust” to the upside. The triangle forces a degree change as well, and most of the time it can be a difference of two or more degree levels.

At $60,  oil has run into resistance and struggled as it touched $64 so far. There is also a huge H&S pattern with the daily charts, and we know these patterns can also produce violent reactions.

The Oil volatility index OVX also had a bottom at $22.98 and has now started to climb again in recent days. Technically speaking the OVX will rise much more if this bearish oil correction starts to take shape.

Mini Nasdaq 100 Intraday Record High Update

The last part of December, 2017 we saw the Nasdaq decline, but this decline didn’t last that long once 2018 rolled around. The bulls still dominate this show, but with the wild gyrations going on we know this market is becoming unstable.  At this time we have two previous 4th wave bottoms, where we can find support. Where it stops is unknown at this time, but we also know that markets can travel well below any previous 4th wave bottom.

For any correction to have meaning, this Nasdaq must crash well below 6240. That will just barely get the Nasada bears warmed up, never mind completing a full correction.  How deep the Nasdaq bear market can, or will go, all depends on the degree level, that we are presently ending.

The Nasdaq is also coming to a Cycle degree wave 3 end, but it sure can fool us in the short term. At this intraday scale the charts can blow low degree moves very quickly as the market patterns are pretty sensitive. If all those expert wave analysts are counting the Nasdaq as a 5 wave structure in Primary degree, then they are too early by at least 2 degree levels. They will also be late in calling a bottom when it does arrive, just like what happened in early 2009.

I may not know at any specific time, as to the exact wave count I may be on, but I do have a very strong idea when I see a wave count, that it will never fit or work.

This morning the Gold/Nasdaq ratio was a bit above 5:1 which is the highest ratio I have recorded in the last year or so. One day we will kiss this 5:1 ratio goodbye, and start heading down to 2:1 again.

SP500 2009-2017 Bull Trap Review

This is the March 2018 contract extended to see it as a weekly type chart. I did not include any Minor degree wave positions because I want to look at it from a bigger scale. At this record top the SP500 is working towards a small double top, which may still take the rest of this week to clear up.

Like Rick Rule says, ” you’re either a contrarian, or you become a victim”. The Elliott Wave principle is a contrarian system, because if we have a bullish wave count, in sympathy when the bullish majority, then our wave counts will be wrong. 

The 2009 bottom is a prime example where wave counts were as bearish as the herd was, so the expert wave analysts never saw the “Biggest bull market since the depression coming”. Steven Jon Kaplan sure did, as this quote is credited to him. 

At that time I was still brainwashed with SC and GSC degree delusional thinking, and I thought about an 80% retracement would happen. Of course, all those wave counts were trashed. What the wave position is at the 2009 bottom must be clear, as all it takes is one wave position to be wrong, then all our future forecasts will never work. 

I show three important levels in this SP500 chart, which will help to paint the impending bear market.  Think about our present top for a minute and ask yourself, “who is left to come”? What tribe is coming out of the jungle, and says, “Yes, it’s a good time to buy high to invest for the long term”?

We are in what I described as a Cycle degree wave 3 bull trap in stocks, and what’s coming will surprise the majority. No arbitrary 20% dip in the markets will do it, as 20% will just start to get the bulls angry. 

At a minimum the 2015 lows must get retraced, and then eventually the 2011 lows should get retraced as well. This leaves us with  the 666 price level that the markets would have to beat. What if the SP500 never gets close to that 2009 bottom, but stops around the 700-800 price range?  Ok, maybe I’ll be wrong when the SP500 stops at 699 instead. 🙄  We are looking about 3 years ahead so exact price levels will be hard to measure.

At this time my bet is still a 3 wave Primary degree correction, with the “B” being anything. It could move fast or slow, or be so well disguised we wouldn’t know where the Primary degree “B” wave ended. 

For those who are just starting to read my blog, I would like to stress that my wave counts are “never” higher than Cycle degree.

It’s mathematically impossible for us to be in “any” higher degree, until the 5th wave in Cycle degree is found. All SC or GSC degree comments and future fundamental forecasts mean “nothing” in a Cycle degree world. Not a single part of  SC or GSC degree wave counts have ever been confirmed by anyone, since the 2000 peaks. 

Russell 2000, 2000-2017 Cycle Degree Bull Trap Update.

This is the cash Russell 2000 futures contract and just to add a little angle to it, I used linear settings.  At this posting the Russell 200o has a 1550 top, just kissing the top trend line again. Trend lines can be manipulated any way we want, so they can be very subjective if we want them to be.  My wave counts are based on a 5 wave sequence in Cycle degree. Banish any thoughts about extended 5th waves, from the 1975 base, because it’s impossible to have multi generational 5th wave extensions. 5th waves are always fundamentally weaker wave structures, even when they extend. When a 4th wave ends, then stock picking will become very important. 

2007 is my Primary degree wave 3 top, followed by a 3 wave crash, ending in March 2009.  From the 2009 bottom look to your left and you will count 3 bottoms at about the 350 price level. Can the market crash back down to this level again? Sure, it can but will it go that far in the next impending bear market?  

Its the markets job to fool the majority all the time, if they  didn’t,  the majority would be rich!  It’s mathematically impossible for the majority to get rich from the majority group.  

This market can still frustrate us, but sooner or later it will become obvious that the market is heading down. Remember, my bear markets start at the top, under extremely bullish news. On intraday charts I look for the first smallest wave patterns heading down to establish a point I count from.  We can count waves until Little Iceage II, and they will all be wrong if we don’t know where we are counting from.

I talk about the impending bear market at peaks while the majority are infected with stock and Bitcoin fever. Delusional thinking rules in the markets today, so when everybody has made their commitment, who is left to come in?  When the majority of analysts are bullish, who are they talking to, or who are they trying to convince to join the stock party when it’s pointing up?

Maybe the next bear market will stop well short of the 2009 bottom, when it turns and starts to soar one more time. Either way, a potential flat or zigzag in Cycle degree is coming, and I will track it as best as I can when it starts to happen. Bull market tops are the breeding grounds for bear markets.  

DJIA Intraday Crash Update

Since my post yesterday the DJIA only travelled a bit higher before it succumbed to another bearish decline. Yes, we have a steep decline this morning, but we do have very small degree counter rallies.  How many times have we tried this before, but failed.  In the last year or so there were no real healthy corrections of any degree size.which has produced a massive single spike in the DJIA charts.  There is a potential for an impulse decline, which have an extended wave 3. Any 5th wave can also extend so, we could get a double whammy.   We are not going to get an 87 like crash, as circuit breakers are supposed to kick in after a single 7% drop. 

That sure does not rule out any smaller fast moves down, like this morning. 

At any major top, it is a good idea to review the biggest degree level, so we don’t come up with a DJIA 1000 forecast. 

This is a linear chart posted October 8th, and it shows a very clear long spike trying to reach to the moon. The spike up top is the opposite of the long spike at the 2009 bottom, so buying on a dip is going to give you nothing but headaches. Yes, many will expect the markets to go below all 2009 lows. But I think the markets will try and fool the majority again, by doing something else. This bearish phase can stop well short of any 2009 lows between the 7000-8000 DJIA Price level. 

I have posted my simple idealized version of a Cycle degree correction, which contains a flat. Triangles are the last of my picks as we don’t have enough time in the next few years for a triangle to play out. After 2021, we could run into another 8 year bull market, which would have to be part of a triangle.  The last thing US markets are going to get is an eight year bear market rally. 

Mini Nasdaq Intraday Crash Review On A Full Moon!

This morning the markets peaked and then proceeded to decline with gusto and a sense of purpose. It is still declining as I post so hopefully we will get more than just another simple correction.   Until we see a clearly defined sequence, all options are still open.   From here on it will be important to follow the intraday patterns to figure out early if we are heading down with diagonal wave structures.

The top was more like a pure diagonal 5th wave slightly extended. Hopefully we have a long anticipated new trend to look forward to, as this so called bull market is getting pretty boring. I love bear markets as they are a real challenge and the thought of a Cycle degree 4th wave correction will keep us busy in finding the turnings, in a market that can have 3 variables. A zigzag, flat or a triangle, are the simple choices with the triangle being the very last pattern I would expect.  It make take a while, but Cycle degree wave 3 should be our new largest degree top. 

We are not in SC or even GSC degree as those wave counts are based on 4th wave bottoms which are all 5th wave extensions. All my Elliott Wave work is on a wave 2 base. In other words wave threes must be the longest wave in the general stock market. 

Besides 5th waves are always the weakest an only rarely does the 5th wave extend. 1987 to the 2000 peak was a 5th wave extension in Minor degree. 

I looked at the date and saw that today is the full moon, which is usually bullish for stocks. This time the full moon gave us an exact turning day. This does not happen consistently, but the moon dates sure can give us potential reversals.  

E-Mini DJIA Intraday Rally Review: Just Another Bull Trap!



So far so good, but there is always a bit more upside potential which could take until noon to play out.  The move from late February 1st is a great looking choppy rally, that fits very well into a diagonal “C” wave bullish phase.

All inverted zigzags, get completely retraced, depending on where we count from. All regular zigzags, also get retraced depending on where we count from. This is all specific to the degree which I have moved up by one degree level. 

Since the end of January we have started a 5 wave sequence in Minute degree, and chances are very good it still is a diagonal pattern. This will add additional challenges as we have to connect, zigzags together. 

It may take all of February for the next phase to play out so we have to have patience, as I’m sure the markets will dish out some nice surprises in the months ahead.   All those that are seeking price support levels, have to ask, “support for what”?

In a bear market, support will only be brief and sometimes longer with 4th wave rallies, but the best support will come when the majority,  are screaming bearish profanities. Bearish news will dominate the headlines very consistently, but will not push the markets lower.  This will be an indicator that a strong bottom is fast approaching.At what price level that will happen at is just a best guess scenario at this time, but the entire stock mania bull market may have to get completely retraced. 

In the long run I’m very bearish, but we still don’t know at this time what pattern any Cycle degree 4th wave will make. A zigzag or a flat, are my obvious choices at this time.  By the 2021 time period solar cycle#25 should have started and this is when I expect Cycle degree wave 4 to end as well. Solar cycles are bear market terminators just like 2009 was,  so 2021 will be no different. 

E-Mini SP500 Intraday Rally Review: Just Another Bull Trap?



This SP500 did what I hoped it would do during the night session. Now we can see we have yet another vertical spike, which indicates one of two things. A correction is coming, or the downright end of a bigger trend.  I see it as an inverted zigzag and it fits very well into another wave 1-2.  From the bottom of February 2nd we had another “C” wave bullish move that alternates perfectly from the “A” wave bullish phase.

Gee, what can go wrong?  As much as I would like to see wave 3 and 4 happen, chances are good we will get yet another zigzag, heading to a new bear market lower low. If this is all turns out true, then it could take all of February to play out.

With this inverted zigzag I also bumped it up by one degree level, so from the end of January 2017,  we would have started a diagonal 5 wave sequence, in Minute degree. 

At 2263 we would have a perfect downside breakout setup, so when this happens, it will help to confirm the bigger bearish picture.  Any Inverted zigzag gets completely retraced, just like any regular zigzag would, so we have to have patience for this to get confirmed. 

There will be no support level, because we have to ask, “support for what”?  When the support hunters are out, then they are still thinking that they are in a bull market.  Every rally we will get will be a fake, and chances are good we would lose nothing but money, trying to catch some mythical bottom.  

This anticipated bear market can take until 2021 to play out, until solar cycle #25 has started. When this happens then you never want to remain bearish, as the start of solar cycles are bear market terminators. If the wave analysts don’t understand the solar cycles then they will miss every major bull market that will ever come in the future. 


E-Mini SP500 ‘Trump Dump’ Review

Opinion: Beware of the ‘Trump dump’ in stocks as rally peters out

There is never any shortage of  slogans and names these guys can come up with, and the ‘Trump Dump’ has been just one of them.

The pattern was so close to the wire, that I had to give it every chance I could to see if the last diagonal wave would still form. This morning the markets crossed the line in the sand, as they have crashed through critical support.  

Last night I was already starting to count out a potential diagonal, and hopefully this is bigger than what all the talking heads were expecting.  I have made it pretty clear that a much bigger bear market is coming, and the only question is, “What type of a pattern we’re  going to get”.  If you read about some secret support price level is just around the corner, then those analysts are thinking  that the bull market is still alive and well. Of course it will take about a 20% correction, before they will officially call it a bear market. That’s far too late, and who says it will not be a 60% or 80%, correction?   

US Dollar Intraday Wild Ride Review



At this stage of the game, I will no longer produce the wave positions leading up to the January price top of 103.820. 

One reason is to make sure we accept that a turning has closed, and that a new direction is in play. Every wave count has a start and a finish, and when we just blend all the turnings like nothing important happened, then we are oblivious to what is going on. Any wave count all depends on where we start counting from, just like we need to know where the countdown starts from. 

In the case of this US dollar chart, we have a pretty clear top, with a nice little spike included. Just today the chart produced another spike to the upside, after which the US dollar started to head back down. Two spikes in one month sure helps to make the bearish case for the US dollar.

Of course, my contrarian friend will be smiling, as gold stocks will be the main beneficiary of all this US dollar turmoil. From this point forward the USD bulls are all trapped, and many may not even know it at this time. Once the USD makes another new low, then they will start to clue in. This will only accelerate the decline of the US dollar. 

US Dollar Intraday Bull Trap Review



At this time the bull trap has already happened, and we should see a scramble into gold stocks by the investors who got it all wrong.   The US dollar will be the main driving force for gold, as they see that the USD is actually  crashing, more will make the run into gold stocks. 

For now, I will stay with the impulse theme, but if I start to see diagonal wave structures too soon, I will have to switch to diagonal wave counting. In early 2017 the US dollar spiked, which I think was a major top in Primary degree. Specifically a “D” wave in Primary degree.  This is all part of a 30 year Cycle degree triangle that still needs to finish in the next 4 years or so, because after 2021 we will run into the same situation as what happened in 2009 as the US dollar followed sc#24 for the most part. There always seems to be a market crash just before the solar cycle hits a bottom, so it is always better to wait for the crash to happen, as it should also correlate with a major low in the US dollar.  

The US dollar came back hard, well into my previous 4th wave which is very normal, but the US dollar should make many more newer lows.  At this time it is also safe to bet that the US dollar has established its highest price in 2017, which was at 103.820. 

The trend lines are parallel lines, and they will need to get adjusted as the USD decline becomes more obvious to the majority.  


US Dollar 2008-2016 Review

‘Huuuge’ Dollar Rally Predicted by Citigroup If Trump’s Plan Triumphs

Some of the Wall Street talking heads are forecasting a huge move to the USD, and some are also calling 2017 the “Year Of The Dollar”  They are all basing these forecasts on fundamental analysis. Many times I have posted that, “fundamentals will always tell you the wrong things at the extremes”.  All the fundamental analysts were wrong in 2008, and they are wrong this time as well.  Markets don’t run on pretty logic fundamentals, they run on raw human emotions, with fear being the strongest emotion. Greed and hope takes much longer to manifest itself, and usally they are found more often in the general stock markets.  Commodities are leveraged instruments dominated by fear, that is why they produce such wild swings.  

It is very hard to justify remaining bullish when the commercials are short the USD by a ratio of 8.27:1

I see this as a classic setup for a USD bull trap. Any trap forces all the participants that are going in one direction, and then forces them all out, and switch to the new direction. In short, they are always late and are never prepared for what is going to happen next. 

In late 2007 my favorite contrarian was very bullish on the USD, even when the entire world was bearish, and they were recommending  dumping US dollars and buying gold. They were wrong then and they will be wrong this time as well.  I couldn’t squeeze in my Primary Degree “D” wave top, which I believe is part of a 30 year triangle bear market. In other words the USD dollar has been, in a fake bull market for just under the last 8 years.  There are so many overlapping wave structures that will never fit into an impulse, yet many wave counters are doing exactly that.  

If this is a fake bull market, then it will not really get confirmed as such, until the US dollar crosses below 71 again. 

When the US dollar does this I’m sure we can count on the Wall Street talking heads to make another terrible call. 

US Dollar Intraday New Bull Market Record High Review



Since the November peak we now know that the following correction was just another zigzag. (5-3-5). Once this 4th wave was completed we got another wild spike up, which is just another zigzag, and may be completing the entire bullish phase of the US dollar diagonal “C” wave  bull market.    In the end it is another gut reaction to a rate increase announcement, which the entire planet already knew was coming. If you have read about it more than three times, or  three or more analysts have regurgitated the same news,  then, it is already old news. 

Yet the markets ignored all this news and kept charging higher. There is a chance that the USD may add another new peak, but at  this time it looks good for another major potential peak. Another position to put a “D” wave in Primary degree would be fantastic but in the early stages, and in the short term, things can still go wild in both directions. Markets don’t always stop on a dime, as it is more like trying to stop a semi truck and reversing its course. 

Gold also spiked lower, so hopefully it was ending its decline as well.  Longer term I’m very bearish  on the US dollar, so all we need now is for the USD to help confirm this outlook. I’m sure Steven Jon Kaplan is also very bearish on the US dollar, and the last thing I should have is an extremely bullish USD outlook when he is bearish. 

We can argue about any wave position at any time, but the USD has a very high chance of a complete bull market retracement, because for the last 8 years the entire US dollar bull market was a false bull market, better know as a big bear market rally.  



US Dollar Daily Chart Bull Trap Review




The US dollar charged higher again today, just before Thanksgiving Day festivities in the USA. It must be a fundamental patriotic move as all other excuses, have already been used. 😉  The Great Rotation into stocks can only be supported if the US dollar keeps on soaring.  With a vertical move displayed in the daily chart above, we must get a major correction, or we are coming to an end to this bullish nonsense.  The speculators or money managers, are the trend chasers and they were very net long in last week’s report.  What the report will bring this Friday remains to be seen, but I would bet that the commercials may add to their net short positions. 

I could see this bullish move, move much higher, if all the COT reports were reversed. Nothing has changed except that a new home for my “D” wave will happen.  Since that May 2016 bottom, the rally is not your perfect impulse wave, no matter how we want to count it, so this is a huge indicator that this move is part of the bigger diagonal picture in a giant “C” wave. This “C” wave bull market is subdivided into 5 diagonal waves. 

This morning the USD has already rested, after a peak of 101.950. It remains to be seen if this price level will hold, but if we are at a “D” wave top in Primary degree, then a huge US dollar bearish move is still to come. 

They make it pretty clear in the EWP book that “D” wave tops, are huge bull traps. A bull trap with the US dollar, is a bear trap in gold, so the three way trade setups are still very much alive. Stocks and the US dollar are pointing up while gold and gold stocks are pointing down. This is a classic setup when stock investors can flee stocks and run to gold as a safe haven place to hide from the expected stock carnage. 

Stocks have been making new record highs on a consistent basis, which sure would fit well with a Primary degree turning on other assets as well. 

Gold may also have found another bottom at $1182 today, so if this is true, then its price level should hold. 


DJIA Daily Chart Review: It’s Still A Bull Trap!




This morning this DJIA 30  E-Mini cash chart hit a new record high along with a few other indices. Of course the majority will take this new high as the real top, and I will join them as I think the real Cycle degree top is just ahead of us.  Since the 2015 peak, what we had no works out to a better fitting Intermediate correction with a small expanded top just to confuse as many of us as the markets can.  There is no way that the majority will ever buy low and sell high, as one this turns it will be too late to react, and the bulls will panic out as their sell stops get triggered. When that happens all the stock bulls will be selling low or in a falling market. 

Once the bears jump on the bearish bandwagon, the mass media will come out screaming all sorts of bearish mumbo jumbo.

It will not be what they say, that is important, but more like the intensity of what they are saying, is the most important factor to watch for.  Now we may hear of a few bearish stories, but when the intensity is at an extreme we will be able to read many bearish stories. 

Once you read about any bearish story more than three times, it will already be old news, and will no longer have an impact on the bigger picture.  There will be no support that will hold for very long, until we get to a Primary degree “A” wave bottom. 

We may even have insider buying at that “A” wave, and gold should be pointing straight up at that time as well.

I’m sure many will try and count down 5 waves in Primary degree, but that will not last long as I believe we will get a flat instead.  It will also be very important to not drift away from the Cycle degree sequence that has now been going on for close to 84 years. I’m looking for an 89 year cycle move, which may only get us to another major bottom by 2021 or so.  

Sometimes the markets can turn close to the 21st of the month, as contracts expire, but it is not something we can rely on, to use as trade setups.  Right now the 200 day moving average is sitting at 17,900 so it has a long way to go down before the 200 day average gets hit. It now takes well over 15.55 ounces to buy one unit of the DJIA, which would be a reading for the DJIA expensive side.  As on the extreme low in 2009 it only took a bit over 7 ounces of gold to buy the DOW. 

What this ratio will produce when it is only part way down remains to be seen, but I will record it when the time comes.  I’m sure the Dow, gold ratio will work well, as historically stocks and gold travel inversely to each other, when we slip in and out of “Stock Mania” moves. To start off, all we need are two calculations from any extreme, to give us enough data to work with.

The majority will never use gold as a base to calculate ratios with, because then you would be a contrarian, and real contrarians are in the minority and will also always remain in the minority.  Many will make the argument that if it doesn’t work for the majority then why use it?  It is because these minority contrarians are far richer, than the majority will ever be, and what the majority uses will eventually no longer work.   

USD Weekly Chart 2008-2016 Bull Trap Review




At one time I was saying that the US dollar still had to break above that 100 price level, and now it certainly has happened this week. A new breakout just confirms the US dollar bulls, but I think this is a huge bull trap in the making.  A great looking spike has now formed on the weekly chart, which is what I always like to see just before a major turning is going to happen.

Over the years and most of the time, I counted the US dollar as a big bear market rally, but switched counting it as a huge bull market. This never lasted as the “C” wave which started in 2011 fits much better as a diagonal wave structure, than any pure impulse wave does.  Those nice, perfectly formed idealized charts they show us in the EWP book don’t exist. The main reason is that the wave structure is never even in length.  If I had produced an even impulse script, then those scripts that are on my blog should be ignored. In about 20 years of wave counting I have never seen even impulse waves, and if we think we see them, then chances are extremely high that they are wrong.

I show a ((D)) wave top in Primary degree, which the book describes a D wave top, as a very powerful bull trap.  Any bear market rally is destined to completely retrace its bullish phase, which means that in the next few years or so, the USD should still fall below that 70 price level. As we all know the last part of that move can go much lower, but in the end the USD bear market will come to a grinding halt once again.  

I like to be as detailed as I can when describing any major move up or down, and the next phase down, should be another zigzag in Intermediate degree, or a 5-3-5 pattern.  One main reason for the descriptions is that so we can catch any major flaw as soon as possible, before too much damage is done. 

All my work is done by finding and tracking all Cycle degree tops, as without them, it is mathematically impossible to move into the next Supercycle degree world. SC degree is still a long way away, so we sure don’t want to get forced into a higher degree before its time. 

This “D” wave top could coincide very well with the stock market Cycle degree top, but it may take some time before we can confirm it. 

US Dollar Intraday Bear Trap Review




So far the October 25th, 99.100 price level is holding. I still had room for the US dollar to move up, but I was pushing it before it reached the breaking point.  Starting into this decline looks diagonal in nature, so any bear market will give us  the gears as we try and fit all the zigzags together.  We need more good evidence, that the US dollar will keep going south. 

Over all the US dollar was in a 7+ year bullish phase that many assumed is a bull market.  EWI has been very bullish on the USD, but I thing the exact opposite is going to happen. For many years I worked it as a bear market rally, and I also tried counting it as a very bullish phase. The big bullish phase will not work when the commercials are hitting the US dollar with short positions.   Not until that picture clearly reverses can I switch to a super US dollar outlook.  I have witnessed EWI make two huge mistakes as they were in a bull trap back in 2000 as well.  Missing a bull market or in this case a bear market is not an option, but sadly enough it happens too many times. 

Sooner or later the majority will see the carnage in stocks, and investors  will be running to gold as a safe-haven place to be.  Of course by the time everybody sees the collapse of the US dollar, it will be too late as chances are good the market will shake out all those that are chasing the trend down and produce another USD bear trap. 

Gold Daily Chart 2011-2016 Review: The Majority Are Bullish On Gold.


This recent survey I read about Wall Street and Main Street, being bullish on gold was very interesting.  It shows that Wall Street experts are bullish on gold by 62%, while the folks on Main Street are 74% bullish. By no means is this an extreme bullish consensus, but for gold already in a 6 month bullish phase, these readings would be extreme.

If we look at it from a contrarian perspective, we have to ask ourselves, “who is left to get in”,?  Who are those smart experts or mainstream people that can push these sentiment numbers much higher? George Soros is bullish on gold, but he does not count, as he can stay  bullish on gold and not blink an eye, while Main Street goes broke waiting for a massive bullish cycle.   

When this much bullish attention is already present in gold, then the upside could be very restricted.  I am sure you may have read that this bullish mood is good for gold, and the fundamentals all point to higher gold prices.  The trouble with fundamentals is that they are all lagging indicators. They are useless to forecast the future price  of gold.  

Everybody was bullish on gold in mid 2011 and look what happened after, as gold plunged into a bear market.  A bear market that has traveled much more than their perfect 20% decline. It even touched close to being a 45% decline, so they all declared the gold bull market dead.   

Meanwhile, all of the wave analysts were counting a correction, after which gold would carry on to new world highs. We counted every pattern under the sun and yet every rally until now, has never lasted. Bearish rallies always get completely retraced, and the only question is, “Has this gold rally been a fake”? 




There is no way I can create a good set of big parallel lines, but if we connect two big peaks, we now have a line in the sand to work with.  For gold to be in a much bigger bullish phase, then it has to blow the lid off this top trend line and soar.  Since the 2013 bottom the gold pattern has dramatically changed and turned into one crazy overlapping decline.  From my Cycle degree perspective, this choppy pattern is a good sign as they are diagonal patterns. It is pretty hard to push them into impulse wave patterns and we should never try if we see them.  For this entire gold bearish phase, which may end up being a Primary degree 4th wave correction, there were virtually no great impulse waves that we can count out.

Right now we have a potential $1200 gold base, but if gold is still in its bearish funk, then this $1200 base will not hold. $1050 will not hold as well, but a few points below those 2015 lows, will surely confirm that gold’s recent rally has all been a fake.  We can argue about the fundamentals all the time, but good wave counts and market sentiment will always tell us to do the opposite thing.  In hindsight (2011), we can now see that being bullish with the herd, was exactly the wrong thing to do. Does that stop anyone from doing it again? Not on your life, as the majority will buy high and then sell out low in disgust. This will happen over and over again, and as long as there are humans with money, it will keep happening.

If that $1300 peak ended with an ending diagonal, then this would also make a strong case for the bearish side. On a small scale gold is pointing up, but stocks are pointing down a bit.  Many may have charged into gold as a safe-haven, but if there are too many bulls then this will not work in the long run as well. The real boost in gold prices would be, if  the US dollar starting a long drawn out decline. This has not happened yet as the US dollar still wants to go up!

Gold could go into a real funk for the rest of the year or into the fall, but I sure will turn bullish once this potential scenario plays out.



Gold Intraday Chart Review: Bull Market Or Bull Trap?




At the end of the week I look through the charts and see if I can find another alternate wave count. EWP is all about “what if” scenarios, and to keep it real, there are always 5 probabilities of the simple pattern types we can get.   This is all specific to the degree and for gold above, I used a wave 4 peak in Minor degree. (First Part of May 2016). What if this great run in gold has just been another good fake? If this run was a fake then it will not take long for the type of decline to start showing up. 

Either way I was suspicious of a gold correction already, with gold possibly hitting its peak on Friday.  I may be wrong but, this is a very compelling pattern not to ignore.  The trend is very steep with a spike showing up very well on the daily charts.  That last little 5th wave I had turned into a diagonal or even an ending diagonal. This would be a Micro degree 5th wave which is not labeled. 

Any chance at $1450 this time around is not workable anymore, as this could be a pretty good bull trap. The $1300 price would also be left in the dust.

In a bull trap, all the traders have “sell” stops below all present prices, so once this starts, it could go very quickly.  Any wave counter can get fooled with this pattern, but constant reviewing helps us to find alternate wave counts. If this becomes true and the contrarians have not sold out, then they are going to take a big beating as gold stocks should also nose dive. 

I have to be bearish with what I see, but at the same time we have to try and watch for an early “ABC” bear trap.