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ElliottWave5.com - Gateway To Cycle Degree Elliott Wave Analysis

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Thanks For The Blog Support!

I would like to thank all the new readers and those that have followed me for the last two years. In the last few months the blog hits have exploded! Most of the time 400-500 hits a day were pretty normal, but last night this number hit another record where we were just shy of 4000 hits, in one 24 hour period. 40,000 hits have already been registered for this month and we still have about 10 days to go. 47,000 hits in a month, has been my all time record high from all the blogs I ever had.

We could be on target for 60,000 hits for the month of April 2018. In two years this blog has registered 600,000 hits, which every reader deserves a pat on the back for helping to achieve this record number.   

Donations are always welcome as there are constant yearly costs of keeping this blog running. I have several PayPal links up, but visitors can also donate with on line directdepost Interac e-Transfers  Canadian funds. 

You can also send in donations via the Goldmoney System. 

Thanks Again

“BB”

 

Hits: 4

ZGD: BMO Equal Weight Global Gold Index ETF

This ZGD is a fairly new addition to Canadian ETFs, which is a bit over 5 years old. The invisible wave count previous to 2013 can be used from any other Canadian ETFs with some differences. It’s an equal weight ETF  and will produce different wave patterns, but in general they will react the same as most other ETFs.  I show Minor and Intermediate degree tops and bottoms with the Minor degree 5th wave being a diagonal. ZGD made its bottom in mid 2015 long before any other gold stock related ETFs did. Again, I could be wrong on this, but I have to call them the way I see it, even if it means missing out on the next leg.

I hate to miss out any any bullish phase, so this is a tough call.

Any price action “after” the 2015 bottom belongs to the bullish side as a potential expanded counter corrective move. The 2016 rally is what I call a “C” wave bullish phase, which peaked suddenly in mid 2016. $14.50 CAD seems to be the peak after which all gold stock related ETFs start a grinding bearish phase, with parts of it fitting into a falling wedge. Falling wedges are very bullish indeed, but any wedge can fool us, especially if it is a fairly small one.

ZGD is now poised to do one of two things, blast up, or keep falling! “It’s now or never”,  as I like to say. All ZGD needs to do is decline just a fraction below the 2015 low, and then this market will have confirmed, that a “complete”retracemet, has taken place.  In short, we may find out the hard way what a fake bull market can do. Way back at the 2013 lows we can see a gentle sloping decline between 4 points. This is a bullish pattern as the markets are starting to bunch up.

I only have one Gold/ZGD ratio from today, and it’s sitting at 146:1. I may get an expensive ratio reading from the Mid 2016 peak, but that still requires more homework.

Chances are good I will update this ZGD more frequently as it deserves far more attention at this critical stage.

With most gold stocks pointing down and gold pointing up, many analysts say that gold stocks will catch up! I don’t believe in this “catch up myth” as they were saying the same thing at the 2011 peak and it didn’t work.

Hits: 2

Bitcoin Update: X Marks The Spot!

This is the cash chart which only gets updated during the day. (BGY00) It also produces different wave patterns that are not the same as the actual April contract. The next available contract month is May and it has so little interest that it’s not worth posting.  I tried something different this time as I applied a custom moving average as 25 day and 100 day averages. This produces a quicker “Death Cross” or “Golden Cross”. We just had a golden cross just a few days from the unknown bottom, which is marketed “X”. Jokingly, “X” = “I don’t have a clue”. In this case X marks the spot to the start of a new wave count.

So far it works as a diagonal, but a pretty clean one I label with a 5 wave run in Minuette degree. There still is upside left, but we start running into resistance again at the $9000 price level, with the big resistance line at just below the $12,000 price level.  Sure, volume in the entire Crpto world has improved dramatically, but it can also be the smart money selling to the gullable dumb money.

The bearish history of Bitcoins is relatively short, and if the bigger trend is still down, then this run must end. This would only be one move, but we need three moves  to help confirm a bear market rally.   We do have  a huge double bottom from the February bottom,  and if you like, we can even draw a falling wedge. If this wedge means anything I would be surprised.

The total Crypto market cap has improved by about $100 billion, but still down close to $500 billion since the peak of the good times in December 2017.

We are getting close to finishing a 4 month bearish phase that the majority thinks is  just a correction in a bull market. Bear markets and even bear market rallies are not over in a few short months but can last many years.

My Bitcoin updates will be once a week unless I see some potential dramatic move being setup.

Hits: 3

SP500 Intraday Gyrations Update.

Since the January top it looks like a nice 5 wave decline, but it has not been flowing as nicely as I expect, from a 5 wave decline in Minor degree.  The DOW and the Nasdaq have both created wave peaks that just do not fit into the bigger picture very well. I did go back to the 2016 peak where the wave 1-2 in Minor degree sits, so instead of a Cycle degree peak it could be a Minor degree peak. The bottom trend line from wave two, can now fit with the bottom in early April.  Right now the markets are in a decline and it will be critical to see if it turns again and creates yet another higher high.

Any 5th wave can form a diagonal wave pattern so this could get very choppy in the short term.  Any new record lows will kill this wave count, but I have to run this wave count to eliminate it.  We are in a decline, but the SP500 could turn into a correction, and a mini bear trap.  Any dip below the diagonal wave 2, would also kill this bullish wave count, so many things can go wrong in a short period of time.

Hits: 3

Crude Oil Intraday Bearish Review

Yesterday, crude oil peaked with a small double top after which oil immediately reversed its trend and now looks like a new trend is forming.  Since my top could be a 4th wave top in intermediate degree. I know that my largest degree of this decline must only be Minor degree, so I sure do not want to start with a a degree far too high.  One 5 wave sequence in Micro degree has already started with two lower degrees also visible. I have used Miniscule degree which is the bottom from my list of 15 degree levels. I will adjust my degree levels once this decline starts to show its true colors.

It is also a good idea to look for bear traps at the earliest moments but that might happen when all the patterns start to get super choppy. We need more evidence that this move is part of a bigger bearish run, and until then we have to be aware that we can always be wrong.  The longer it takes for any new highs  to be reached again, the better I like.

The oil bullish peak came within 45 cents of the $70 price forecast, but that forecast is an easy call if we were at $65 already. As I post, this chart has already dipped much lower, but in the end only time will help how this progresses.

The Gold/Oil ratio has compressed a bit more which means crude is still hitting the ratio brick wall. The Gold/Oil ratio is at 19.71:1, but it’s supposed to go the other way. In relation to the last 3 month Gold/Oil ratio average this makes oil more expensive.

Hits: 2

Canadian Dollar Daily Chart Update

Since last August, 2017 our Canadian dollar has gone wild, with swings up followed by dramatic declines. As soon as our dollar went higher than the previous little bump, the bearish scenario was trashed at least temporary.  This can work as an expanded triangle and it looks big compared to any wave 1-2 that I have.

From the “D” wave top to the “E” wave bottom we only have a 7-wave count which works as a zigzag very well.  Any triangle pattern that we may have must not break below my 4th wave position because if it does, then chances are good my diagonal scenario gets reused. Market action has not forced me to change the bigger degree positions, but this little rally is either going to blow past the top trend line, or it will fail.

I have high confidence with my 4th wave scenario, but some of  the smaller moves  sure test my patience. Many times the CAD has also turned around close to months end, so it could take until May before this rally gets resolved.

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GDXJ, Gold Stock Bull Trap?

The start of the bull market in early 2016, soared with small subdivisions This bullish phase ended in mid 2016 at about the $50 price level before GDXJ started to turn down again. For just about 2 years, GDXJ has been grinding sideways for far too long in a bullish correction. A horizontal wedge has also formed which compounds and confuses the next potential move. If we look at it from a bearish point of view, then it’s an easy guess, otherwise it can soar out of this wedge just as easily.

Even now the Gold/GDXJ ratio is hitting a break wall with todays reading at 39.8:1 which makes GDXJ a bit more expensive. This ratio should spread, as any decline intensifies. I have 62:1 as my cheap ratio, but we may never hit that again for a very long time.

Most of the gold stock related ETFs also have this sideways wedge,  so it’s not just some isolated pattern.  The well heeled gold stock contrarians who have very deep pockets will just be buying more, but for a new player this decline would hit them hard.

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Silver Daily Chart Update: Bull Trap?

This is a daily chart but I have increased the bar count from a normal 500 to 1500 which stretches this daily chart. This way the top wave 2 in Intermediate degree is showing.  Silver is not even close to looking like gold and I don’t think it is going to catch up. Catching up rarely happens as silver works much better as a leading indicator to what gold is going to do.

Since the 2016 peak, silver has executed a grinding bear market, which does work as a triangle in a “B” wave. Silver also has a wedge that is horizontal, further compounding the forecast in which way silver can go.  We do have a few waves that show higher lows, but that could be just a “D” wave.  Short term gold and silver can fall right along with crude oil.  The fact that silver has been struggling to gain bullish momentum also helps any bearish outlook.  Any “C” wave, crash, can happen so fast it will surprise us all.  I don’t like surprises, so it’s always a good idea to look for them before they happen.

If the bearish 4th wave scenario is true, then the silver market has to crash to new lows, even by a very small amount.

Hits: 4

Crude Oil Daily Chart And The $100 Forecast!

When I read the news that the $100 price forecast was back on, then chances are good that, it will never happen. At the 2016 bottom the media saw no bull market coming, but they sure can see it now! Back then they were calling for $20 and even $10 oil, yet the market did the exact opposite and started to soar.

This is the June contract in line type settings, which eliminates most erroneous spikes and shows no gaps.  This morning oil topped just short of $70 and has now started to back off as I post.  I’m not bullish on oil at all, even though oil broke out of the top trend line. The flat line shows the potential of two H&S patterns starting to develop around this $70 price level. $70 is a very boring number as I love the rounded Fibonacci numbers much more, where $89 has a much better ring to it!  Even $89 is a pipe dream right now,  because the entire crude oil bull market could be just a big bear market rally.  To confirm that, then nothing short of  complete retracement of this oil bull will happen. It may take two years to decline, but the bullish move from the 2017 bottom was a very choppy diagonal.

Oil may still give us a hard time, but this morning the Gold/Oil ratio, compressed down to 19.38:1. This happens just before a major reversal like it did back at the 2014 peak, when the ratio touched 17:1.  When oil becomes cheap, then this ratio will start to widen again. Something much wider than the narrow 21:1 average range we’ve had for the last 3 months.

There is a huge Falling Wedge (Cycle Degree) in crude oil and others, which on the bigger scale forecasts another huge oil bull move will come, but it may take a few years just to get to a bottom. The power for oil to crash like in 2008 is always there, and if you hate volatility then you shouldn’t be in a long position anymore.

Hits: 2

VIX Daily Chart: Falling Wedges Are Bull Traps!

 

 

 

I have been using different descriptions for basically the same pattern. They call them “Falling Wedges” and they produce powerful bullish reversals. From an Elliott Wave perspective, they are also called Bear Traps.

The bottom of the VIX wedge took about 6 months to build up before it exploded and has now been settling down in the last month or so. I had to switch this VIX chart to line type which took out many of the erroneous spikes and cut or peak price to $37.

I think there is a very good probability that the VIX may be in a wave 1-2 pattern, but the VIX may still need to fall to $13 or below. I have a little 5 wave sequence that soared, but now has just about been completely retraced. If the VIX drops below $15 then that single set of 5 waves didn’t go anywhere!

The reason those Subminuette degree 5 waves didn’t go anywhere is because it belongs to an expanded pattern which is sure starting to look like a zigzag correction so far.  Zigzags do cut short but I treat them like running zigzags, not as a truncation.

Many are using the VIX to explain how bullish for stocks the falling VIX really is!  Sure, that would be true if the VIX topped out at a $100 or so and has just started to fall, but we are looking at a potential huge double bottom. At $9 we also will have a huge Head & Shoulder pattern, which is also very bullish.

Since the 2008 peak in the VIX,  we can see a huge falling wedge that has a 23 year long bottom. Even on the weekly scale we can see falling wedges.  It’s not just one wedge, we have multiple wedges. Once I look over the VIX COT reports after Friday, I will know more which way the traders are leaning. Short term the VIX is still bearish, but I sure wouldn’t trust it to keep being bearish for very long.

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Nasdaq Intraday Bullish Phase Update!

When markets go up the expert analysts turn bullish, and when the markets are heading down then they turn bearish. No matter what the direction they will find you a reason explaining why. The Nasdaq contains the biggest elephants in the room which suggests very large companies. I think elephants are pretty small compared to some of these “FANG” stocks which are more the size of the biggest T-Rex!  In January of 2018, all the indices recorded world record highs, never matched in financial history. This bull market top calls for a correction that nobody expects, with some analyst getting suspicious as to the staying power of this bull market.

The Nasdaq bearish phase has only started more than a month ago, so in order to help confirm a major bear market is coming, all major markets have to crash to new record  lows again.  Price is only important to the majority, but from an EWP perspective pattern is far more important. Yes, I use price projections as well, but you will see no prices posted in my charts.

Another little pop is still possible, but the declining pattern will be important to see that it contains no corrective moves. A grinding summer bearish phase would suit me fine, but only time will prove that true.

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DJIA Intraday Bullish Progress Update

As of this morning the Mini DJIA seems to be in a small correction. The VIX also reacted with a huge spike to the upside, which tells me it takes little to spook this herd of DJIA bullish traders.  From my “B” wave bottom, the DJIA has travelled a choppy path which indicates I should be looking at diagonal wave structures.   I can draw a nice wedge as well, just by adding the top trend line, but we have to be careful not to see imaginary wedges hiding behind every move.

Since it’s only midweek, another small move to the upside could still happen, but in the end, this present rally still looks like a bearish rally.  To confirm this move the markets must resume their downward path and completely retrace the entire April bullish phase. Usually there is a much better flow to any 5 wave sequence, but this can smooth out over time. I do have different wave count tops like the Nasdaq does, so I have to look at a potential expanded top, which should be one degree higher. In other words, the “B” wave top in Intermediate degree is already in. The late 2007 peak can count out as an expanded top as well with the same degree level.

Many analysts are very bullish on stocks, forecasting that the next leg up is just around the corner. Since 2000 it has been my experience that markets never do what consensus forecasts are always telling us. ( At the extremes)  Basing forecasts on fundamentals never work, because they are lagging indicators, not leading indicators. In the case of the DJIA it was close to a 8-9 year lag as the best fundamentals were at the January, 2018 peak.

Where were all these bullish experts when the DJIA was at 6500? We know history proved the majority wrong in late 2008 or early 2009. Some analysts are so young that they have no recollection of the 2008 crash, so it is pretty hard to find an analyst that is a contrarian in the mass media today.

I can’t see this market being bullish all summer long as a bearish move into the fall has happened many times before.

Hits: 2

Gold Daily Chart: Is $1375 A Bull Trap?

 

Our present gold bullish phase was an extremely choppy ride and gold has been struggling as of late. We can go back 5-6 years and gold have struggled around this 1375 price level many times before. Based on the top line we also have 4 H&S patterns of various sizes, which would be very bullish in a bull market, but it would be very bearish if a big correction is coming.  I cannot stay bullish when I see this as it looks too much like a gold bull trap to me.

I did raise my degree level up by one, and the “A” wave I’m use can switch to a 4th wave easily. The rally that started in early 2017, can work as a triangle in a “B” wave. Any triangle in a “B” wave like this is very bullish in the long term, but short term gold bulls could be trapped.

We also have a rising wedge which we know can produce some violent trend reversals. Our present top could be a running inverted zigzag so a dip below $1300 would be the first logical price target to get breached.

Gold could turn bearish, along with the stock market, which has happened before during the 2008 crisis.  Gold could roll around some more, but if the entire gold bull market was a fake, then it must start to tell us soon.

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Crude Oil Intraday Update

About 5 days ago crude oil peaked which produce what looks like a triple top. The third peak is a wild spike which you can ignore, which doesn’t happen in line type charts.  After yesterday’s bottom oil rallied before it started to grind back down, which does not fit into an impulse anymore. I labeled the entire move as a zigzag, but a diagonal can also fit into a 5th wave decline, so both wave counts have to be kept in play until one gets eliminated. Oil is a wild animal at best of times so violent moves are going to happen.  We can draw trend lines, but it is far too early to start doing that. In a bear market lower lows is the  pattern of a decline, so lower lows below $65.60 should happen.

Our present little rally as the makings of a 1-2 wave so if the quality of any 5 wave decline remains very high, then this would be a very good bearish sign.

This may be wishful thinking, but wave structures do smooth out a bit once any  bearish decline is more accepted by the majority.

On a bigger scale crude oil has a Cycle degree declining wedge in it, so that alone can forecast another huge bull market in a few years time.  The whole idea of high degree wave counts is to “see” it coming long before the majority ever will. When a big group of investors  also seen the same thing, then you can get what would be a mini panic.  This has only happened in a very small scale, so bigger panic situations will arrive as more and more people get suspicious to the staying power of this so called bull market.

The Gold/Oil ratio has not changed hardly at all, as it has been hitting the ratio brick wall for months already.  Today the Gold/Oil ratio is at 20.23:1.

In Canada, Alberta is talking about conduction pipeline wars, as Alberta wants to cut oil supplies into BC, if the pipeline does not get built. If this actually happens, then BC could see some explosive gas price increases at the pumps, crushing BC’s economy along with them.

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Mini SP500 2000-2018 Review: Buying The Dips?

When intraday gyrations seem a bit foggy, then it is always a good time to review the big picture, looking at where we came from, and then where we are heading to.  Analysts are becoming frothy again as they say this market has turned and all new record highs are coming. The crashing of the VIX confirms it as they say that bigger bullish moves are ahead of us.

We can go back a relatively short time period to the 2000 peak where the majority were also very bullish but yet the markets imploded, just like they did again in the 2008 crash. Now those crashes were dips as well, but the majority were sellers, not buyers at the previous two lowest dips.

The majority of experts have no clue how deep the next bottom will dip down to, so those investors and their clients are going to go down with the ship because they refuse to ignore financial history.

I show two stages for the next decline with the SP500 1800 price level being a potential resting spot before a downside breakout happens.  The general guideline for the depths of bear market retracements is near the bottom of the previous 4th wave of one lesser degree. If we have no clue what our 2018 peak actually is, then any previous 4th wave forecast is pretty meaningless. I have mentioned it a few times already, and that is “NO” 5th wave peak must be left “uncapped”, otherwise they have broken the wave sequence and we might as well be playing Snakes & Ladders!  BTW, in January, 2018 we have 2 ending 5th waves yet I left one uncapped. After a Primary degree 5th wave has peaked, then a Cycle degree number must find a permanent home.

The SP500 won’t even get close to the top of the previous 4th wave until it crashes through the 1600 price level, while SP500 700-800 would get us near the lows of the previous 4th wave of one lesser degree. The 4th wave crash in Cycle degree is the real important dip as that is the only dip that will send the markets into another major bull market.  Flipping big wave counts around like a person flips burgers, is not my style as counted like that for over 15 years.

If you are looking for some SC or GSC degree wave count your not going to get it at Elliott Wave 5.0 as from my perspective, both of those degree levels are  still 11-12 years in the future. Don’t get me wrong, as we are still in SC degree wave 3, and still on GSC degree wave 3 as well. Both will never arrive if all 5 waves in Cycle degree are not found and confirmed.

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DJIA “Big Dip” Update!

So far the DJIA has procrastinated in following through with any decline, and the fact I have an extra lower high also makes me suspicious as where the market is going in the short term. Long term I remain bearish as, “The Big Dip” I talk about is yet to come. Reading about how some investors are buying on the ‘Dips”, I start to shake my head and say, “What Dip”?   Buying on the dips in the worlds biggest financial stock market bubble in history would be a mistake if we have no clue as to the size of the real dip to come.  A Minor degree dip in a Cycle degree world is nothing if the DOW still has to fall below 16,000 or 8000!

I have mentioned that when you see “any” wave count where an expert or hobby wave analysts leaves the 5th wave peak without a “Cap”, then any wave count following this 5th wave, is just guess work.

This “Cap” must always be one degree higher, and leaving off this cap, sends a clear signal to me, that the wave analysts have broken the Elliott Wave sequence, and therefore they are making shit up. (Cosmetic Wave Counting)

Not capping a 5th wave break’s every rule in Elliott Wave counting, because once you see an uncapped 5th wave, then any wave count that follows is worthless information for us. If there was a bounty on any uncapped 5th wave you can find anywhere on the Internet, then  you would become a very rich bounty hunter!

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Crude Oil Intraday Crash Update

 

This chart is in a 5 minute setting and it is switched to a line type setting. The bar chart version was so choppy and it created erroneous spike, I couldn’t tell where to start the countdown from. The secondary peak was the real top of this run, which also produced a triple top along with a wicked H&S pattern. This is also a prime example of what a H&S pattern can do at the peak of a bullish run and the end a rising wedge.  Crude oil also had a little sideways move, that from my perspective is a perfectly formed triangle. This Elliott Wave Triangle gave me a warning that I can’t use a 1-2, 1-2  wave count.

Early this morning crude oil soared one more time, but now has already started to back off. I can take another zigzag rally as we could have finished another inverted 1-2 wave set.  Worst case scenario is that crude oil keeps soaring because we missed an expanded top. If the big trend has reversed, then we should see crude oil take out our present $66.13 price level. Oil may still pop to a new rally high, but only time can confirm that.

As I post oil is soaring once again so this wave count could be trashed by the end of the day.

 

Hits: 2

Bitcoin Soars, But How Far Will It Go?

I get most of my information from Coinmarketcap.com which many analysts have also used. I also use Coindesk.com for other news.

Late last week volume in Bitcoins exploded and when you quickly scan the list of 1567 cryptos we can see the volumes all go green. Scan several hundred cryptos and you can see the great majority of cryptos all follow Bitcoin up or down. Bitcoin Dominance is still at 42.9% so where Bitcoin goes,  the rest will follow. I may only have a week or so left with this April contract and the volume is so low that any futures charts cannot produce sufficient traffic to fill out the charts. Even the May charts are still so bad it is impossible to make out any real pattern.

I have to start switching to line mode, which I have done with the chart above. Any prices from Bitcoin futures will be off a bit from other quotes, but that is pretty normal. Nobody found a real good excuse why Bitcoins rallied, and it sure wasn’t short covering so common in futures.

My two trend lines are based on the bottom trend line and then one is dragged to the top which still keeps the decline inside the two trend lines. Now if Bitcoin suddenly decides to fly to the moon it has to wander far outside these two trend lines.  I just can’t see why Bitcoins have left us in suspense just barely avoiding a downside breakout at the $6200 price level.

Investors still haven’t figured out that Bitcoins are in a bear market. A bear market will constantly produce lower highs and so far Bitcoin still fits the description. Overall, I’m looking at this market from a diagonal perspective which allows lots of overlapping patterns and still be in a 5 wave decline.

Usually a little wild triangle in a 4th wave position would give more of a clue, but any triangle would just be starting, so it could take all month to clear up.

Volume has to be maintained otherwise it is a clear signal that any rally will die a slow death. Commercials COT reports show that they have no interest in playing this Bitcoin game as they have “NO” positions in either direction. Only the speculators are playing this game and they are still net short by a wide margin.  Maybe it all has to do with the new moon or tax filing deadline, but we may never find a good fundamental reason until after the fact.

On Friday the US, France, and GB conducted a missile strike after the markets closed. They do this so not to rile the markets, but  Sunday night may bring any reaction as by then everybody in a the world has heard about the missile attack. Also, many times special forces will use the new moon to execute special operations, and if it falls on a weekend so much the better. There is much more to this missile attack than meets the eye, as some news only comes out in hindsight. I need to do more research, but why didn’t the Russian air defense take out any incoming missiles, again? The USA has been given out advanced warning for weeks already, so the attack should have been no surprise.

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Crude Oil Intraday Bullish move Update.

Since early March oil has been on a real bullish roll that could be coming to an end shortly. Many of the fundamental news releases tell us how bullish analysts still are. How can oil crash with inventory levels fluctuating constantly? The same thing happen just before the 2008 peak in oil, when every expert in the world was proclaiming that new record highs are on their way, but yet the oil market tanked and in just 8 months, the world was in another oil  glut!  Oil not only crashed once, but it crashed again when experts were claiming that oil would never go below $100. How long did that expert opinion last?  The next thing we know another world glut has arrived at the $28 price level, before it charged back up to the +$65 price range.

I had mentioned it many  times that the $60 price level could give oil some serious price resistance, with a present price of $67. Since the April 6th bottom crude oil executed a wild run that sure seems like it is starting to fizzle out. In the last 2-3 days oil has been forming what looks like a rising wedge, which can and do produce amazing reversals once they get close to completing.  In this case the wedge is a Micro degree wedge which in this case we can call an ending diagonal. Diagonals can take up the entire 5th wave, so any diagonal in any 5th wave forecasts a reversal. Any 5th wave peak must also be capped with a one degree higher wave count. We should “never” see 5th wave peaks left empty anywhere on the Internet.

At a minimum I always like to confirm a move with two lesser degrees and sometimes even three depending on physical size. To confirm a 5th wave decline in Intermediate degree, I “must” see Minor and Minute degree subdivisions and occasionally a third degree will help.

Many are calling for $70 oil, but where were they when oil tanked to $28 at the 2016 bottom?

The Gold/Oil ratio has bounced from an extreme ratio of 44:1 and in the last three months it has been sitting at an average of 21:1. This morning oil dropped to the 19.92:1 range, which was a small, fast dip that have preceded reversals before. When the ratio is hitting a brick wall so to speak, this means that something is up as that is what also happened with all my stock index ratios. This Gold/Oil ratio should start to spread again as oil declines, and until those numbers change dramatically, I will remain bearish on oil. Crashes in commodities can happen extremely fast, as oil clearly has demonstrated in the past many times.

Crude oil also has a huge Cycle degree wedge in progress which could usher in a big Primary degree move in the future. Five waves up in Primary degree would work for me. 🙄  I have incorporated solar cycle wave analysis into EW5 and at this time crude oil prices should still be attracted to the start of solar cycle #25. Oil did exactly that with the late 2008 crash and the start of solar cycle #24.

As I post crude oil is heading down, so that’s a good thing!

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US Dollar Daily Chart Update

The decline of the US dollar has been in progress just under 13 months and I’m sure there is more to go, but short term radical moves can kill any wave count pretty quick.  The 4th wave peak in Intermediate degree is still holding, and I see no short term moves that will dislodge it. This blog is all about locating, and confirming all 5 waves in Cycle degree, and EW5  is the only blog I know of that is doing this. I say this so all new readers fully understand that  smaller degree wave counting must come before all the big wave counts can be justified or even confirmed. This also applies to currencies like the US dollar.

At this time I don’t think we are in any Minor degree just yet as the switch would have to counter rally much further. In this case the USD could be finishing a Minuette degree 4th wave,  which could be followed by a 5th wave extension. International trade wars are in progress, but I think it’s more about Cyber Wars that all major nations are conducting. The US dollar is caught in the cross hairs as it seems that the USA infrastructure is also a prime target for these attacks.

We can get all sorts of rallies, but none of them will charge back into a bull market., at least until all the commercials are net long by a very wide margin.

We also have to be prepared that the US dollar can soar when stocks make a huge counter rally. COT reports come out on Fridays and if there is a radical change I will talk about it.

The Euro could also see a pop so when the US dollar moves many other currencies will also react.

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Is Nasdaq Friday 13th Bad Luck?

End of the week, new moon, Friday 13th and a rising wedge doesn’t help in reinforcing a bullish outlook. This week the markets struggled trying to make headway and the rising wedge shows it.  This may only be a Minute degree wedge, but there are Cycle degree wedges as well.  When a falling Wedge develops, then this can turn into a very bullish reversal. Of course, if we abuse these wedges, then they lose their importance and meaning. Most of the Wedges are bear market related so any Cycle degree wave 3 top to a Cycle degree wave 4 bottom would be a Cycle degree Wedge. Just about every crash in history showed one type of a wedge. The 1937 to 1942 Cycle degree wedge is a prime example what large degree wedges can do.

The initial rally that started last week can be counted as a wave 1 but this is also a typical “A” wave move in zigzags. So far the high peak could contain an expanded flat so I will have to flip back and forth between two patterns until the bigger pattern becomes more clear. As rough as some patterns are when starting out, they do have a tendency to clear up after a while.

When the markets have crossed the line from a bull market to a “huge” bearish phase traders have to change all their thinking instantly. Obviously we are far from that situation as market bulls have just called a market correction bottom. Just goes to show that the majority of experts still think they are on the bullish side of this market.

In a bear market good news no longer pushes the markets to new record highs, the opposite happens at the end of a bearish move when bearish market news no longer pushes markets lower. With small counter rallies, this is much harder to detect, but if we are not looking then it makes little difference, as we would be in another bear trap.

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VIX Intraday Update: Calm Before The Storm?

When the VIX is declining,  the excited bullish stock herd start to calm down, from the mini panic spike in late January 2018.  Before the big spike, VIX players were in a trap with a small inverted Megahone pattern also showing.  Inverted Megaphones are more open ended with the open end facing to our left on the charts and with the cone pointing east. A normal Megaphone would always have the wide mouth facing east (right side) and the cone would be pointing west. (Left side)

We still could see some dipping in the next few days, but no new record lows should happen.  The VIX has wild and choppy wave patterns, but this is the real world when it comes to diagonal wave counting.  Complaining about volatility will get us nowhere, and all I can say is, “Buckle Up”, as this roller coaster ride will start to get going again.

The COT report that comes out every Friday will give us a better idea who is still net long or short the VIX.

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Is The Mini SP500 Going To The Moon?

I did have a very bullish wave count all done, where we are in a “C” wave bullish phase that would take out this 2810 peak above my wave 2 in Minor degree, if that becomes the case, then the wave 2 would just move over to the new peak and then the real wave 3 in Minor degree should get going.  We are bouncing of a strong double bottom, so eventually that bottom will get retraced when the downside breakout happens.  Right now 2680 could offer very stiff resistance, combine that with a potential inverted Megaphone, and we have the makings of another potential bull trap.  This would be a wave 2 top in Minute degree. By this Saturday we will have a new moon so any attempt in getting there may have serious problems.  🙄

This may drag on into next week, but US Tax Day is April, 17th which also could wreck havoc in the markets. If you haven’t noticed, many of the top tech companies are having problems all at the same time.  Markets don’t stop on a dime, so when the trend does start to change, volatility starts to explode.

I have not seen so many crybabies about volatility in 2000 or even 2007 as I have seen in this 2018 year, so I expect all to get worse.  Buying on the dips in a big bear market will become deadly, but investors have been brainwashed to do that. It’s the big dip like the SP500 at 750 which will become important and if and when it gets there, all those dip buyers will be sellers as they run for the hills.

There will be clues when the markets get oversold, but they will not show up until a few months ahead of any major bottom.

For any Cycle degree 4th wave correction to end, we have to look at the previous 4th wave of one lesser degree, which would be Primary degree.  I see three price stages where this bear market can go and the first stage is for a complete retracement to the 1800 price level. Only until below SP500 1600, will the markets enter the top of a 4th wave correction. It usually takes into the lower part of the previous 4th wave of one lesser degree before a bottom arrives.

Either way another week or so should show which trend is for real. At this time I’m still after 5 waves down in Minor degree. Even when we get to any “A” wave in Intermediate degree, any counter rally could be very mundane and even short lived. We could run into a bear market that will be hard to see clear Primary degree counter rallies, which is exactly what happen in the GSC degree decline down into 1842. There may not be a panic until the majority of participants all see the same thing at the same time.

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Mini DJIA Intraday Rally Update

The DJIA is on a different wave count due to the secondary peak being much lower than a potential wave 2 in Minor degree.  To call this secondary peak a running pattern is also pushing it, at least for the short term. Running, flats, triangles and running zigzags do happen, and they happen more frequently than most would expect. I don’t believe in calling something a “Truncation” (shortened pattern), when so many running patterns do occur. I’m working a Minute degree 5 waves down with a potential 4th wave peak still to play out. Any 5th wave decline could fall and stretch very deep and shock investors as the reality of a bear market starts to sink in.

Many investors have never experienced a major bear market so a deep 60-70% correction is unthinkable. First, they called for a 10% correction, then they were calling for a 40% correction with the latest call I read about was a 60% correction. (Fibonacci .618). Ok, when this happens then what? Is a 60% correction deep enough for a Cycle degree correction to complete?  At this time I doubt it very much. History has given us many bear markets, with the GSC degree wave 2 decline only lasting about 8 years. The SC degree crash from 1929-1932 only took 3 years to play out.  Cycle degree wave 2 took 5 years, and Primary degree wave 2 took another 5 years ending in 1974-75. I don’t see a Cycle degree correction (bear market) take longer than 3 years.

There are no fixed time lengths for any degree as we also have seen a 20 year Primary degree bear market in gold as well.  I love the Fibonacci sequence for turning times with 2021 being a full 89 years for the next potential bottom.  Even 1929 to 2018 is already 89 years long. The reason I focus on 2021 is because of a silent force when one solar cycle ends and another solar cycle starts. Solar cycle starts  will terminate all your bearish thoughts as another 8 year bull market should develop once solar cycle #25 kicks in.

The DJIA peak of 26,600 may be the high of 2018, and when investors realized their gains are pathetic or in the red and losing money, they will hit the sell button before they click the “Buy” button.

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Gold Daily Chart Review

The Gold crash of late 2016 has just about been completely retraced and gold is finding tough resistance at the $1360 price level. Many times I have mentioned the $1375 price level as the price to beat to confirm the 2016 crash as a correction. We’re still about $25 away from the $1375 breakout and I’m confident gold will still clear $1375 with flying colors.  Wild moves in one direction and then a wild move in the other, seems to be the normal state of affairs.

I show a simplified “C” wave still in progress, but they are all diagonals, which is what we should expect for a “C” wave bullish phase.  All this is still pointing gold to the $1500-$1600 price range. A short term correction may still be in progress so I expect some violent moves as gold gets closer to a breakout situation.  Emotional investors jump in and out of gold for “safe-haven” reasons, so based on that it is impossible to know when investors suddenly get the urge to “buy”.

In the end it will be the US dollar bear market that will keep gold very active and until the US dollar is ready to charge back into a full bull market, the upward pressure on gold should remain.  It’s when this daily chart goes vertical, we have to wake up, as vertical moves do produce big bearish phases.

The biggest threat will come from stocks, when they start on bigger counter rallies. Gold and gold stocks will always find competition from the general stock markets and the idea is to spot any reversal before it happens, not after. It is the mass media that are always late in recognizing a trend change as the fundamentals are lagging indicators, not leading indicators.

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Crude Oil Intraday Rocket Ride Update!

I was suspicious about my March peak, which I now counted out with an expanded top, followed by two sets of 5 waves down. All my degrees are being used up and I will not longer count out smaller than the 15th degree. When I consistently run into the 15th degree level, and still see a few smaller wave sets, then I might have to look at a higher degree, but so far there may not be the need. The bottom of April 6th is now a diagonal 4th wave bottom. Just today it is getting close to the top of my trend line, so another correction should be due. Fears and uncertainty have arrived in the oil market and we can thank Trumps Tweets for that.

Since the March bottom we have been in a “C” wave bullish phase, and this oil move is a prime example what can and does happen in “C” wave bull markets.

How much more crude oil will run is uncertain, but the end could also be near.  Even with all these wild swings the Gold/Oil ratio hasn’t changed that much and is still bouncing around the 20.29:1 range. Eventually I would like to see the Gold/Oil ratio expanded closer to the 30:1 ratio, but that is not going to happen for quite sometime yet.

Remember, as fast as oil has gone up, it can come down just as fast. You will not be safe in this bullish trend for very long. With this move it just extends the “C” wave in Minor degree.

I’m starting to mention that crude has a huge Cycle degree Megaphone in the works, between the Cycle degree wave 3 top and a Cycle degree wave bottom, which once completed should produce yet another rocking bull market in oil. This may still be 2 3 years away so don’t get too excited just yet. Megaphones have open cones, but wedges and even Scalene triangles have mostly closed cones. I will start calling Megahope patterns by the size of their degree levels, as Cycle degree Megaphones can produce 5 waves in Primary degree. The US dollar also has a Cycle degree Megaphone in progress, and I think there are more out there I haven’t discovered yet.

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Mini Nasdaq Intraday Bullish Phase update.

The Nasdaq has been marching to a different drummer again,  and in the last 5-6 trading days the Nasdaq has been in a bullish phase. I would love to see the Nasdaq break out a bit higher and as I post it seems to be doing that. Any of these inverted zigzags can turn into a running pattern, which many may call a “Truncation”. There are lots of examples out where zigzags are cut short, but I will call them a running pattern before I call any “Truncation”. There will be constant adjusting that I will be doing until the bigger trend becomes more clear. The Nasdaq peaked last month and if the bigger trend is in place, then that peak of the Nasdaq will be the high price point of 2018.(7200) No more record highs for a very long time.

In a bull market, we get consistently higher lows which are Elliott Wave, 3 wave patterns. This process works in reverse as well as a bear market will produce consistent lower lows and lower highs.  Since the March peak that is exactly what the Nasdaq and others have been doing. Jawboning a bear market back into a bull market will not work, except on a short term basis. Once this present rally starts to wear thin, then we should see all the markets make new lows again.

Many are complaining about how volatile the markets have been, as they have never seen so much volatility! All I can say is “get used to it” as that is what happens when markets start to make a big trend change. Those that are already out can sit back and watch this market crash, until it becomes over sold again.

Any big forecast how deep a bear market can go is depended on what degree of a peak the markets are all at. So far they expected just a 10% correction, but now this number is changing as well. Some are now calling for a 40% correction, but a 60% correction number has also been used. All the forecasts in the world for a bear market bottom will mean nothing, if we don’t know what’s going to happen after the bear market finishes.

At a minimum the Nasdaq has to retrace the 4000 price level first, and this may only be a temporary resting spot until another leg down starts.

Bull markets end when nobody expects them to end just like bear markets will end when nobody expects them to end. This has happened so many times in financial history that it will not be any different this time. When it comes to the stock markets human emotions never change as fear, joy and greed  has been around since the caveman days.  A new generation of investors do not do any homework in studying financial history, and many of them didn’t even experience the bear market of 2008, so those investors are in for a big surprise.

Mark Zukerberg’s testimony increased his net worth by 3 billion dollars during the time he sat in his chair, while social media supported Zukerberg!  In the long run Facebook is still besieged with problems like the majority of tech companies are having at this time.

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Is The Bitcoin Bear Market Over?

In the last few days or so Bitcoin has been acting a bit different with an odd wave structure that does not fit well with the previous wave count. Some experts claim that the “correction” in Bitcoin is done with, and a new bull market in Bitcoin will start. A Bull market to where exactly? To be in a bull market Bitcoin has to exceed the old high of $20,000. Besides that, Bitcoin would have to fight past that $12,000 price level first.

Bitcoin is getting very close to breaking out, past my top trend line, and when I bring the bottom trend line up a bit, we end up with an inverted Megahone pattern.  Trend lines are subjective opinions at best, because they are used so much that they hold little information.

Wedges or inverted Megahone patterns can produce some wild thrusts so I respect those patterns, especially if they are Primary or Cycle degree Megaphones.  I will as much as I can,  keep two trend lines parallel to each other, and some Megaphone patterns when they might be sneaking up on us.

Bitcoin has become the currency that’s hard to spend: Don Pittis | CBC News

Here is a good story how a guy paid 10,000 Bitcoins for two pizzas back in 2010. This worked out to about $82 million for two pizzas!

The new ICO issues have started to slow down this week, but it seems that about 40 of them disappear over night from a peak of 1600 coin offerings. We are back down to 1564 coin offerings and the pace they are pumped out could be slowing. The 24 hour volume has hit close to 10 billion, which is down dramatically from its hay days. As I post Bitcoin is in a bit of a rally so chances of it breaking out past the trend line looks very good.

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Mini SP500 Intraday Rally Update

Any rally we have had in the last 3-4 trading days sure doesn’t fit into any impulse as it is just too choppy to justify counting it out as an impulse.  I would love to see this chart go a bit higher as that would completely retrace a small zigzag that hasn’t been completely retraced yet. Many times they can turn into running zigzags as well, but it will be a tough call either way.  We should find out in a few more days or closer to midweek what is going to happen.  The experts have just noticed that no new record highs have formed in 50 days as they seemed to be paralyzed in making a bigger bearish call.

 

They also have been bitching about the extreme volatility in the markets, which they think is not normal. It’s normal in a bear market, but bull markets tend to flow much smoother.  All I can say is, “Take A Pill”,  volatility is just getting started.

If we’re lucky the January 2018 peak of 2880 will be the high for the 2018 year and even hold for the next 3 years. Many bear markets in the past have ended with years ending with a 2, like 1932, 1942, 1842, 2002. My GSC degree wave 2 ended in 1842 but it took 8 years to decline. SC degree wave 2 only took 3 years to decline, so any Cycle degree decline will be about the same or even a bit shorter.

Bare minimum the SP500 has to retrace the 1800 price level, but that could be just a temporary resting spot in a long bearish decline. Many are using the trade wars as an excuse for the markets decline, but trade wars act to slow in a digital world. The Cyber warfare going on is attacking the US infrastructure on a regular basis as hacker groups and unfriendly governments attack the US.  There is far more power to destroy from the Internet as groups can go viral virtually overnight.   Chinese net users call for US boycott over trade clash – Nikkei Asian Review.

Trump may think he has the power to wage economic war with other countries like China and Russia, but all they have to do is devalue their currency and the trade war would be neutralized.  We can have crashes without any bear markets (1987), but we can also have initial crashes which are then followed by a long grinding bear market.

The 1842 GSC degree wave 2 decline and bottom, were just grinding declines acting more like a set of 5 waves  than a zigzag. I already have produced the template for such a decline as I explore a few of the options for a Cycle degree corrective pattern.

Bear markets have a nasty habit of retracing  back down to the previous 4th wave of one lesser degree, but if the degree is wrong, then how do we know where the previous 4th wave of one lesser degree even is? Most of the time bull markets will retrace deep into the previous 4th wave, and sometimes even push a bit lower. Something that may seem normal in the Elliott Wave world, would be considered insane by the majority, until it happens.

The SP500 previous 4th wave low has a gully around the 666 price level, but it may stop well short of that at around 700 or even 750!

Most of the world indices like the Nikkei, Shanghai, Nifty, and the DAX are all in the same fleet of boats, that are already sinking. Like Steven Jon Kaplan said, “The object is not to find a safe cabin on a sinking ship, but the priority should be to get the f$#k off the ship”!

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Crude Oil Rocket Rally Update

Crude oil made an ugly decline (diagonal) into the bottom of April, 6, before crude oil soared once again.  Crude oil has now rallied far enough to where it has resistance at my previous wave 2 peak in Micro degree.  Also a H&S pattern is developing, which in a bear market rally is a bearish sign. In a bull market this H&S pattern would be just a temporary stop.  The real reason for the rally is that all of the protective buy stops are being triggered by some news release regarding declining inventories. The news does not suddenly turn a bear market into a bull market, even if it looks like it.

This rally will only get confirmed as a bearish rally once this entire intraday bullish phase is completely retraced. Even the December crude oil contract is still lower in price than the June contract, by $2.75 a barrel.  This does not bode well for a huge bull market in oil to keep going. As I post crude oil has broken the $65 price level by a small margin, but still a far cry away from breaking to new record highs.

Add to the fact that most commercial traders are net short crude oil with a 20.58:1 Gold/Oil ratio, I will remain bearish until such a time when a big correction has taken place or is completing.

As fast as this rally charged up, it can crash just as fast, so hang on to your britches folks, as this could get rather violent swinging into the opposite direction.

Longer term we could be heading back to a world oil glut and they will start to store oil in very large crude oil tankers.  As soon as all the experts realize that an oil glut is here, then it will be over and the price of crude will soar again.

Crude oil has a huge inverse Megaphone (Wedge) pattern which is a very bullish indicator and can produce amazing bull markets. Again, this is a bit early to describe a big bull market in oil if the oil charts presently contain an inverse zigzag!

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