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ElliottWave5.com - Gateway To Cycle Degree Elliott Wave Analysis

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CA:HEP Horizons Enhanced Income Gold Producers ETF Review

This is an income fund in Canada started back in 2010. 2011 was my Cycle degree wave 3 peak and what followed was a grinding bear market that looks like an impulse but in reality it is just another diagonal 5 wave sequence. All this may be hard to swallow for those staunch gold stock bulls foaming at the mouth, but I’m not here to make those emotional traders happy, as I will always try to supply an alternate idea about bear market rallies.

I call them fake runs at times, and the biggest and most important thing to know, is that all bear market rallies retrace themselves by 100%.  In mid 2016 I called for a correction in what I though was a bigger bull market still to come. What followed was another grinding sideways movement that seems to be going nowhere. All bullish corrections during that time had failed. When we apply a wedge to this section, HEP is getting bunched up inside the cone, and it must be forced to break-out. Break-out in what direction? Slice the top line first or slice the bottom line first?

Our choice comes down to two basic chart directions, up or down!  This pays a small dividend but I still would not touch this ETF with a 10-foot pole.  I do not give any specific buy or sell calls, as I can only forecast up or down my idealized wave structures. I may still be a bear now but I will turn very bullish when the time comes. There is always a chance that I can be wrong, but then the bull market will have to leave without me, as I refuse to jump into a trade in the fear of missing out. In 2008 most markets crashed together as gold/silver/gold stocks/oil and all the big markets headed south. If it happened once before, it sure can happen again. It would cost you about $2300 to find out!

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Russell 2000 New Record High Review.

This is the June contract daily chart and it is the main reason why it does not fill out. I started with the weekly chart and it seems the entire 5th wave in Intermediate degree is a diagonal with this part being a zigzag traveling to new record highs.  Apple is just completing the exact same type of zigzag which tends to be the finish of a diagonal 5 wave run.

I did check it again from the 2015 bottom, which is best done with the weekly chart. Many may  start counting this as potential new leg up, but if that is the case then another two, 1-2 wave structures would have to form.  The VIX is also apporaching record lows again so a big bullish move in the Russell 2000 is highly unlikely this time.

When a market goes vertical, it’s always a good time for a correction, or it can mean the end of a big bullish phase.

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Cotton Monthly Chart: Triangle Still In Progress?

I have been keeping my eye on cotton for some time but as you can see it is such a wild diagonal market. I believe cotton is in a triangle but the exact location is a best guess at this time. I have records going back to the 1970s and without a doubt choppy wave strutures is the dominate theme.  From the 2001 bottom a wild zigzag occured topping in 2011 right along with gold and gold stocks. I do have a very big Submillennium chart of commodities, and the entire general theme is diagoanl in nature. This did not smooth out until a bit until after the GSC degree crash in the mid 1800s. My Submillennium wave two ended in the Little Ice Age about 1500 CE. (Common Era)

This does not mean the entire Submillennium run is a 5th wave extension as it is just the nature of the beast in commodity land.  You have to be very good at looking for, and identifying diagoal wave structures,  as they will sneak up on us when all we can do is count impulse waves everywhere.

The commercials are short cottom by a wide margin so persuing a bullish wave count at this time is a lose-lose situation.  I can’t pass up following any potential triangle as it is a very rare treat and excelent experience.  This is the first attempt at counting out the cotton triangle so anything can still happen in the short term. The small “A,B” in Minor degree is an expanded pattern which eventually always get retraced.

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SIL Silver Miners ETF Update

All the attention is focused on gold which I think is painting us a very bullish picture which is not confirmed by silver or many other ETFs. SIL launched a wild run that  dipped well into the previous wave two of the “same” degree, which makes the entire decline a diagonal decline. Cycle degree wave 3 has completed at the 2011 peak and this bear market is far from finished.  The trend lines show that we can’t force wave patterns to stay in a channel.

I may be bearish on all this, but I assure you I will turn very bullish when the time comes.  Since that 2016 peak SIL has been in a bearish mood that sure looks like it has more to run.  It may take the rest of the summer to play out,  where it could produce a double bottom set-up. This would be a very bullish set-up that very few will take advantage of. Investors “hate” to buy low but the contrarians love it. Of course all this goes against the bullish mainstream media forecasts, but lately the bearish pressures are still showing up. From my perspecive attention to pattern is far more important than the Fricken barrage of fundamantals that the media uses to brainwash us.   Vertually nobody can tell the difference between a bull market and a big bear market rally, but the EWP is the perfect tool to use for this.  The problem is nobody has an acurate picture of where they are counting from, so wave counters can get caught in the same bull trap as the majority.

Forecasting the same trend as the majority do is not rocket science folks, as it takes much more time and effort to look at all moves from a contrarian perspective.

I called a bullish phase peak in 2016, but the correction sure has not confirm this just yet. The SIL trend is still down as I see it.

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NASDAQ Intraday Review

The Nasdaq had a very different time period for a major peak which was hidden or masked by the bearish attention to the DOW and SP500.   Any Nasdaq wave count is not clear at this point as we still have too many wild gyrations. Summer is coming on which can produce very bearish moves. We do have to respect the Nasdaq as it can keep on giving us the gears in the short term.

From late April the Nasdaq has now only produced a 3 wave run, as wave 4 is still missing from this action. I switched to line type chart but it also changes the wave patterns, producing different wave counts all the time. In the short term I will be doing some cosmetic wave counting, but eventually the trend will start to smooth out, and when it heads south it will help to confirm a bigger bearish phase is in effect. Recent Commercial trader report does not show an extreme bearish situation, but more of a small bullish situation. This could turn more bullish as the real decline shows it’s true colors.

It makes no sense to spend so much time in intraday scale as for long periods of time nothing can happen. Nobody can take advange of intraday scale wave counts. It might take a week before a new posting is read 4-5 times, by that time it’s to late to take advantage of it.  The big and best moves happen at the daily and weekly chart scales when the majority are all “forced”  to switch directions.

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The Euro Keeps On Crashing: Daily Chart Update.

The Euro counter rally did not last very long at all. We will see if this impulse decline has more power to it than most analysts are expecting. The 6 currencies that are inside the US dollar basket act inversley to the US dollar with this Euro being one of them. It also all realates back to gold as gold and the Euro have traveled together many times in the past.  The bullish phase in 2017  was a “C” wave bull market with 5 waves in Minute degree.  At 1.16 the Euro can put up some resistance to the decline but this should only be a temporary resting spot as everyone screams, “Support”.

Price support means little, but wave pattern support is everything, from my Cycle degree perspective.  I may have to adjust the wave count decline, as I’m starting this run as a wave 3 extension. We have an open gap below and this should get hit in this bearish decline.  Until the Euro decline has completely played out, gold will keep heading south. Gold has crashed $70 already and it’s not finished.  I’m sure the COT reports still show the commercials in a Euro short position, and until that starts to shift dramatically the Euro will keep declining. Most investors have no clue what the difference is between a real bull market and a bear market rally. “Every” bear market rally retraces itself by 100%. It’s the big bear market rallies in Primary and Intermedeate degree that fool us the most.

The Euro started it’s bear market in 2008 right along with oil, with both ending on Cycle degree wave 3 peaks. This makes it close to a 10 year bear market and we’re still counting, as “every” rally in the Euro has been completley retraced.

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SP500 Intraday Bullish Phase Update

So far this phase of the stock market has done nothing by soar in one direction and then move right back down again. Investors are having difficulty in finding a lasting trend. From the April low we could still be in a diagonal ‘C” wave rally. From the April peak, the SP500 crashed again but added a 3 wave zigzag move to a lower low.  This little 3 wave structure doesn’t fit unless it is part of an expanded pattern. If that is the case then this market could crash to the May lows, after which another shocking rally could soar past the March high.

I would have little room to spare if the next move happens, but final ending diagonal 5th waves can produce moves that will surprise many of us. There is nothing here that indicates that a bull market correction is already over. Any Cycle degree correction needs much more time and depth, before a new bull market will be ready to be unleashed.

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Crude Oil Intraday Record High Update

This bull market in oil keeps pushing higher and it still may not be finished. At this time it looks like and ending diagonal could be forming with a drop to the bottom trend line can still happen.

Higher and higher price forecasts for oil have flooded the internet and in the short term some of them may still get hit. The question always on my mind is “what is going to happen “after” thier price targets become true. In reality they have no clue as, and besides if they did, they might get fired for being bearish.  I have no such hang-ups in calling an oil bubble, but it is impossiableto define an exact top at this time. The big question is, “Is this bull market just a big bear market rally (fake bull market), or is it the real thing.

There is nothing wrong in playing any fake bull market, but then you really have to know when to sell or go short.

They all thought that the 2013 peak was a bull market yet another crash ensued producing a complete retracement. That was a Primary degree peak and at present we may be at an Intermediate degree peak.

Bear market rallies have a dubious reputation of  crashing with “complete 100% retracement”, even if it is retraced by only slimiest of margins. The EWP is still the best way of seeing bear market rallies depending on where we are counting from. My bearish wave counts come from the 2008 peak which is my Cycle degree wave 3 peak.

The entire oil bull market is so choppy that I find it hard to believe that oil prices are still going to the moon. Commercials have establish large short positions and the majority of experts are “all in”. The is a bullish top heavy trade set-up and it can only end badly. From a shortage to a glut it only took about 8 months in 2008, so this bull market can change dramaticly in a very short period of time.

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Gasoline Blendstock Weekly Chart Price Surge Update

I’m sure you can read all sorts of fundamental reasons why gasoline prices are soaring. I get the same bullshit from the man in the street, that have never ever looked at a futures chart. In the end there is not a single person that can tell you what made gasoline prices go up and down in anyone of these patterns. When the oil market was in a glut in 2016, nobody will know or will remember specificly what turned the oil market northward.  I sure can’t that’s why I use numbers and letters to track the emotional trips that investors make. Never forget where this big bullish cycle originated from.

The big Cycle degree wave 3 peak happened in July 2008, as the expert cries for shortages were heard everywhere. Within 5 months gasoline prices had crashed which  the majority of experts never saw coming. The contrarians were calling for a crash and the markets did not disapoint us.

Today we are faced with the same situation as gasoline prices are going “vertical”.  Summer months seems to be a great time for oil related markets to crash, but the exact date and time is never written in stone. From the 2016 low gasoline prices have charged up with some of the wildest patterns I’ve ever seen. Once again we will hear all sorts of fundamental reasons why prices should keep heading north.

When prices are pointing up, I look down and build the bearish scenerio that will always come.  At $2.26 gas prices are stuck in limbo with no previous resistance from the 2014 crash.  What we do have is a great Head and Shoulder pattern, that from my perspective is a very bearish H&S pattern. Then between the $1.30 and $1.10 price range we have the biggest open gap I have ever seen in any commodity. This gap will get closed and it is only a matter of time before this happens. If we look 5 months or so down the road into the fall, then this is plenty of time for a crash to show itself again.  They call this Gasoline Blendstock but it is much lower than any prices you may find at the pumps.

It seems that turnings happen closer to mid year but this market has no shortage of surprises at least in the short term.

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ZGD Another Bull Or Bear?

This is an equal weight gold stock ETF and it shows the same pattern but pointing down, none of this sideways pattern where we can get fooled into thinking a big bull market is just around the corner.We still end up with a sideways pointing wedge and it has been long overdue to break out. Break out in which direction?  This morning gold stocks have already turned down,so I will not be surprise that ZGD will slice through the bottom wedge trend line. ZGD hit a new bear market low in early 2018 which many of the other ETFs did not do.

I’m dealing with many of these 4th wave scenarios  and if I’m right this ETF has much more to fall and will even set new record lows.  Another double bottom could fool us with an early bottom,whichmay take all summer to play out. After all we have to respect summer highs like 2016!

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ZJG Update: Bull Or Bear ?

The debate rages on as gold stock bullish investors are convinced that this sideways wedge is a bullish sign.  The initial start only took about 6 months, but this so called correction has taken about 22 months. I could see it if  these gold stock ETFs only took 8-10 months but 22 months is very suspicious.

ZJG has started to dip again and is getting very close to cutting the bottom wedge line. Investor will see thier accounts get shredded if they believe that they should be buying on the dips. The rich can play that game but a guy like me with a small trading account cannot ride a bearish trip down.

If this bull market is a 4th wave rally then chances are good a new record low will happen. This goes against many bullish scenerios but I refuse to pussy foot around in posting what I see.  This ETF is pointing sideways but other gold stock ETFs are pointing down so we have a real mixed bag with basically the same pattern in 1/2 dozen gold stock related ETFs.

Stocks, bonds and gold have been falling together and the mass media has been quick to point this out. It may take all summer and into the fall for this to become obvious, but it will also represent another great buying opportunity.

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10-Year T-Note: Is It Time To Turn?

The news that Bonds, stocks and gold are falling at the same time is no surprise. I have been warning about this for sometime already, but when the media picks up on it, it already becomes old news.  My personal guideline is that when your friends start talking to you about this bond decline, then it’s already old news. News circles the world about as fast as the crowd can do the wave at your basic hockey game. Every major bond trader has that type of news high on their reading list.

Yes their may still be a bit more downside to come but it looks like it may have already turned. I’m not going to draw you a pretty arrow pointing up as I think my readers understand the basics of the idealized form.  I expect a full reversal as this 10-Year T-Note bull market is far from finished.

We are finishing a 4th wave correction in Intermediate degree with a Minor degree zigzag. The current commitment of traders bond postion has shifted to the long position by a huge amount. When commercial long prositions get this skewed then the 10-Year T-Note bear market is going to run into very stiff resistance where a bull market has the base to grow from.

Just to get warmed up complete 4th wave retracement will happen and eventually this T-Year T-Note chart will soar up and beyond the top of the chart.  Chances are extremely high that diagoanl wave structures will be the main theme with another potential zigzag we have to contend with.

I can’t always keep up with any intraday charts, but I will try and catch strong turnings as much as I can. Everybody is freaking out about much higher rates to come, but I don’t see it that way if this bond bearish phase was just a correction in a bigger bull market.

Bonds have been in a bull market since about 1982 with a Cycle degree wave 4 bull market. This bull market is not finished so one more extreme high should happen. I’m dealing with 30 Cycle degree 4th wave patterns, and I have many asset classes where I also have 4th wave declines in Intermediate and  Minor degree 4th waves.

The moves that force short players into a trap are the best reversals, as the power of the bulls will slice and dice all the bears betting on a continued decline.

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HMMJ Horizons Marijuana Life Sciences Index ETF Update

In the past month HMMJ has been on a rally that looks more like an inverted zigzag than the start of a new impulse set of waves. The bearish trend in HMMJ sure is starting to look like a 5 wave diagonal decline and if I’m right  we should see this rally die and then head south again. Another set of 5 waves down in Minuette degree should land us at a wave 3 in Minor degree.

Crossing the $14 price line by even the slimiest of margins is all we need to help confirm that the bearish trend is still alive and well.

I would not touch this ETF with a 10-foot pole until all reamaing diagoanls waves are show they are all played out.  If the impending decline turns into a wild diagonal then this will also help to confirm another “C” wave deline. So far this has not happend on a smaller scale, so maybe we’ll get lucky  and we get a pretty clean decline.

 

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Euro Intraday Bearish Phase Update.

I was expecting a counter rally and we were not disappointed as soon after the Euro turned south one more time. If another violent reversal happens then I may have to change this 4th wave count. What matters is if the Euro was in a big fake bull market fooling all the experts in the process.  It sure can be as I have many other currencies in the same positions.  Gold needs the Euro to turn very bullish and that sure does not look like it’s going to happen. This recent dip in the Euro was matched with a dip in the gold price. From my perspective the Euro/Gold relationship is still working.

The commercials were also short the Euro,  so until that situation makes a dramatic change, I will remain bearish towards the Euro. The US dollar also spike higher this morning, so all three are acting their parts perfectly.  These are only three asset class relationships I’m talking about, as our Canadian dollar and the Australian dollar are showing the same patterns.  Many experts have forecasted for the Euro to soar, but by the looks of it the Euro is refusing to cooperate. Telling the difference between a real big bull market still to come or a fake bull market is the key, as the smartest market readers are also being fooled.  A new big bullish phase in the Euro will happen, but at this time it sure looks like the next big bullish phase will also be a fake.

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Crude Oil Intraday Gyrations Update

This morning crude oil also spiked to a new record before it backed off a bit. As I post a reversal is in progress so short term this recent high could still get retraced. The more violent, crude oil gets is the sign of a trend change that oil could be switching to. The price gap between this June contract and the December contract,  has compressed dramatically,  as the December contract is now only  a 65 cent difference.

The Gold/Oil ratio is also at record lows as it hit the mid 18:1 range since early April 2018.  Before oil crashed in 2014-2015 the Gold/Oil ratio managed to hit 17:1 so 18:1 is not that far away.  The entire world seems to be bullish on oil prices, as every price forecast imaginable is thrown at us. I’ve heard all this before  as this potential peak has happened two times before.  This will be my third oil, bearish phase I will be tracking and they all started with very high gold/oil ratios.

The WTI commercials are short oil, and even with the ICE futures they are in short positions. Until this scenario changes I remain bearish on oil.

Some only expect a pull back to $60 or so, but that is a very bullish corrective forecast. Even if oil is ending on an “A” wave in Intermediate degree, a net pull back of 50% can take us to the $40 price range.  A $10-$12 correction is peanuts, as that would not force too many oil bulls to reverse their positions.

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Gold Intraday Crash Review $1300 Price Level Busted!

This morning gold crashed about $23 breaking the $1300 price level with ease. I mentioned that this was a very high probability and this morning it happened. We still have a bit to go as 5th waves tend to extend dramatically at times. I dropped my degree level down one degree of this 5 wave run, but I have to stay below Minor degree as we may still have to deal with a zigzag in Minute degree. The $1300 price level was a mental support price for all the bullish price action that was supposed to make gold soar. Gold is soaring alright, but in the wrong direction.

The US dollar also spiked higher this morning as I believe it’s a bullish phase is also far from over. In the near term for this summer and into the fall, I will remain bearish. In the past, gold has had few problems with moving $200 at a time in both directions. This decline is far from over, but we have to be aware that violent reversals can happen at any time, even if they may be temporary reversals.

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Mini DJIA Intraday Bull Run Takes A Break!

Running with the bulls can wear you out, so the bulls are taking a bit of down time as they run in the opposite direction. The question is how far south will the run? The May run sure looks like an impulse to run as 5 waves have completed.   Short term we are still faced with violent moves in both directions, blowing us a lot of smoke to keep any real trend hidden. Eventually the smoke will clear as violent moves (volatility) is very normal when a major change in trend is in progress.  We have a wedge forming as well, so the bottom base of  23,400 has been hit 4-5 times.

We know that “sell” stops are all piling up below this price level, so when that fails the bulls might just capitulate in the short term.  The DJIA is starting to look more like the SP500, but short term any run like this can just correct and resume its charge back up.  I think the short term 24.300 price level will tell us more as that is where I would expect another turning to occur. This may take all week to clear up. Today is the new moon day and many times this can produce strong reversals.  I just don’t see crude oil heading north as the DJIA heads south. In 2008 everything crashed together, oil, gold & silver, gold stocks and all the other indices around the world.  11 years later we are faced with the same setup, but also with many asset classes being at different stages in  any crash.

Gold and oil also made some major moves this morning so I will cover that today as well. I will keep most of my intraday chart analysis between Tuesdays and Fridays as I have to keep my attention on the big trends first.  Any wave analyst can produce you all sorts of numbers and letters giving you short term trade setups.  Short term trade setups mean nothing, if we miss the biggest bear or any of the big bull markets.  The reason short term day traders are everywhere, is because they have no clue what the big trend is that we may be in.

Like Jim Rogers says, ” A big bear market is coming” and it could take a lot of other asset classes with it.

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Australian Dollar Weekly Chart Elliott Wave Count Review

The Australian dollar is not in the US dollar basket but it is important to watch as it follows the commodity cycles. During the years I worked on it off and on as the wild gyrations were far above my pay grade.  Once we line up the 2001 bottom with the peak of the US dollar and the bottom in gold, The AUD bullish cycle was a zigzag with one mother expanded “B”  flat ending with a vertical drop that shocked may gold stock investors.  “C” waves of flats end like this as with zigzags this is reversed most of the time.

For gold to crank up dramatically the Australian dollar has to crank up as well. This is not what I see about to happen as the present rally sure fits great into another Elliott Wave triangle.  A triangle in a 4th wave bear market rally is fooling many into thinking the bull market in gold is imminent.

At this time the AUD is already heading down and it should not take that long before it trashes the previous wave 3 low in Intermediate degree. It may take the rest of the summer and some of fall to play out, but I sure would never want to bet long on a 4th wave bear market rally.

I have a pretty clean 5 wave decline so far, with diagonal leanings but it does look good as an impulse. One Intermediate degree drop is all we need to help confirm the entire decline.

The AUD also peaked in 2011 and has followed gold and gold stocks down together.   You can’t get a better correlation to Gold than when you look at the Australian Dollars big trends. So is gold going to suddenly soar while the AUD keeps heading south? I doubt it, as it would be truly amazing if it did.

The COT report does not show the commercials in a net a short position, but they are long by a small amount but not to any extreme just yet. This may happen at the .60 cent price level. A huge double bottom would be setting up, and a bullish H&S would show up as well.

The perfect setup for a major reversal will come folks, when the talking heads are all spewing out bearish fundamentals concerning the Australian Dollar. Welcome to the club as our Canadian dollar will tag along with the AUD  during the next decline.

Given the history how fast the AUD can crash, what may be bullish looking right now, by next week it could trash my wave 3 bottom.

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Japanese Yen Intraday Elliott Wave Review

eI want to warn readers that this YEN Elliott Wave count is an experimental project that can go wrong in unknown ways very quickly. The 2011 top matches gold and gold stocks very well. I see the YEN decline matching the gold stock decline, right down to matching the mid 2013 correction as well. Even the 2016 rally matches gold’s rally fairly well.  Our present rally is also a choppy rally  that just will not fit into an impulse without some extreme “forcing”. Forcing a wave count to fit our outlook will never work in the long run as the markets will shred those types of wave counts in short fashion.

I have tried for many years to make sense out of the bigger picture in the YEN. It still would need an incredible amount of time and attention before ‘I’m happy with the big picture, but for now an intraday wave count will have to do.  All support would have to get “taken out”, including the 2015 low for the YEN to show us that the bearish trend is still alive.

Commercial reports do not show extreme short positions on the YEN, so they are not that useful at this time. As the YEN declines, then the commercials will just keep adding to their bullish positions. They say gold is still going to head north, but will the YEN follow?  The YEN is one of 6 currencies in the US dollar index basket and it deserves watching if this gold/yen relationship keeps up. Futures are strictly “single units” as they are not “Pairs” like you would find in the Forex markets. You would have to find the exact pair that matches this futures chart to take advantage of any action that may happen in the futures market.

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E-Mini SP500 Intraday Update: With the VIX And Jim Rogers “Extreme Bear Market Coming”

Jim Rogers: Extreme Bear Market Coming

Jim Rogers comes from Market Wizard fame. When he speaks it is a good thing to read what he has to say about the coming bear market in the next few years.



This VIX index has been heading down and is approaching the start of a very violent spike. The spikes show up worse in this index than the actual June contract.  The top parallel lines roughly show where the Intermediate degree stock market bottoms finished at.  We still have a potential $9-$10 price range where the VIX can turn. Sooner as bottoms tend to come in with a “Flash”.  I would hate to see the VIX index hit another new record low, but I still look for a potential reversal as when it happens it can happen rather quickly.

 

As the VIX implodes stocks start a bullish phase, which I think is coming close to an end as the VIX can’t go to “zero”.  I will be doing some “Cosmetic” wave counting. Eventually all trends end so it will erase all those patched up wave counts in a flash. We have different wave patterns between stock markets and this is just one of them. Eventually, when any  new trend is more obvious, as waves may even smooth out a bit. We would have to get a very obvious 4th wave to show up before this run is finished, so many things can go wrong.

This bear market is going to be “More Extreme” which stands to reason, if we look at it from a Cycle degree perspective. 2002 was an Intermediate degree bottom with a small recession. The 2008 bottom was much worse than 2002, recession as it was one degree deeper. The next bigger degree bottom will be a Cycle degree bottom so it should be worse that than what it was in 2008-2009. The markets love to fool the majority all the time and the markets  may not even go lower than that 2009 bottom.  Even if they did go lower, all it would mean is we have a missed extension somewhere in our wave positions.

Contrarians will be buying long before the real bottom arrives as stocks will already be oversold before the real bottom even arrives.  Of course the real bottom at the end the next bear market will arrive when all the experts have declared that a recession is here and it’s going to get much worse. All bearish consensus will be in agreement with the parrots all singing the same tune. At his time the market will refuse to cooperate and start on a bullish phase that will not stop for another 8 years!  It all may take until 2021 as we need the power of solar cycle #25 to push markets up and away.

Commercial traders are very bearish by any stretch of the imagination, which can act like a brick wall stopping the markets march to higher highs.

Overall, I remain bearish on the stock markets until such a time we clearly see that a good correction has taken place.

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GBP Monthly Chart: 1979-2018 Elliott Wave Triangle Update

In some of my past updates I didn’t go back far enough to see the big picture, but with this monthly chart and an additional 1000 bars, we can go back to  1979 and start another count. I have a very high degree of confidence that the GBP is in one big Elliott Wave triangle, and if I keep the wave count as I had it, we may be too early for the 4th wave in Cycle degree to be completed. From my Cycle degree perspective all my work is based on 3 degree levels.

Primary degree, Intermediate degree and Minor degree, in sequential order  is what I have to find to make a better fit. Constantly looking for a better fit is the only way to eliminate the bad wave counts, which “every” wave analyst constantly has. This wave count position change also does not impact  the wave count I presently have posted,  as the short term target is still the same.  Wave 3 in Minor degree still needs to get completely retraced, but does not have to fall below the 1985 lows.  That 1979-1985 crash is just one single zigzag, followed by another completed inverted zigzag. This only gives us a count of two zigzags that have completed. This means we still have 3 Primary zigzags to go which still could be many years away.  Sorry folks, but I have no SC or GSC degree wave counts that I can give you.  I could give you nothing but SC and GSC degree bullshit if you want, as I spent a decade or more counting everything in GSC and SC degree levels.

Flipping big numbers and letters around is actually time traveling on paper, as one degree is the same as jumping forward or backward in time by 60% or more. This is a structural change and not a “cosmetic” change. Cosmetic wave counts never last and they always make us miss major bear and bull markets.

The commercials are net long by a small amount, but they carry far less risk. The speculators carry all the risk, who have”shifted” to the  to the long side. The mass media always report what the speculators are doing. Speculators are the trend chasers which always leads them into a trap sooner or later.  I have been using the COT reports for close to 20 years, which always work best when we see extreme differences between the two groups. If net positions get close to a 4 or 5:1 ratio, then I consider this as a substantial extreme. It also puts our wave counts, at risk of being wiped out.

I will be posting more GBP charts, but mostly from daily or weekly charts and Minor degree turnings.  I think this picture above will show much better as we head into the fall time period. Those that think that the British Pound is going to soar are in a bull trap, so they eventually will have to pull the ejection seat and bail out.

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Are Lumber Prices About To Crash? 1979-2018 Monthly Chart Elliott Wave Count Review

In the last few weeks we could see how bullish the media were towards lumber prices. All sorts of reasons for the price rise have been used.  I have worked on this lumber chart for many years, but due to the choppy wave structure had a hell of a time in making something that fit well. I have worked in the forest industry starting in 1969, so I still remember that crash rather well. Our company behaved differently before the 79 peak, but a year after the crash it was a different ball game.

Before the crash the company never cared about inventory levels that much, as lumber prices were rising as the rough cut lumber sat in the yards. When the crash came and prices started to fall, the whole focus switched to reducing inventory levels, and maintaining strict control. Sawmill production was curtailed many times to keep our inventory levels extremely low.

I never do these difficult wave counts in the computer as I print them out in full 8×10 sized charts.  I stare at the chart for an hour or so before I lay down a single “ink” mark.  Yes, I mean “ink” because each mark makes you think extra hard before you label anything.

One thing is certain and that is that the bull market in lumber is a diagonal in Cycle degree. Most all commodities are in one huge diagonal in Submillennium degree wave 3 starting before wave one back to 1100 CE. After the GSC crash, commodities started to smooth out a bit, but diagoanls will always be around to make counting commodity wave structures a real challenge.

I have labeled it right down to Minute degree levels, which is the bare minimum that needs to be done to come close to confirming a wave count in Primary  degree. The Minor degree would be two degrees below Primary degree.

In the Mid 90’s lumber prices formed a huge quadruple top that eventually got surpassed 13 years later. At this point all things point to the high possibility of a Cycle degree wave 3 peak, and a huge bear market should follow. The wave 3-4 crash in Primary degree was a flat, as I can only count 3-3-5. To me it looks like a classic flat. There is no way of knowing what pattern we are going to get for a lumber Cycle degree bear market, but I’m voting for a zigzag at this time.

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Canadian Dollar Daily Chart Update

Despite what you may be reading about Canada its fundamental economy is becoming a train wreck. Our commodities are turning into a bottle neck as the train tracks need major work and of course the pipeline issue with our local premier who is controlled by the “greens” is willing to go to jail to block any pipeline from being built.  We are facing the Carbon Tax which just scares away any big investors as costs increase. With the world in a lopsided oil trade, I can’t see our CAD soaring like many believe it will once the oil decline becomes more obvious.

The current commercial positions are long, but not by a wide margin. Since the decline is a 5th wave the diagonals come out of hiding, making our wave counting more challenging.  I love the challenge as they are part of the wave structure and provide us with a very important location clue.

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US Dollar Daily Chart Review

I’m sure the gold bugs will not like the US dollar wave count, but it runs inversely to the Euro and wouldn’t do it’s “own thing” no matter what we think.

For gold to soar, we need the US dollar to implode, but obviously that is not happening at this point. This potential 5 wave run looks identical to the Euro 5 wave decline. I also moved my bearish degree level down by one with this run, but may have to shift back if this pattern does something completely different.

As it sits this US dollar bullish phase is not completed but a correction seems to be in progress. It’s this USD correction that has stopped gold’s decline for now.  This bullish phase could move at a very high speed, but it is developing a pretty good looking impulse which can make it easier to count out.

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Euro Daily Chart Bearish Phase Update

The Euro bullish phase came to a dead stop right in a long term bearish trend line that has been going on since the 2008 peak. That 2008 peak matched other commodity peaks along with oil. The only change I’m making is in this bearish phase is to drop down by one degree. People may think it’s funny that I’m concerned with being out by one degree.You may think differently if  only one degree can put you off by 60% or more. This the same as the  Fibonacci number of “.618” which separates each degree level. One degree difference means finding a huge bear market bottom and missing the entire bull market that will follow.  With the 15 degree levels that we deal with, being out one degree is huge.

I’m starting a Minute degree run, which should end up at a wave 1 bottom in Minor degree. For many years gold ran along with the Euro as the US dollar imploded, so it is pretty hard for me to swallow the gold bull market at this time. Oil is also at an extreme so the Euro and oil can crash together, as they sure share that same 2008 date!

A very strong commercial short positions are still on which should slowly start to reverse over the next bearish phase. The Euro is in the US dollar basket, so some of the currencies in this basket, is what we use to watch for reversals.

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British Pound Bearish Phase Review

With my last posting I did not go back far enough, but once I did a big triangle started to make a better fit. It’s always about finding a better fitting wave pattern with my wave counts, as it makes no sense to replace any wave count that is as crappy as the last one. Anybody can come up with a wave count, but maintaining that wave count is the big task. So far the GBP is still on a bearish decline which should take it to new record lows.

Any new record low, even by the slimmest of margins will help to confirm that this wave count is valid. Of course it could be very choppy on the way down, but we should get 5 waves in Minute degree which should finish this Cycle degree GBP bear market.

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Nasdaq Intraday Bullish Review

The Nasdaq has been on a wild bullish phase the seems to have no end. Since the April bottom any impulse pattern we did have fell apart rather quickly. The Nasdaq may be getting ready to correct.and it can overlap right down to the bottom trend line.  I have many different wave counts in 5 of the stock markets I cover and it will take time to sort out.  A three wave rally is just starting to complete and it’s when I would suspect a correction, or even an ending.

The Cycle degree wave 3 position I do have, may still get evicted. At this time I’m not happy with any of my short term wave counts as it will take some time to sort out.  When all support (4 spikes) going back to February breaks down then we may have a better pattern to work with.

I’m not going to spend too much time on this as there still are too many alternates I can come up with.  I never try and post 2-3 alternates in one chart as I try to work one of them at a time. It’s always a process of elimination one wave count after another, which takes time to play out or fail.

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Mini SP500 Intraday Gyrations Review

The gyrations continue as this market is having difficulty in making up its mind in which direction it wants to go. Right now the markets see no gloom and doom as the VIX resumes its downward march.  I had this wave count once before, but now I will bring it back even if it is just temporary. It’s a diagonal 5 wave run, which is not finished yet, but a correction is due. We are near  to completing a small 5 wave run, leading into an “A” wave peak.

In the short term bullish action would have us believe that the bull market is still on.  I could be as some of these patterns are starting to fit into an ending diagonal.  So for the short term, there are still too many different options which have to be reduced or eliminated.  Sure fundamental news gets reported but that is a 24/7 on going event.  There is no way we can pick out all the different fundamental news stories, that made the SP500 go up and then fall just as fast. Fundamentals in the world, is just “white noise” like us older folks used to get from B&W TV stations before they went off air. It’s the volume of the white noise that is important, not the specific noise. Even the DJIA is getting close to looking like the SP500, while the Russell 2000 and the Midcaps are battling for a potential triple top.

This could  drag on until the end of the month, but if it breaks, and it’s a bearish dip, then no short term price support will hold.

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Crude OIl Makes A Swan Dive.

I extended my Minuette degree wave 3-4 with this run into last night being one ugly 5th wave. Early this morning crude oil started to implode, which was also a diagonal. Trump dumps the Iran Deal and oil implodes. Of course, all the forecasts for higher oil prices soon emerged with one forecast at $82.50. I laughed when I read that as it is another example of consensus forecasting.  This morning this June oil contract peaked at $71.80 and then started a decline.

Only time will tell if this peak will hold as my 4th wave in Intermediate degree might find a home for a little longer than just a few hours.

What is far more interesting, is what happened with the Gold/Oil Ratio as oil went vertical. We had a June Gold/Oil ratio managing to compress to a little over 18:61.

This morning the Gold/Oil ratio hit 18.35, which is still the most expensive ratio for this bull market so far.  As the crude oil prices decline further, this ratio will start to expand again.

This crude oil bull market is one of the most lopsided trade setups that I’ve seen in years,  as the professionals are geared for higher oil prices to come.

All these expert fund managers are already in, which has been reported on in great detail.  From my perspective, there is no one left to get in as the “Greatest Fool” has arrived buying into crude oil at $71.80.

The Gold/Oil ratio is a powerful tool as it works on a mathematical base, which the majority ignore. Many of these extreme oil price forecasts mean nothing if you just make a simple ratio calculation.  A $300 oil forecast would give us a $5400 gold price, which is not going to happen. A quick calculation will tell us that the $300 oil forecast is just a mythical dream, not based on reality!

Crude oil is very close to cracking the $70 price level again and that could be the trigger for “sell”orders to kick in.

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10-Year T-Note Intraday Update: The Crash Continues

This 10-Year T-Note bear market has now been going on since the 2012 peak, and it’s still not finished, just yet. I believe that T-Notes have been in a zigzag crash in an Intermediate degree 4th wave crash. To compound wave counts even more, we have to deal with all the diagonal wave patterns that are always present.  The April peak was my diagonal 4th wave peak, which was followed by a decline that is not an impulse at all but must be counted like a diagonal.

The first zigzag looking crash looks like a zigzag, but I was trying to force it into an Impulse which never worked. Once I applied my standard diagonal count down, then things started to fit much better.  All sorts of zigzags show up with the first one looking near perfect, but these zigzags stretch beyond anything ever described in the EWP.  From the wave “2” top in Minuette degree.  The wave 3 followed which also only contained “one” zigzag, with the “B” wave riding high in the wave 3 counter rally, followed by a long declining “C” wave stretching wildly in the process.

The reason for an extra explanation, is that the markets are full of these types of extended “C5” waves, especially when we are in a 5th wave as well. This is only one type of diagonal decline and probably one of the easiest to count out. From late April to our present May peak is another diagonal 4th wave rally, which must be followed with another zigzag in Minuette degree. This should take T-Notes to new record lows, but then smash into a 4th wave bottom in Intermediate degree (Red) In the next couple of years we should see the bulls return as there are just too many people forecasting rates to climb further.

On Current COT reports it shows the commercials in one second  highest long position in over a year. This does not support a huge bear market in bonds, but rather supports a bullish phase to come. Most other types of bonds are also in net long positions, so it’s not just one contraian reading, as there are 3 or 4 other types of bonds as well.

All the bearish wave counts in the world will get trashed if we think that the “Big One” is here!   The last bullish 5th wave in Intermediate degree should also represent a zigzag rally, but this could be so choppy, we will be convinced it’s not a bull market at all.

This decline could last until the end of May and until this bottoms, upward pressure on rates will remain.

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