Tag Archives: Cycle Degree Wave III

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. 

Mini Nasdaq Weekly Chart 2009-2017 Bull Market Review

This morning the Nasdaq hit another record high of 6334 but may still add on more points before another correction is due. One trend line is all we need as two of them will not fit well.  Look at the angle of the bull market, and how it cuts very close to a 45 degree angle, or corner to corner.  How long this market can keep gyrating without a major correction is uncertain at this time, but markets do have a knack of fooling us with surprise moves.  I like to catch as many of the surprise moves that I can but it doesn’t always work that way. 

From my perspective, I have a clear vision of a single idealized wave count, and I use this idealized picture as my reference point, for all the different simple corrections that we may find. Most of all it is important to eliminate 2 of the corrective waves, but also to get the highest degree of this correction.  This helps in keeping all wave positions within Cycle degree, so we don’t  end up with the  SC or GSC degree forecast. Unless all Cycle degree peaks are found we can’t move forward into the next highest degree. 

The Nasdaq is about the best forming impulse wave, when compared to the others, but any 5th wave can be very choppy due to diagonal wave structures.  In 2016 we did have an expanded “B” wave top pattern, and it did not let us down as another leg up materialized.

Then from 2016,  the bull market started to go crazy which works best with extending the last 5th wave in Minor degree. It makes wave 1 and wave 5 about even, with wave 3 still being the longest and the extended wave. 

Harry Dent, who is just a book writer says the DOW will fall to 5000. When we actually go look we can see there is nothing down there, but it would take us back to 1996 price levels.  1996 coincides with the end of solar cycle#22 and the start of solar cycle #23, which just kept the bull market going. 

Now if the Nasdaq were to fall along with the DJIA then the Nasdaq could fall to 600-700. Again, there is nothing down at the 1996 price level to support anything,  so I know those numbers are arbitrary numbers,  picked out of thin air. Manipulating the masses with fear is very normal as it sells books. 

All this can take the next 3-4 years to play out and to surprise us again, the Nasdaq could stop well short of the 2009 bottom, before a brand new bull market starts with the start of solar cycle #25. 

I checked the Gold/Nasdaq ratio and it was 4.94. It took 4.94 gold ounces to buy one unit of the DOW, which is the most expensive ratio I have recorded in the last few years. The record expensive Gold/Nasdaq ratio I have,  is about 4.  To get real cheap this ratio would have to get closer to 1.18 again. 

Mini DJIA Intraday New Record High Update

I’m not happy with this DJIA intraday wave count as I’m using cosmetic wave counting methods. Either way we are looking at diagonal waves where critical wave structures constantly overlap. So far the entire month of October has been this way, but not nearly as flat as what the SP500 is developing. It all fits into the diagonal wave structure bordering on being an ending diagonal as well. 

Today the DJIA created another little spike to the upside pushing to the 22,946 price level. How many times this has happened, I’m not sure, but we know that’s also breaking records. In the long run, we are headed for a Cycle degree wave 3 top, and to correct a Cycle degree bull market we have a choice of 3 simple patterns, and these patterns must have a specific wave count based on an idealized pattern. 

Of course, if our perception of an idealized pattern is not clear we can create any wave counts we think that we see. Expert wave analysts thought they saw a wave 1 in Primary degree back in 2009, but were proven to be completely wrong.  Can this happen again at the next market crash bottom? It sure can as many think we are in SC degree or even GSC degree.  

It is medically impossible for markets to be in SC degree, without finding “ALL” the 5 waves in Cycle degree first. It may take 2-3 years or so, but when the big bearish bottom arrives, nobody will be ready for it. Only the seasoned contrarians will be ready and that only makes up 3-4% of the investors. 

As I post the markets are charging higher once more so I expect a new set of record highs will be created again. 

DJIA 1929-2017 Linear Chart Cycle Degree Review

I love to show the DJIA in a linear chart as it shows the last year or so as a near vertical move. This move was what they called the Trump Bump and a few other names. The majority, though the bull market was over as the markets plunged in reaction to Donald Trump being elected as president. I was one of the few that didn’t fall for that and sure enough the stock market reversed its losses and proceeded to soar.

It soared higher with a constant barrage of new record highs being broken, and it still may not be finished as I post. 22,773 seems to be the present record high.

1929 to 1932 was a major bear market, producing a depression during that time. From some of the worst fundamentals in stock market history, the markets turned and charged up for many decades with many crashes and corrections along the way. Crashes, corrections and bear markets are going to continue to happen if my single idealized wave pattern is true. These bull market phases since the 2000 peak  are the results of extended wave 3s that have been happening since the 1932 bottom. If our wave count is wrong for 1929-1932 then all the cosmetic wave counting in the world will not find us a better fit.

Yes 5th waves extend, but 5th waves also tend to be the shortest waves most of the time.   Since the 1932 bottom I use no 4th waves in SC degree or 4th waves in Cycle degree in the 70s bear market. The EWP clearly says that wave 3s are never the shortest wave, yet the majority of all expert wave analysts in the world, are based on 5th wave extensions.  Extending 5th waves and never looking for the alternative wave 3 extensions will always force the wave counts into a much higher degree. The next thing we know is that 2000 becomes a SC or even GSC  wave 3. Any wave 4 in any degree has a very specific simple idealized wave structure, that must get confirmed.

Of course I followed along and used to count everything in GSC and then in SC degree, yet none of the waves required never materialized. When that fails, it’s not a failure of the EWP, but it is a failure of humans to think objectively and sequentially. Most people are biased in some shape or form and wave analysts are no different. It took me until 2013 before I dumped all SC and GCS degree thinking. I use an idealized wave structure to tell me what I’m supposed to be looking for, and try not to practice cosmetic wave counting.

Markets never make it that easy where the wave count is so clear. If they were, we would have many wave counting billionaires in the world today. Yet when you look at the contrarians today most of them will never be caught dead drawing out a bunch of numbers and letters.

I’m anticipating a Cycle degree stock market correction, which the majority will call a bear market by the time it shows itself. A big bear market is just a correction in an ongoing bigger bull market, which from my perspective, is the SC and GSC degree levels. Both degree levels are already in extended waves.

There are three main price hurdles that this impending wave 4 needs to retrace in the next 3-4 years. One of them is the complete retracement of the Trump Rally, and then as a bare minimum, the markets must dip well into the 2007 peaks in all indices, not just the DOW.

With the DJIA this would be well below the 14,000 price level. The last hurdle to cross would be a complete retracement of the stock mania that started in 2011. That would take us below the DJIA 10,000 price level. Once the Trump Rally is completely retraced, then we will be left with a single long spike to the upside for many years to come.

Our present tall skinny looking 5th wave is the opposite of the long skinny spike to the downside that ended in early 2009. From a bear spike in 2009 to a bull spike in 8 years or so, is a nice Fibonacci round number. Many markets move in Fibonacci years, but the underlining driving force of the markets is the solar cycle.

At this time, many experts are still expecting for stock prices to “melt-up” so to speak. This is very standard bullish talk at the peak of any bull market. At the extreme, wave positions cannot be in sympathy with the bullish herd, as the waves always act the opposite of popular opinion.  Investors love to buy high as they feel safe amongst millions of others doing the same thing.

In reality insiders have sold in May 2017, and in the long run retail investors will be left holding a portfolio of worthless paper, again.

What amazes me many times, is how short of a memory investors really have, as they have learned nothing in the last 17 years. It is mathematically impossible for the majority to win at this investing game, as they are always too early or too late when making a decision. Seasoned contrarians know this very well, and have perfected the art of buying low and selling high to the emotional investors.

As scary as it sounds, I watched more 1929 documentaries and there is not much difference as investors were extremely bullish in 1928 as well.

SP500 Supercycle Review

I spent more than 10  years, counting wave structures in Grand Supercycle degree (GSC), then I moved down the degree stack and counted everything in Supercycle (SC) degree for a few years. I even started another blog just dedicated to SC degree wave counts. When I saw that the majority of expert wave analysts missed an 8 year bull market, I knew that SC and GSC degree wave counting had major flaws in it and that it must be thrown out. 

This flaw is the lack of understanding that wave 3 is always the longest wave in the general stock markets. 5th waves do extend, but they are rare and usually involve the last degree before a top. In the 1900’s I believe that the markets developed a Cycle degree diagonal 5th wave, ending with the peak in 1929. 

I don’t think a multi generational 5th wave extension can even happen, as 5th waves are generally the weakest as well. Yet every expert wave analyst counts with extended 5th waves. Those that count from a 4th wave base, will always move into a higher degree level long before it is supposed to arrive.

I will be talking about Supercycle degree (SC) from time to time, as technically the general stock markets, are still in an extended wave three in SC, and GSC degree. SC degree wave 3 has not completed anywhere, and it may not arrive until the 2029 time period. The Elliott Wave Principle is not about flipping pretty numbers and letters around, as any kid can do that. It’s all about how we visualize the idealized wave structure. Each time we label a position on paper or in our computers, we are also technically travelling in time. To time travel, I like to go back 100 years, and then look forward 100 years. Four generational seasons make up a 100 year cycle, and most economic cycles repeat themselves in 100 years. 

The short story is by “Ignoring history, we are doomed to repeat it” which is especially true in the financial markets.

Below is a chart of the SP500, which does not update that frequently, but it gives us a good long term picture from the 1929 top.


All the super bearish forecasts that will be mentioned in the future are irrelevant, if we think we are in some mythical SC or GSC degree world already. From my perspective, we are a minimum of 2 degrees lower due to the fact that wave 3s have never been extended. At times at the 2000 peak, my wave counts were about 4 degree levels lower. 

Readers must understand that I see the EWP as just one big ” Idealized impulse” wave structure, and that these wave structures are extended wave 3s not extended 5th waves. The peak in 1929 and the 1932 bottom is my wave 1-2  in SC degree, and not a wave 3-4!  Just being out by 1 degree can throw any forecast off by a minimum of 60%. (1.618) 

The same problem shows up in the 1960-1975 bear market, which the majority assumes is the location of Cycle degree wave 3 and 4.  To recap, the majority use a 4th wave base from the 1932 bottom and then another Cycle degree 4th wave base in 1975.

Labeling 1932 and 1975 as 4th wave bases would give us about an 85 year long SC degree 5th wave extension so far. That’s almost three generational seasons long, for a 5th wave extension?  Technically, this cannot happen, yet the majority of wave analysts all count from a wave 4 base.

 It’s also the main reason why experts missed the biggest bull market since the depression. (2009 -2017). How many expert wave analysts posted any wave count that was extremely bullish in 2009? No wave analysts that I was reading at that time could say with great confidence, that a multi year bull market in stocks was coming.

As long as the wave analysts believe that SC and GSC degree, are here already, then wave followers will continually  miss major bull markets. This happens because they have never gone back in history and looked for alternatives.  Going back 100 years and starting fresh, is too much like work, so until they want to do the work, the same setup that happened at the 2008-2009 bottom will happen again at the 2020-2021 time period.

The start of any new solar cycles are bear market terminators, as they will trash all bearish wave counts and related moods. The studies of the sun and the real impact on the stock market is not rocket science folks, as many have made the same connections.  

‎www.ez3dbiz.com/2016_stock_market.pdf

The link above is just one link to a solar cycle study.

 

Mini SP500 Intraday Record High Review

The markets have seen another impressive run for most of July, with the SP500 topping to another record high. Early yesterday the Mini SP500 reached 2476 before it turned down again for the rest of the day. One move has ended and another move looks like it has started. Two main things can happen next, one is that another correction of the ongoing bull market has started, or that a big bullish phase has ended. 

Now if this start of the decline survives the day, then this would be a good thing. In the end, for a bigger bearish move to have started, we need to see these markets head much lower. I’m not going to go wild in calling this an expanded top due to the fact, that there are  just too many zigzags. Besides, not until any “C” wave decline has nearly finished will we know.  

A potential Cycle degree wave 3 is still my favorite choice, but only time will help to confirm that. It’s also time to take another Gold/SP500 ratio calculation, and as of this morning it takes 1.98 gold ounces to buy one unit of the SP500. When the SP500 becomes cheap again, this ratio could be closer to  .75 of a Troy ounce. Not until the entire planet is bearish on US stocks, will this ratio give us better readings. 

As I post, the SP500 is heading up again, but we want to see the top price of today hold.

Mini DJIA Intraday Crash Review

The DJIA stopped this morning and then started to soar again. How high this counter rally will go all depends if a real top has already completed well over 5 days ago. One thing is certain and that is we have overlapping waves that are not allowed to happen in an impulse. Any starting set of 5 waves can be a diagonal, and that’s what I look for, in the immediate future.

The DJIA has roared back so fast that it was approaching the top trend line already, while I post. Violent moves to the downside and then reverse violent moves to the upside, is the pattern we have to put up now and for the foreseeable future.

We need the markets to hold that bullish top on the 19th to help confirm and potential Cycle degree top we may have. So far it looks good, but in the markets, looks are always deceiving. It’s one of the reasons to be a bit more cautious before I plunk down a Cycle degree wave 3.   I doubt a new price low will have time to play out by the end of today, but by month’s end, with some big holidays in July in Canada and the USA, anything can still happen.

Eventually the summer could end up being pretty slow, so it is a good idea to keep the wave counting options open, at least for the short term. Long term this market is going down, and the only real question is which one of the three bear market patterns,  will we get?

We will hear horror stories about some DJIA 5000 price forecast, which they are playing the Doom and Gloom fear card. The more fear they can spread, the more money they can suck out of our pockets.  I’m pretty sure that future price forecasts of 3000, and 1000 will also hit the media, but those 3 price forecasts will never happen if a SC degree wave 3 is still well over a decade away. SC degree wave 3 is an extended wave as well, which may not finish until 2029, it surely did not end in 1929.

Where is GSC degree in all of this? Well, GSC degree wave 3 is still going strong, but we may not see any GSC  wave 3 peak until 2129. Any GSC degree wave count or forecast you may hear is based on 5th wave extensions not on wave 3 extensions. If someone comes along and can’t believe that wave 3’s are extended, then all we have to do is point to 1929 and remind them that 1929-1932 was a SC degree wave 1-2.  There was no Cycle degree wave 3-4 in the 70s, and until those two main patterns are wiped out and recounted, the debate of degree levels will rage on.

Those SC and GSC degree wave forecasters, have never confirmed any SC or GSC degree waves anywhere, and as a wave analyst, we need very specific wave counts to confirm any higher degree.

In the last 7 years not a single wave counting reader has come forward and told me they want to switch and help confirm any Cycle degree pattern. The EWP today is used as a short term trade setup, and therefore never saw the biggest bull market coming since the depression. This is pretty sad indeed, as missing a huge bull market should never have happened.

Contrarians do a much better job of reading tops and bottoms, and they are some of the wealthiest people in the world.

Insiders have sold out in May, which is not a good foundation for another major leg up.

Due to holidays and long weekends, I try to reduce any wave analysts, on our holidays. 

DJIA 2009-2017 Bull Market Review

When the big markets are pointing up and the talking heads are also pointing the markets in the same direction, then this is when I’m already building the next pattern heading down. I’m not that concerned in how much higher this market can go, as I’m building a potential picture in how low it can go.

How low this market can go, all depends on where our original wave two starting point was, and how popular 5th wave extensions really are. With stocks 5th waves do extend, but many times it will be one of the last 5th waves in a run. It is wave 3 that has to be the longest wave.

The last 5th wave extension happen from the 1987 crash bottom to the 2000 peak. From the 1987 crash bottom, the markets exploded with a wild sequence of 5 waves in Minute degree, which translates into just one move in Minor degree.

It took me until about 2013 to finally look at the bull market from a 5th wave perspective. Not as an impulse, but as a diagonal wave structure.  Diagonals, are just zigzags connected together with flats or triangles in a 4th wave position, which the EWP does not explain very well.  In the book they label an ending diagonal like an impulse, but in reality they are zigzags linked together. To separate the normal impulse waves from diagonal impulse waves, I use a specific wave counting method that is also shown in the book, which most experts seemed to ignore.

When I see analysts turning diagonal wave patterns into impulse wave patterns, then they are ignoring all the zigzags that are linked together in waves 1, 3, and 5. 

On the chart above, I show 4 horizontal lines, that had significant meaning on the way up, which on the flip side can provide some major turning price levels on the way down.

We have been told over and over about markets, retracing back to the previous 4th wave of one lesser degree. When all wave analysts are walking to a different drummer, then who had late 2002 as a previous 4th wave?  The 2009 bottom 4th wave went much deeper than the late 2002 bottom, so the previous 4th wave is more of a guideline, than any strict rule. In short, I never use the previous 4th wave bottom like a rule, but I use it as a very strong guideline. 

 Now we are faced with a potential move that is two degrees higher than anything that the late 2002 bottom produced,  and one degree higher than the 2009 bottom. Many experts will look for new record lows, with DJIA forecasts to 5000, 3000 or even 1000, becoming very popular  again.

One thing is certain, by the time the markets get to the next major low, fear mongering by the experts and the mainstream will be front page news. When that day arrives, fear will keep investors out of the markets and at best you will be holding a token position just before the Roaring 2020’s get started again.  

 

Russell 2000 2015-2017 Daily Chart Review

The Russell 2000 has given us one wild ride which most analysts ignore most of the time. Recently the Russell 2000 has led in the downhill race, but quickly turned and played catch up, soaring to new record highs again. What is different with this top is that the pattern is very choppy, followed by another very choppy run, which sure can count out as an ending diagonal. 

The 4th wave in Intermediate degree sure can work as a zigzag which was then followed by what looks like a set of 5 bullish waves. Well, these can also work as one single zigzag, with a stretched “C” wave in Minor degree.  This has been pretty normal on most indices, except for the Nasdaq, which has been closer to an impulse pattern, than all the other major stock markets. 

The Russell 2000 also has several major bottoms that could provide us with an early warning wave count, for a future Cycle degree 4th wave bottom.  No! We are not some super duper mega crazy SC or even GSC degree wave top as those wave counts are all based on 5th wave extensions, and not wave 3 extensions. Wave 3 extensions come from a wave 2 base which I started to switch to in 2013. 

There is no way of knowing for sure,  if this top will hold.  The prospect of an ending diagonal sure can change things in a hurry. 

E-Mini DOW 30 Intraday New Record High Review

From the May, 18th DJIA bottom, the markets have charged back, in what looks like a strong move. In reality they show the desperation of participants to ride this bullish phase.  They only ask, How much higher can it go”? 

They should be asking how deep can the markets crash down to?  Every bull market has a start and an end, but knowing the exact wave that it will end on, is always a crap shoot in the short term. One good thing about any new record high is that we don’t have to fight with multiple tops. Double tops or what some call, “truncated tops”, makes it more difficult to figure out where to count from, which so far is not an issue. 

In the long run, we are heading up to a Cycle degree wave 3, which is now off by a Minute degree, from my previous Cycle degree top. 

All my work starts from a wave 2 base as the majority of expert wave analysts have been working from a 4th wave base since 1932.  5th waves never extend this much as they usually are the weakest waves. They can also contain diagonals which further amplify any weaknesses.  The only time that any 5th wave really extended, started just after the 1987 stock market crash. 

Since the 2000 top, not a single wave analyst has confirmed any part of any SC degree, let alone GSC degree. We need very specific patterns to confirm any potential SC degree, that we may think we are in. This wave structure is 5 waves in Primary degree.  

Any wave analyst that is presently working 5 waves up in Primary degree, in any asset class is already in SC degree, and if they are looking for 5 waves down in Primary degree, at a minimum they are also in SC degree.  GSC degree would need many 5 wave trips in Primary degree, up an down. 

From the 2009 bottom we have a diagonal 5th wave, not some 8 year bear market rally that has never happened in market history anywhere. 

As I post the markets have pushed higher, which makes my wave count still a bit too early.   Any new record high can be the last record high, and sooner or later the greatest fool rushing in, will have bought his DOW long position.

Insiders have long left this market, and only the retail, and speculator  trend chasers are left playing this game.

The VIX has also hit new record lows, so it can make a nice bounce when fear strikes again.   

Nasdaq 100 E-Mini, Another Great Intraday Top

Early this morning, the Nasdaq created yet another spike to new record highs, before it slumped again. Until stocks start to show  a consistent declining pattern, we are never sure that this peak will hold.  I would love to see this market start heading much  lower during the rest of this week, as it is long overdue for at least another correction,  or the end of the big 8 year trend. 

Just like all the other indices, the Nasdaq should eventually peak at a Cycle degree wave 3 top as well.  Finding the exact wave that makes any top is very important as all other wave counts are based on it. Of course, those pesky expanded flats throw a monkey wrench into any wave count. 

Nasdaq Intraday Bull Market Update: Down To The Wire

Once again the Nasdaq is down to the wire before breaking to  a new record high. The sharp drop in May could have been part of an expanded pattern which, if it is true always sends the markets to newer highs. Apple, which is the big elephant in the room will not maintain its price no matter how many freaking iPhone 8 models that the experts figure it can sell. 

On this Thursday we are going to hit the new moon date, followed by a holiday on Monday. The new moon dates can produce dramatic reversals in stocks, plus we are getting closer to the end of the month as well.  If we reach a new record high, then the next correction should go much deeper, than what we have had so far. The entire rally that started back in mid April would also be completely retraced. Eventually the entire Trump rally will also be left in the dust, which the US dollar has already done.  

A new record high will force the Cycle degree wave 3 to be moved to a new home.  All my work on this blog is dedicated to tracking and confirming all the historical 5 wave sequences in Cycle degree.  My goal is to find a permanent home for Cycle degree waves 3-4-5, as without them no SC or GSC degree wave patterns can develop.

My work is at a minimum 2 degrees lower than what the majority of expert wave analyses is working with, and back in 2000 my wave count now is a minimum of 4 degree levels lower. 

 

 

E-Mni SP500 Intraday Crash And Rally Review

In the last couple of days the markets perform a swan dive, (not a Black Swan), followed by a fast rally right back up again. The present rally looks like an impulse, but the last wave crossed to new highs as a 3 wave pattern,  which was part of a diagonal “C” wave.  In order for this starting decline to be in a bigger bearish trend, then all the markets need to push much lower, this summer.  Just in case todays rally has been just a single diagonal, then all we would get is a deeper correction followed by the real “C” wave. 

If the markets are over the hump,  then after any bullish news comes out it will ignore this news and eventually push lower. This is the exact opposite of what happens in a bull market.  Depending on what Cycle degree 4th wave pattern we get and all the bearish news  doesn’t push the markets any lower, then this could be time for a big reversal. This may happen when  a  “B” wave in Primary degree  gets close to starting. For now I will be looking for the first 3 waves  in Intermediate degree,  leading to the “A” wave in Primary degree. 

 The VIX sure performed as hoped for, but the gap it left on the way up, may stay open for a very long time. That is fine from my perspective, as I know far in the future the VIX will crash again and crash right back down and close that open gap.

Anything can still throw a monkey wrench into any wave count, so hopefully we can catch any errant wave counts early enough to adjust. This is where constant reviewing on the intraday scale needs to be done. 

The SP500 had a 24 month Market Vane report of 70%.  Last week this number hit 69% for 5 solid trading days in a row. That sure spells out a major bullish top to me. 

Again, I would like to stress that there is a very good chance that the markets will never go below 2009 lows this time, as Steven Jon Kaplan has already mentioned that as well.  Even if it did go lower,  then this is not a big deal, as all that would have happened is an extension we missed. Price does not change a Cycle degree crash to a SC or GSC degree crash.   Prices will be massively oversold far before it ever gets to a real bottom, so any bearish wave counts will eventually get trashed leaving you no time to accumulate large bullish positions.    

E-Mini Nasdaq Intraday Crash Review

 

 

Don’t you just love crashes? The Nasdaq started to crash last night,  and it sure looks like a great swan dive.  We still could develop a wave 3-4 and 5.  It could also be part of an “ABC” crash, so anything can still happen in the short term. Any counter rallies can be very violent, but until we establish very visible lower highs, I have to work dual wave counts. What else is new?  This is pretty normal as we have at least 3  simple choices for a correction, but 5 in total when we are at smaller degree levels. 

If this top can hold, and not produce another double or triple top, then this top is a market gift for wave analysts. This extreme peak is now very visible, which makes it easier to count from. I will be keeping the updates a bit short, as if I spend too much time, the wave counts become obsolete while I’m posting.

I would like to see wave analysts forecast the retracement level, when this market turns back into a full fledged bull market.  There are millions of retracement ratios, which one is going to be the right one? 

All the super degree wave analysts will tell us the worst, but the worst forecasts in the world have never materialized. If a big crash turns out to be a big flat, then any  bear market will come to a screeching end, and soar to new record highs again. 

The Market Vane report this Tuesday, showed that a 91% bulls reading was at a 24 month extreme, which happened  4 out of 5 days in this weekly report.   I have mentioned this several times, as I consider 91% an extreme reading. In other words, there are no stock bulls left to come in, as this reading can never go to 100%. 

 

Idealized Cycle And Supercycle Degree Wave Counts For The Next 100 Years.

These charts look like they are very steep, which is the only way to squeeze them onto a single 8X10 chart.  Many templates I print out in 22×28 format as I post them on my wall in my small home based office.  The first chart below will give you an idealized wave count from the 1932 bottom, to a Grand Supercycle degree wave 3 top, sometime in the next century.  The 1932 bottom is my wave Zero to the start of  5 waves in Cycle degree. 

This may not make sense, but it would make sense if we visualize the Elliott Wave principle as one single impulse wave, which started after our planet started to climb out of the last ice age. Wave Zero in Supermillennium degree started about 11,000 BC, when farming began to spread. Commercial farming produced enough food to allow cities to grow into city states and empires.

Here is a good link that talks about starting to grow food 13,000 years ago when the CO2 content started to go above 240 PPM.

Of course the reverse happens when our earth dips into a mini ice age condition. We had many deep cold spells in the last 10,000 years, and expecting no more cold spells in our future, is just wishful thinking. 

In one single impulse for the general stock markets,  we get an idealized count of 1-2, 1-2, 1-2  waves,  where wave 1 is always the shortest and wave 3 is always the extended wave. Three sets of 1-2 waves will extend wave 3. This makes the 5th wave one of the shorter waves, and most of the time fundamentally the weakest as well. It is a 4th wave crash that crushes the fundamentals, making the 5th wave very weak.

The majority of new wave analyst, joined in after 2000 as it seems the EWP book spread far and wide with the Internet at that point in time.

The idealized chart or script above starts back with the 1932 bottom showing some dates. This gives us a potential 2017 Cycle degree wave 3 top, with a bottom by 2021 or so.  From any 4th wave bottom, we always must get a 5 wave bullish run that must also be a specific wave count. In this case, and from the Cycle degree 4th wave bottom, the EWP shows us we are supposed to get 5 waves up, in Primary degree. From 2009 to 2017 we already have 5 waves up in Intermediate degree, but the next bull market has to be one degree higher. 5 waves in Primary degree would finish Cycle degree wave 5 and terminating at a SC degree wave 3 in green, on your top right. 

Some of the last 4th waves I show with a triangle, but I think big triangles are very rare, so the chart above I turned it into a flat.

 

The chart above is presently our current picture with Cycle degree wave 3 on your top left, followed by a flat to a Cycle degree 4th wave bottom, which can also turn into a zigzag. After the Cycle degree 4th wave crash, we get a roaring bull market that could last for another 8 years, to the 2029 time period.  This is also when SC degree wave 3 will end, and another SC degree bear market will start.

We are already reading reports how the super bearish expert wave analysts are expecting a depression. Just like no depression happened in 2009, I’m sure we will not get one even with a SC degree crash after 2029.   Sure we will get recessions over and over again, but the solar cycles have trashed depressions in the past.  To get a full fledge depression, the majority of us will have no money and no job, and there would be no inflation. There would also be a big reduction in Millionaires and Billionaires in the world, as their wealth goes up in electronic smoke.

Besides that, we are not in the1930s anymore, where they had no general support. In todays world, we can send money to anybody in an instant,  via auto debt. How many pensioners get their checks as auto deposits? Our Canadian government loves to see all of us on auto deposit, as tax refunds can happen at lightning speed.

The next chart below starts where the chart above finishes.


Again,  up on your left is a green wave 3 which is Supercycle degree.  I use the same template as the only thing that changes are the degree levels. We would also be well past the 2030s going into another huge crash, as a potential flat.  SC degree Wave 1-2 from 1929-1932 sure looks like a zigzag, so SC degree wave 4 has a very good chance of being the opposite.   I think any SC or even GSC degree triangle will not happen as they seemed to be rare indeed. Besides, every 4th wave correction, we have had,  is a different degree level, so flat corrections can repeat themselves many times. I don’t mean double flats as they are extremely rare, to the point they don’t exist. 

If we don’t understand how the 5 simple charts fit together, how do we know what we are supposed to look for?  The three charts above will give you an idea what to look for, as the EWP is far easier to understand from an idealized chart perspective.  Ignoring extensions and forcing these extensions in a 5th wave will always push us into a higher degree, where we should not be.

I spent many years, counting in GSC degree and then switched down to counting in SC degree. Finally, I switched into Cycle degree in 2013.  All Cycle degree wave positions must be found first, before we will ever see any SC or GSC degree wave patterns.  This blog is dedicated in doing just that, as the EWP is far more valuable than just using it for short term trade setups.

Nasdaq E-Mini 100 Intraday Top Update.

 

The Nasdaq has soared in the last 5 weeks or so, and it sure has been a choppy ride. Even now a small zigzag has pushed the Nasdaq into record territory, but a small leg may still get added on.  The other indices are lagging behind, but there is never any guarantee  that they are all supposed to top out in perfect synchronization.

The market can wobble around at a major record high, and then surprise the majority by making a sudden dip to the downside. It just takes the smallest degree move down, and we are over into the bear market side of things.   This is also when any bad news pushes stocks down further, and any rally after a good news report  will start to die. The market would have to give us lower highs, which is the exact opposite of what happens in a big bullish phase.

This Nasdaq will also be heading to a wave 3 Cycle degree top, but until this top is locked away and in the bag, so to speak, the Cycle degree wave 3 position can’t find a secure home.

We have 3 simple choices for any corrective pattern,  and some big triangle would be the very last thing on my list to look for. A  Flat or a zigzag deserves all the attention in the next 2-3 years.  All the wave counting in the world is useless if we have no clue on what is supposed to come next, which makes the EWP just a short term trade setup analytical tool. The EWP would be far more powerful if all contrarian indicators were incorporated into the EWP, which would reduce all the crazy market calls based on wave patterns that have never been confirmed by anyone.

Sure the markets are struggling to go higher, but I  will remain bearish until we see some downside action. We are getting close to being 4 months away from the 1987 crash anniversary date, which would be part of  the 30 and a 60 year cycle, that WD Gann followers talk about.

Many may think we will get a long grinding super bear market, but remember that the 1929 crash only took 3 years to play out, even 2007 to early 2009 was much shorter.

All the gold ratios used for the Nasdaq and Apple show we are at extremes when using gold as money.  Even the Market Vane report recently hit 91% again, which I consider an extreme indicator as well.

Nasdaq Intraday Review: Soaring To Record Highs

 

Since mid April the Nasadq has gone nuts, which any sane wave analysts would label as a small 5 degree impulse wave.  The fact is that most waves are not pretty impulse waves, but they can be diagonal waves instead. Diagonals are when zigzags are connected together.  In the bigger scheme of things the 5th wave is always the weakest and only rarely the longest.  This rally has nothing to do with power or excellent fundamentals, but it has more to do about fear of being left behind. 

Yesterday the Nasdaq hit a new record high at the 5640 price level, and now sure looks like it has started another potential diagonal set of waves heading down.

It is also a good idea to take a Gold/Nasdaq ratio calculation, which sits at 4.50:1. It takes 4.50 gold ounces to buy one unit of the Nasdaq, which is the most expensive reading for all of 2017 so far.  At anytime a new record high, can be the last record high which would then knock the Nasdaq over onto the bearish side.   It only takes the smallest degree for this to happen, and then the markets are very vulnerable to bad fundamental news.  A great  fundamental reason, why stocks are going down can always be exploited with the, “Geopolitical” excuse.  Of course, they will dream up also sorts of other reasons when you give the mainstream more time.

All the bullish forecasting in the world, can turn out to be very useless, when the Greatest Fool has already bought.  The Market Vane report has hit record highs as well, so this sure chokes of any smart money left to come in. 

To say the least I have a very bearish slant, so I will look for these waves that help support that outlook. The last thing I’m looking for is any SC degree or any GSC degree wave counts.  All the Cycle degree peaks must be labeled first, and then they must hold, with a very high degree of confidence.

Imagine if we crash to a SC degree 4th wave bottom, what is the idealized wave count that we would need or that must come next?  The book tells us exactly what we need, and that pattern would be 5 waves up in Cycle degree.   All that would have to happen before we even get close to where GSC degree wave counting is required. 

Important DJIA 1929-2017 Review

 

It is always a good idea to review the entire  bull market at critical turning points.  In this case it is the DJIA, which has a good long history we can see. I have made it pretty clear that I follow the Cycle degree wave counts, which without them, we can never move into any SC degree or GSC degree positions. The chart above is in Logarithmic  or “Log” scale which shows some beautiful patterns.  The big problem is the degree we should be in, and that wave 3 is always the extended wave, with a 5th wave extension as  being more rare than a common occurrence.

I show three places,  where the wave 3 is extended, and one where the 5th wave extended dramatically. In the 1950’s it was wave 3 in Intermediate degree that was extended pushing wave 1-2 in Primary degree into the 1970’s. The majority of expert wave analysts do not extend wave 3,  as they called the 1929 peak  a wave 3 in SC degree.  1929-1932 fits far better as a wave 1-2 in SC degree. Right in the middle of a depression the historic bull market began. This ended up with the markets basically ignoring all fundamentals and proceeded to soar into a super bull market.  The crash from 2007 to the 2009 bottom looks identical to the 1932 decline, but it was 2  degrees lower.  Many have the 1970’s as a sideways Cycle degree wave 4 which basically extends all 5th wave in the process.

Sure the 70’s looked like a sideways pattern, but looks are deceiving. There is no rule that says we can’t have an expanded flat in a wave 1-2 position,  as I see them on a smaller scale many times. Wave 2 in Primary degree ended in early December 1974, which was followed by another 1-2 wave in Intermediate degree which contained a running flat. (Red). Then again, after wave 1-2  with Intermediate degree, we had the third 1-2 wave but in Minor degree.  It was the 5th wave in Minor degree (blue)  that extended dramatically after the 1987 stock market crash.  The only time since the 1932 bottom that a 5th wave extended.

Sure, I was in the same trap  as I counted everything just like the majority have been doing. This will never work as the majority can never be right!  If we look back, we can see that 1977 contained a corrective move, followed by another 1987 corrective move. The years ending in 7  and corrective moves are still not finished as 2007  was followed by a crash as well.  Now we are in 2017, so if the theme stays true, we could see another corrective move but in Cycle degree.

 

This chart is in linear scale which displays the stock mania very well. Since 2013 I have abandoned the idea that we were on a big bearish “B” wave, until I realized I can’t have the same wave count as the majority had at the time.  Any 5th wave can contain an ending diagonal, but that is not the case this time.

A choppy bull market acts  like a diagonal which can happen in “Any” 5th wave. They are zigzags joined together with flats or any complex correction in the “B” wave positions which on the chart above,  I did label it the way it should be labeled.   When we look at the charts in this bigger scale, we can see the  wild spikes to the downside in early 2009, now followed in early 2017 with  a massive spike to the upside which also contained another zigzag.  Vertical moves like this can never be maintained, so it is just a matter of time before it reverses.

The majority of wave analysts that are already in SC or GSC degree, will never agree that we may be at a Cycle degree top, but that no longer surprises me anymore. I’m sure the 2002 bottom and the 2009 bottom is pointing a Megaphone pattern to 5000. The problem with that is, there is nothing down at DJIA 5000, nor is there any previous support at 3000 or even at 1000.  These numbers are all pulled out of a magician’s hat,  as they have no logical reason to exist.

I think in the bigger picture, this impending Cycle degree 4th wave will fool us by falling short of any 2009 bottom (6500)and roar up again in another 5-8 year bull market.  This will leave all wave counters empty handed again waiting for that horrible depression we have been hearing about.  I doubt very much that any 4th wave correction in Cycle degree,  will bring any depression at all. These major ugly forecasts are based on wave counts that have never been confirmed by anyone. From the idealized charts we can figure out exactly what degree positions we need to confirm any wave count.

Elliott wave has nothing to do with what we see in the real world charts, but it has to do with well drawn out idealized charts. In any impending correction, we always can have a choice of three simple patterns, with the triangle being very low on my list. Matter of fact, there were no triangles in the entire 1932-2017 bull markets, so I doubt very much that we are going to face some mega years in a SC or GSC degree.

These super long time periods they use,  are pretty useless as they are more like scare tactics to sell more subscriptions and books.  If a wave 4 in SC degree can only take 3 years, we sure are not going to get 600 year bear market in stocks.  Hell,  the next ice age will come before the next GSC degree bear market arrives.

Since the 1987 crash we had 5 waves up in Minute degree, then from about 2002 to 2007, we had 5 waves up in Minor degree followed from the 2009 bottom with 5 diagonal waves up in Intermediate degree. Each 5 wave sequence jumps by one degree, so we know what 5 wave sequence we should get in the next bullish phase, during the rise of solar cycle #25.  None of my readers have figured this out yet,  even though I have talked about it many times.

 

DJIA 2000-2017 Cycle Degree Review: With Supercycle And Grand Supercycle Degree Commentary!

I spent many years learning how to count by following all the other wave analysts who were counting wave structures in Grand Supercycle degree (GSC) and in Supercycle degree. (SC) SC degree always comes before GSC degree, and Cycle degree comes before SC degree.  The waves we see in the real world are the simple, easy waves that any wave analyst can count and label with little trouble.

The EWP is a very subjective look at the markets from a GSC degree perspective, and all the practitioners that bought the EWP book have been taught to look at the markets much the same way. After many market failures, and missed bull markets,  I decided to knock down all the degree levels by one degree, which at that time moved everything into the SC degree world.

Things started to make more sense but still it was not good enough, because I always had too many degrees left. It also never matched anything that the contrarians were already doing.  This became very obvious after the 2002 and 2009 bottoms, as the experts still had very bearish wave counts at that time, while all the contrarian indicators were telling us otherwise.  In hindsight, most wave counters were working 5 waves down in Primary degree in 2002 and 2008, yet both of these wave counts failed dramatically.

The EWP is not about what you see and what we think we can see in the markets, the EWP is all about how we visualize and draw out the 5 simple patterns, and knowing how they fit together sequentially.

To understand the EWP from my perspective, I see the EWP as one big impulse wave, with all wave three positions being the longest waves. This one big wave structure started with a wave zero, after the ice age was ending, about 13,000 years ago or about 11,000 BC.

This is a pretty specific time period, and it is when the CO2 content in the earths atmosphere, crossed above 240 parts per million.  It is when plant life started to grow dramatically and agriculture started to spread around the world. Better farming methods, warmer climates and higher CO2 content in our atmosphere help support commercial farming, which was the only way that city states or empires could grow.  

All the big civilizations grew during a high degree wave one position, with periods of  (Global warming). Civilizations, then died or were cut down during the big wave 2 declines, which coincided with periods of  (Global cooling)  Submillennium wave two can fit into the Dark Ages very well after which GSC degree wave one also formed in the 1800’s  This massive singe impulse wave structure is based all on the waves starting with a 1-2 count.

In other words, Elliott Wave 5.0 is based on all waves coming from a wave 2 base with extended wave 3s, and is “NEVER” based on the 5th wave as being the longest.  Yet, when we look at all the expert wave counts out today, most of them are based on the 5th wave as being the longest wave.  The worst of these came after the 1929 peak,  as they were all convinced that the 1929 peak was in fact a wave 3 in SC degree.

I fell into the same trap and it took me a long time before I changed 1929 to a wave 1 position in SC degree, which made 1932 a wave 2 bottom. 1932 is the start of wave zero in Cycle degree, from which another 1-2, 1-2, and 1-2 base started from. In the 1950’s it was wave 3 in Intermediate degree that was extended, pushing wave 1 in Primary degree to the 1960’s and 70s. It is also one main reason why the 2007-2009 decline contained no expanded pattern.

 

 

One huge single impulse wave structure eventually gets to the half way point,  which is when it hits a Minor degree wave one in a Primary degree wave 3 impulse.  If the 2000 peak is too high of a degree, then we know that the past wave 3 has not been extended.  I can dream up virtually any wave count you would like, and the higher the degree the more impressive it may sound. The sad fact is, that what you see are actually much smaller degree levels.  Big and tall,  does not make them higher degree levels, as it is the smaller degrees that become visible when markets extend. 

With wave two bases, eventually only the waves 3-4-5 are left to play out which is the situation in the DOW chart above.  Intermediate degree wave 3 in red peaked in 2000, followed with the wave 4 bottom, and the wave 5 peak in 2007.  The 5th wave subdivided into 5 waves as it should, and in this case must be 5 waves up in Minor degree.  This theme will repeat itself over and over again growing by one degree each time.  This will be important to understand as any 5 waves after the Cycle degree 4th wave bottom, must follow in sequence as well. In other words, we must get 5 waves up in Primary degree, to keep everything in sequence, which will eventually terminate at wave 3 in SC degree.

SC degree wave 3 may take until 2029, before it gets close to finishing.  After the SC degree wave 3 tops, and then the SC degree 4th wave bottoms, what is the wave pattern we must have, before we reach any GSC degree position?  We must get another 5 wave sequence, which must be 5 waves up in Cycle degree.  At this rate any GSC degree top may still be a 100 years away.

As I have mentioned many times,  I hunt and track the 5 waves in Cycle degree, as it precedes all SC and GSC degree wave patterns. Without all the Cycle degree peaks being found, no SC or GSC degree can have a base to build from.  All SC or GSC degree price forecasts mean “nothing” in a Cycle degree world, so the next time you hear DOW 5000 or DOW 3000 being mentioned, chances are good you will be left out of the markets holding a bag of wooden nickels. 

 That 2009 failure to forecast a super bull market should never have happened, as any failure of this type of wave counting is not an EWP problem, but it’s a human problem.  The failure to go back in time and fix any non extended wave structures, must be initiated as soon as any large degree wave structure fails.

Of course, that’s too much like work, as it is easier to cosmetically change any wave position, rather than going back a 100 years, and change the basic structure. 

 

The above template is specifically meant for a Cycle degree flat correction,  followed by 5 waves up, with an extended wave three.  2017 may give us the Cycle degree wave three top, so the readers to this blog will need this template for the next few decades. With a few changes like a potential zigzag, this same template can work for the Intermediate degree wave 3 peak in 2000. Change it again to Primary degree, and this template will work for wave 3-4-5 from the 2007 peak as well.  The corrections will be alternated and may be a very fast moving zigzag and not a flat. The idea with any template is to build, and get all the degree levels and their wave counts memorized,  so we never have to look into the book again.

The EWP book only shows us nice pretty waves all the same size, which never happens in the real world. Waves are never even and they are never always impulse waves.  Diagonal waves are a big part of any wave structure, but most wave analysts just ignore them and turn everything into impulse waves. 

If I dig pretty deep into my inventory of templates and idealized patterns, I’m sure I have a SC degree wave 3 all drawn out already. Of course, all the wave counts will end, or even disappear once we enter another ice age. 

Mini Sp500 Intraday Post April Fool’s Day, Crash Review

 

Slowly the Cycle degree peak at the top left will fade away with these intraday charts. In the big scope of things we must never lose sight of  this Cycle degree peak or forget the bullish mood it created. After an 8 year bull market it is easy to forget all about the 2009 bottom,  and get caught up in the bullshit hype that stocks are still in some super degree, move with lots more upside to go.

Just like around March 2009 when the bear market ended, we now have an extreme top in early March,  that may have been the end of a Cycle degree wave III, bull market.   This morning stocks took another hit on the chin and it looks like it would be an ordinary correction due to the long looking spike today.  The problem is that diagonals act exactly this way, as zigzags are linked together  making us believe that a correction is in progress. 

If no correction is due then this decline must get completely retraced confirming all we had were false rallies. There are also big differences between the DJIA and the SP500 wave patterns so this can fool us,  if we only stick to one index. 

At this time we could be in the first part of a single zigzag but in Intermediate degree. A potential Cycle degree 4th wave correction in the shape of a flat would be nice, but it is never guaranteed or perfectly “Clear”.  What has to be clear is the idealized wave pattern, where it spells out what type of patterns we are supposed to get, if our wave count is accurate. 

In the next month we should see this market break new lows by a wide margin, as we could be approaching a bottom to a wave 1 in Minor degree.  Of course, there will be diagonal waves that will do everything in their power to screw up any wave count, so that always gives us the potential for unexpected surprise moves. The worst can be that we are brainwashed by the simple impulse wave patterns and  we ignore all the  connecting zigzags.  Impulse and diagonals are two different patterns as the EWP book shows. In the book they call it an ending diagonal in a 5th wave position. If any 5th wave can produce a diagonal of any type then they can happen in any 5th wave, at all degree levels.  Stretching that ending diagonal  just makes it another choppy 5th wave, but it also gives us a big hint as to where we are. 

The markets will change fast, where long drawn out explanations will not last long. 

Mini DJIA, Friday, March, 31, 2017 Intraday Review

 

 

Not much has changed, but there may be the odd chance that one more last spike to the upside can happen. We could be looking at a 4th wave top and if that is the case, then another leg down should happen.  Any 5th wave decline, especially if they are diagonals, can extend dramatically. It should end with another completed zigzag of some type, after which we should end on wave 1 in Minor degree. Wave two up in Minor degree will give us another strong rally, and I would expect gold to take another hit as well.  

This may all still be weeks away, but I try to describe it the best way I can.  Not too many traders will be able to ride out a Minor degree counter rally so I would expect some panic in and out of any short positions.  The stock market is in direct competition with gold, so I would expect gold to react down when stocks are expecting a strong counter rally.  

Nasdaq 100 Intraday New Record Highs!

 

It never fails that the Nasdaq can pull the dirty tricks and end up soaring to new record extremes. T=One thing is certain and that is the Nasdaq crossed to any new record highs via a 3 wave pattern. Not some mythical set of 5 waves, but one set of 5 wave sequences is included. Yes, these wave counts could be in a lower degree as well, but the pattern still looks like an ending diagonal.

Since the Nasdaq created a new high, this would also move any Cycle degree wave 3 to a new location. The 5450 price level is the highest so far, but I think that will get beat by the end of the day, if not sooner. 

Mini DJIA Intraday Bearish Review

 

The markets gave us a rally alright, but now has started to roll over. There still may be a surprise bullish move left, but if we still have a Minute degree wave 4 and 5 ahead of us, then we should see new record lows again. I want to stress that all the wave patterns we have seen starting from the Cycle degree top have been diagonally wave structures. Diagonals are connected together with zigzags and the only true impulse waves are rather small and very rare.  I think diagonals should be identified as such, because they help to confirm location. Location!, Location!, Location!, is the name of the game with the EWP, and diagonals are one of the best in helping to figure out where in the hell we are in the bigger sequence. 

You have to have a sense of humor when looking for waves, as it is so easy to get distracted and find ourselves in a higher degree, that we shouldn’t be in. The one place that diagonals appear most frequently is in any 5th wave position, and at any degree level. I always try to label any diagonal as, (ABC1, ABC2, ABC3, ABC4, and ABC5). This cannot always be done, as room to show them is not always available, so I mention it as much as possible.

Right now the Minute degree diagonal is still a good choice for the start to Cycle degree wave IV, and sooner or later we could run into wave 1 in Minor degree.  Markets are making a comeback as I post, so another high can also happen. In the long run this bearish phase is alive and well, and Cycle degree wave 3 should hold. 

To give us a better understanding how powerful diagonals can be in helping to determine location, we have and look at the bull market from March 2009 to March 2017.  This great bull market was so choppy that virtually every expert wave analysts, counted out corrective waves. They got fooled not  just for a few months, but for many years. I was also a sucker for a few years, until I realized that bear market rallies are far more violent and choppier than what the markets were giving us.  Once we accept this,  then we know we have a very high chance that a 5th wave was in progress.

 Of course, if we don’t have the degree right of what the 2009-2017 bull market was, makes what I post pretty irrelevant.  Technically speaking, the bull market from the March 2009 bottom to the March 2017 top, is one move. One move divided into 5 diagonal waves in Intermediate degree.  This gives us a very good idea for a base, to figure out where we are. I use the idealized visual drawings to help with this, as it is all a constant process of elimination.  

Mindlessly counting away,  just making electron sized wave counts, is not my idea of having fun. Especially if we keep missing the big bull markets.  

SP500, 1980-2017 Cycle Degree Elliott Wave Review

 

I think it is very important to always review all the wave positions, to make sure they still fit into the idealized sequences. Even expert wave analysts do not do this as most of them practice cosmetic wave counting. Structural and cosmetic wave counting is completely different from each other,  as one just covers up a wrong wave count by making a few changes, while structural wave counting tries to find the root cause.

For well over a decade, I was a cosmetic wave analyst as well, as I chased GSC and SC degree wave positions. None of them worked to my satisfaction until I changed the basic structure of the impulse and applied the wave count,  with wave 3 being the longest. This is exactly what the little blue book says happens in the stock market, as any wave 3 should “NEVER” be the shortest. In fact, it is wave 3 were all the extensions take place.  Until we get to the final last degree, when the 5th wave can extend. 

Since the 1932 bottom the majority of all wave analysts counted the 5th wave as the extended wave. The waves we see in the real world,  are the easy waves which develop to fool all the wave analysts that think wave analysis is just a simple matter of making numbers and letters.  How many times have we heard about wave analysts giving us instructions about simple trade setups?   Simple trade setups are just that, but if we are brainwashed with a simple trade type of a mentality, then we will never catch any major bottom before a major bull market.   Wave analysis has had two major failures since the 2000 top as both times the majority of wave analysts thought it would go much lower, but in fact it turned and soared the opposite way. This is not a failure of the EWP, but a failure of subjective thinking. 

I was following Steven Jon Kaplan and he was hitting tops and bottoms far better than all other wave analysts combined,  and I knew I had to incorporate what he sees into the EWP. 

In late 2008 he already talked about the, “Biggest bull market since the depression” while the wave analysts were still playing around with a massive bear market drawing simple  numbers and letters. The modern age of the EWP, started after 2000, is a subjective look at the markets. The EWP book makes no effort into how to figure out if our degrees, we are using are wrong. By using well drawn and well thought out idealized charts, it is easier to figure out what degree and patterns we need to make the sequences complete.

This is all specific to the degree, but if we have no clue where one stops and another degree starts then we can make all the numbers and letters we want, and they will have little meaning.  

I realized that that the pre 1980’s was actually the start of wave 1-2 in Primary degree with an expanded flat,  and what followed was another massive wave 3 extension in Primary degree. When I started to look at it from this perspective, then I realize all my SC and GSC wave counts were built from something that had no proper base. It was not until I abandoned all GSC degrees and then all SC degree wave counts, that I realized Cycle degree was a much better fit. Minute degree levels are not labeled in, but in general we need to see a minimum of 3 sets of 1-2 wave counts,  so we make sure that wave 3 is extended. Wave 1 is never the longest and if you think we see one, then chances are good it is part of an “A” wave. 

Yes, the 5 waves up to the 2007 peak is short, but wave 1 and 3 were about even. Only two sets of waves in the same degree can extend at the same time. The market crash from the 2007 peak ending in March 2009,  was an “ABC” zigzag crash, which I thought would produce at least an 80% counter rally. Yet, all expert wave analysts didn’t see it that way as they all saw the market crash much lower,  when they painted us a wave 1 in Primary degree. 

When I saw this happening, I realized this is one of the worst blunders in wave analysis I have ever seen. Every major blunder, if treated like an accident, should instantly kick in a major review. Every major accident always has an accident investigation team sent in, to find out the real cause. This is done so it can never happen again. 

That’s all too much like work to find the root cause of a major failed wave count, besides, it’s a real blow to the ego as well.  Going back 100 years or so is far too much like work. It’s far easier to make cosmetic changes to keep the simple trade setup wave positions alive.  

There were many indicators in late 2008 and early 2009 that the bearish crash was coming to a major end and I have already covered most of them in many previous updates.  From this great 2009 bottom the markets have sent us a clear vision of a massive 8 year bull market that the majority of  wave analysts counted as a big bear market rally. By 2013 I was convinced that this really fits much better as a diagonal 5th wave or a bad impulse wave, than it ever fits into a bigger corrective pattern.  By 2011 the stock mania started, as gold and gold stocks imploded in a predictable fashion.  The general stock market will always compete with gold investments, as history clearly shows. These swings will happen many more times so we have to be prepared for that. 

As a potential wave 3 top in Cycle degree the Gold/SP500 ratio is about 1.88,  which means that it takes 1.88 gold ounces to buy one unit of the SP500.  I have one reading that shows 2 ounces as being very expensive and (.75) of a gold ounce as being cheap. These numbers will move at a snail’s pace, and I need to do a few more extreme calculations, but I’m sure we will see the SP500 fall well below the 1 ounce price level again. 

In any impending Cycle degree wave 4 bottom, this market does “NOT”  have to fall below 2009 price levels.  So many will be expecting for it to do just that, but I have faith in the markets to never do what the majority expects.  It will never go down in a straight line as that would be too simple, and if it stops dead at 800,  it will not surprise me at all. Even if the SP500 eventually travels well below this 800 number it will not destroy the Cycle degree 4th wave count in any way. Price never confirms a wave count, but the pattern does. 

For the rest of the year any bearish mood should intensify, so be prepared for anything

 

Mini SP500 Intraday Bear Market Review

 

Most of all the intraday charts I set at 90 minutes or smaller with 500 bars as a guideline. This is so the charts are very consistent in size and spacing, also when I print them, they print out to the edges on 8×10 paper. Right now this is a 45 minute scale just barely keeping the Cycle degree wave III in sight up on our left side. 

We had a nice surprise little rally this morning and we may not be finished just yet.  This wave count is all about a potential diagonal eventually heading down to the first wave 1 in Minor degree.  It sure looks like we have an alternating set of 5 waves, which is very normal for a zigzag.

Not much else to really report as sometimes these markets can be as boring as watching paint dry. The Nasdaq is definitely on a different pattern,  which keeps its record of marching to a different drummer intacked.  Buying on any dip this early in the bear market is pure folly, as this bear market will be much bigger than the majority expect.  The only time I will turn bullish is when we are close to finishing the “A” wave in Primary degree. 

At this pace that could take the rest of the year to achieve. At this time I’m looking for a leading zigzag in Intermediate degree which would have a 5-3-5 count. Two sets of 5 waves in minor degree and one set of three waves for the “B” wave in Intermediate degree.  I’m sure there will be many adjustments along the way as those expanded patterns can really throw a monkey wrench into any wave count. 

I saw a wave count from the 2015 bottom and all he could do is make Impulse waves., and ignored all other connecting zigzags. He is working a Minor degree crash so by his wave count this bull market is not finished, and he has it ends in a Cycle degree wave 5.  Cosmetic wave counting is not my style and I try to avoid it as much as possible. 

Mini SP500 Intraday Crash Review

 

 

The crash today should start to wake some of the permabulls up, and give them pause as they fret about how deep this bear market can go.  I will work it as a bad impulse for now, as the last rally peak is now confirmed as being a bearish rally. Complete retracement helps to confirm the inverted pattern.  A very steep drop can happen in a bull market as well, but in potentially diagonal declines waves they can do the same thing. 

Otherwise, this can be mistaken for one single zigzag crash. I don’t think this is the case but, I like to keep my options open.

Mr Steven Jon Kaplan has already Tweeted, in what he expects from the impending bear market, and we are not that far apart, in price or time. At this time the markets are still heading down, so any wave three type bottom, may still be some time away.  

It may take until the counter waves are much bigger before, I can where the zigzags are connected, but ultimately we want to catch the “A” wave bottom in Primary degree. It may take an Intermediate degree zigzag to get there.  

On the bearish side, we could see huge drops that defy logic, but confirm that gravity is a real science.  Somewhere down the line the public may scream “Black Monday” or any day of the week, which may actually be the end of  the “A” wave bear market. 

We still have a long way to go, so surprises can jump out at us at any time.   All the traders betting this market to go down, will be leaving “buy” stops above all present prices. We can see many of the sell stops got hit in a domino fashion, producing the straight down move we had today. 

Mini DJIA Intraday Crash Review

 

 

A very nice little market crash this morning. A new low  after the previous rally, helps to confirm it was an inverted move, which now has been completely retraced. 

Don’t get fooled with the fast downward move, as this will be typical in any declining diagonal. In this case I kept the rally top as a “B” wave top, but we have to stay open minded,  that it can work as a diagonal wave 1-2 as well.   We are just off record highs since early March, so we don’t want to start off with too high of a set,  of degrees. The largest degree is Minuette degree, which can easily be adjusted later on.  In the long run a Cycle degree 4th wave bear market is our future, which may be a flat. For a flat to be real we have to expect a potential zigzag leading down to the Primary degree “A” wave. 

It sure will not be one of these perfect zigzags we see in the book,  as we are guaranteed that the markets will always alternate. Very rarely does the same pattern repeat itself. This is so that all the wave analysts have to work their asses off to even get close.  Easy wave counts rarely happen,  as the market produces them for the lazy wave counters.

Just for starters, this market should completely retrace all of the Trump bull market, which started at about the 17,500 price level. Ultimately, it should also retrace the entire stock mania move,  which started in 2011 at the 10,500 price level. Somewhere between the two sets of numbers we may find the “A” wave in Primary degree.  We are looking 2-3 years down the idealized script, and there is a very strong probability, that all the markets will “NOT” exceed the 2009 bottom. 

I’m sure many of the expert wave analysts will not see a Cycle degree wave 4 bottom when it happens, as they will still be chasing SC and GSC degree wave counts.  Many might be pushing for the DOW to go to 3000, or even 1000. There is nothing down there, that will give us any support.  These two numbers are picked out of thin air, and have no meaning to any Cycle degree bottom. Having a wave count in sympathy with the crowd will never work when the majority, is pessimistic already. Ignoring crowd psychology is a huge mistake, when we do Elliott Wave analysis. 

Nasdaq Intraday New Record High Review

 

 

The Nasdaq always seems to want to march  to a different drummer.  This morning the Nasdaq pushed past the 5440 price level one more time, creating what may turn into a double top.  So far the Nasdaq created one more point higher so technically it’s not a double top anymore.  I would love to see another reversal at this time, but that may be asking too much. 

Most of the wave patterns you see are diagonals, even a potential ending diagonal if we are really lucky.  I may use many emotional words, but that just goes to show I’m still human and not some AI controlled robot.  🙂 

Not much else to add but as you may have guessed by now, I have a very bearish outlook for the next several years or so. How long the stock bear market will last is up for debate, but It may take more time than the 2002 crash and also the 2007-2009 crash.  Yes the Nasadq sure has a different pattern, but the total time could match the other 3 indices. Markets don’t have to be longer the higher the degree, as history has proven that point very clearly.  Just look at 1929-1932,  and then 1937 and 1942.  The Higher degree crash only took 3 years, while the lower degree crash took 5 years. 

Mini DJIA Intraday Update

 

The DJIA is a bit more synchronized with the SP500 this morning, so hopefully this will continue at least in the short term. We are looking at one of the most extreme bull markets in history, pushing prices to record highs. The potential for the Cycle degree wave three to hang around forever is present, but we are rolling around record highs which can always present a problem. A mad dash to close out buy stops above present prices can always fuel another short term rally.

Sooner or later,  the bulls are going to get tired of this and not show up to this stock mania party anymore.  The people normally selling, would overwhelm the buyers and next thing you know,  all the sell stops at lower prices will get triggered. Just like the Mini Sp500, we want to see all of the three March price bottoms, to not give any support for very long.  At a minimum I would say the markets have to retrace the entire Trump rally, and then set its sights on retracing the entire stock mania which started in 2011. This makes it about the 10,500 price level, which I don’t think is nearly enough for a Cycle degree wave 4 bottom.

I can not remain bullish by any stretch of the imagination, but only time can give us more clues to what gets confirmed.

Nasdaq 2000-2017 Elliott Wave Count Review

I’m sure we can find places of contention in the above wave count, especially from the 2000 peak to the 2002 bottom. By all means this decline can be counted out as a fairly good declining impulse.  Easy wave counts are for suckers as the markets will always send us some easy wave counts. The easy wave counts are the traps, making us think we found the next best thing, since sliced bread! 

I have looked at the 2000 peak as an expanded flat, but then the rest of the waves will not fit very well. I can work the decline as a double zigzag, followed by a “D” wave bull market, to the 2007 peak. Another 3 wave crash into the depths of 2009, which did not go to new lows.  What are we going to do with that odd ball 2008-2009 crash?  I use it as a running triangle “E” wave, and from that  2009 bottom, the Nasdaq blasted into an 8 year bull market.

It formed closer to a good impulse than any other market I keep wave positions on, as this wave count is also relatively zigzag free. 

The majority of wave analysts had the most bearish wave counts at the 2009 bottom, but yet the markets soared beyond anything imaginable in  2009. They tried the exact same wave count in 2000-2002 and that bear market also failed. I’m sure nothing will change the next time, when we arrive at another major bearish bottom.

This market is one of the most hyped up markets we have seen in a very long time, and my bet is that it will be a Cycle degree wave 3 top, and not some SC or GSC degree related pattern. 

To stay within a certain degree level you have to count out all the idealized wave structures, as  you would need them to help us to confirm our location. The difference between an Intermediate degree set of 5 waves, and a Primary degree set is huge, (. 618) or 60% as it is the cutoff point between two different worlds.  Being out by 60% between degree levels is not my idea of having fun wave counting. 

The Nasdaq is at record highs, which makes it still vulnerable to a surprise bull attack. It may still take this month before we find out for sure, but the writing is on the wall.

Updated March, 18, 2017

 

 

I thought I would add another version of the Nasdaq in Linear scale. Linear scale shows the stock bubble in a more dramatic fashion. I believe that the 2009 to 2017 stock bull market showed more of a pure impulse than any other wave pattern I have been working. The only way this will work at this time, is that the bear market from 2000 to 2009 ended with  a running triangle.  As of March 2017 we can be very close to another major top  that would give us a Cycle degree bear market.  I looked over the COT reports, and it looks like the commercial traders have net short positions, with most of the indices, I keep wave positions on.  These are bearish indicators, besides the Market Vane Bullish Consensis Report, is coming off fresh record highs as well.

At this time it is far too early to give an accurate, Cycle degree 4th wave bottom price target, as we don’t know if a zigzag or a flat is going to happen. If the early declines look like a set of 5 waves, then this could work as part of the leading zigzag to a flat. 3-3-5. My least favorite bear market pattern would be a triangle, as we would not have enough time, to complete a triangle by 2020, or even in the next 3-4 years.

By that 2020 time frame, solar cycle #25 is going to trash every bearish mood and every bearish fundamentals we can dream up. Especially all high degree bearish wave counts. 

Any Cycle degree 4th wave bottom does “NOT” have to fall below the 2009 lows, but can stop well short of that bottom as well.  I can imagine all the expert wave analysts calling for the markets to go much lower when in fact, they should be accumulating major bullish positions.  Just like the 2009 bottom, the contrarians have figured this out a long time ago, while the wave counters were still dicking around, making a bunch of mindless numbers and letters. 

The EWP is a very powerful analytical tool, but very inefficient if we ignore all the sentiment and ratio readings.