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ElliottWave5.com - Gateway To Cycle Degree Elliott Wave Analysis

"ELLIOTTWAVE5.COM PROVIDES THE MOST USEFUL ELLIOTT WAVE INTERPRETATION I HAVE SEEN SO FAR!" - Steven Jon Kaplan - 2016 - TrueContrarian.com

Holiday Season Reduced Posting Notice

First, I wish all visitors to this blog the very best during this holiday season.

I will be taking downtime as well, between December, 21, and January 1, 2019. All postings will not cease but they will be sporadic.

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DJIA Index Update.

 

Sometimes the futures charts don’t offer any special insight. I like this index and it only moves during the day. It can take days to finish a small move and this DJIA ended on a down spike and now has roared back to life!

It may last this week but any correction in this market is far from over. The DJIA is not going to soar to the moon as it will take much more to correct the imbalances in the world. That imbalance is “Debt” and world governments are all leverage to a point they will never pay the debt off. It will be easier to default on any debt than pay it down.

The DJIA may have seen another wave 1 bottom but in Minute degree. The bearish trend is still alive and at 23,300 all support will fail. Of course, President Trump will be blamed and they are even talking impeachment proceedings.

If the markets are very expensive when we use the Gold/DJIA ratio, then I can’t be bullish for any fundamental reason.  My most expensive reading was 17.24:1, which was broken by a new record of 21:1 in early August of 2018. This morning this ratio was 19.85:1 which is better but its a far cry from being cheap. The commercials are still net long but not at any extreme, so I would also like to see those numbers reverse.

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HUI Bull Or Bear?

As much as we would like to see some real action in gold stocks, the HUI has done nothing but slowly grind higher. I keep wave positions on about 13 gold stock related ETFs and indices and I can produce a different wave position for each one.  The HUI bottomed in September of 2018 while I have some that just bottomed last month. There are no consistent bottoms where they all bottomed in September so rally may yet be a fake. I show what could be a wave count if any “A” wave was already completed in 2016.

This is still a bearish wave count I show but there could be only one more leg to the downside and then another fast move up. The trouble with that is if the HUI only went as high as I show, it’s not high enough to be followed by 5 waves down in Intermediate degree.

The wedge has the HUI price cornered into the cone which will force the HUI to show us it’s true colors. Gold itself has a different angle during the last 2-year bearish phase in gold stock related indices and ETFs.

The Gold/HUI ratio sits at 7.9:1 which is a cheap ratio compared to the 10:1 cheap ratio I have recorded. I would like to see the Gold/HUI ratio compress some more as it could hit 10:1 again.

I think the markets may be a bit slow during the holidays, extending the time it takes to play out into the first part of 2019.

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TSE Wave Count Review

 

I have always had a real problem with developing a wave count for the Canadian stock exchange. This wave count is no different and chances are good I will have to rework it many times. The ETF to the TSE is far worse as this bullish phase developed sideways. Since Canada is commodities oriented, I may have to apply the big diagonal wave count. I would need a much bigger historical database, which I haven’t found at this time. I have no Gold/TSE ratio database as I would have to start one from scratch. Today this ratio is a bit below 11.8:1 which means it takes 11.8  gold ounces to buy just one unit of the TSE.

This makes it one of the most expensive indices I follow. We also have a big wedge that should slice the bottom trend line in due time. Eventually, the TSE could fall to the 2011 lows but an intervening counter rally should start well before that price level.  The 2016 low might be a better price target for another “A” wave bottom in Primary degree, which may still take until 2019 to complete.

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Crude Oil Intraday Gyrations Update

Are we having fun yet?  Trying to figure out where oil is going next is always a challenge but I sure don’t think that the bearish situation is completely finished just yet.  One clue is that the waves are still overlapping each other which are signs of a bearish rally still in effect.  Another thing worth mentioning is that crude oil is just below the Fibonacci number 55. This support could fail before my digital ink even dries, as a move up or even a bit above $55 could still happen.  I have to run two sets of wave counts for oil, but both of them can be the same for most of the trip.

The Gold/Oil ratio has improved a bit recently at 24:1. This is not nearly close enough to be considered extreme but it’s making progress.  The Gold/Oil ratio only got better during November and we will have to see if it is running into a price ratio brick wall.

I would turn very bullish if the commercials were in a net long position, but they are far from that which will keep oil prices from running away to the moon. The fundamentals in oil change so fast which makes them worthless as well.  Did fundamentals give you the confidence to short oil in early October 2018? The experts were calling for $100 oil at that time. The October 2018 peak was one of most lopsided trades in the world as everybody was leverage to the long side and that didn’t include any COT positions.

The crude oil Death Cross on the daily chart happened closer to the $65 range, and oil would have to rally for a very long time before it creates a Golden Cross.  All my futures contracts that I follow are shifting or have shifted, into the 2019 year.

 

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S&P Midcap Daily Chart Update

We have a triple bottom that is being formed this year. I doubt that the 1760 bottom will hold, as investors usually get their nickers in a twist when support fails.  Below that 1760 support their are all the sell orders being stacked up, to protect the bullish investor.  

When the protective sell stops get triggered this turns the once-bullish investors, into stock bears instantly.  Some of my updates will be on the shorter side and many of my postings will be erratic as I will take more downtime for the next 3 weeks or so.

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VIX Not Ready To Crash!

The bullish action of the VIX tells us that  fear is present in the markets and at this time I believe the VIX has far more room to move up.  A few big gaps opened up in December which were quickly filled or closed off.

Not until I can count out 5 waves up in Minute degree, will we get close to another correction in the VIX. The little H&S patterns being setup also adds to the VIX bullish picture. A bullish VIX means bearish stocks so investors are not getting any Santa gifts just yet. I don’t have sympathy for investors that are still trying to milk out gains at an extreme record high. It’s like playing with a hot potato. If the VIX breaks out to a new record high this week remains to be seen, as the odds of a sustained VIX decline are getting less and less. It may take the rest of the week but the VIX should charge to new record highs.

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Idealized Submillennium Degree Wave 3 Review

Since about 2013, I became convinced that the basic Elliott Wave Principle is just one big impulse. The idealized chart above has a wave zero start with the ending of the Little Ice Age. Yes, global cooling killed the Medieval warm period but picking an exact date is impossible as the LIA took a few hundred years along the bottom. 1500-1800 could have been the worst of it as millions of people succumbed to malnutrition and disease. 

During that time British markets carried on into North America as trade flourished. I have another idealized chart made for commodities as this chart changed into an Impulse during the Roaring 1920s.

The markets in the real world are never this steep, but it’s one of the ways to fit it on a large format paper 24 inches wide. I work connecting all Cycle degree points together first, and the arrow points to the January Cycle degree peak.

Idealized charts work like blueprints and when we try to build the Elliott Wave Tower Of Babel, without looking at the blueprints, then we are guaranteed that any wave count will always fool us and the Elliott Wave Tower Of Babel will come falling down.

When we switch the DJIA to linear settings it sure can look like the Idealized chart. If we compare the 2000 peak with modern day wave counting methods, then the majority of all wave analysts out today are a “Minimum”  of 4-degree levels higher than what my wave counts are. 



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TSLA Defying Gravity?

Tesla has been defying gravity far too long. It seems to be building a very flat top squeezed by a rising bottom which looks like a wedge to me.  Of course, if you are the bullish person you’re not going to be looking for any bearish signals. TSLA has defied the bears as well, but Elon Musk made the bear’s life miserable during the entire time. 

I have an open or uncapped 5th wave so technically I don’t know what wave count is next.

I do, but the only reason this 5th wave is uncapped is that I had no more editing room. I believe that TSLA has or still has to hit a Cycle degree wave 3 peak but I need more evidence in the short-term to confirm it. Tesla is all about commodities, so it stands to reason for all the choppy wave structures. In the future, I will re-work the last 2-3 years in different ways to eliminate any potential expanded top. No expanded top can mean a single zigzag while an expanded top is instantly a flat.

4 or 5 times Tesla tried to breakout and push higher, bit so far it has failed.

My Gold/TSLA database is not that large, as I have to build it from scratch. Today this ratio sits at 3.48:1 which is extreme when we use gold as money.  Most of 2018 the Gold/TSLA has been averaging between 3-5:1 which looks like TSLA has been hitting a ratio brick wall.

The cheap range of the Gold/TSLA ratio is between 60-70:1 so we have a longway to go before TSLA becomes cheap again.

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SPX Crash Update

I like this SPX index as an alternative to my futures charts as it might clear up some wave patterns I’m working. Any specific single month in futures can be so wild that wave positions do get very muddled. I’m not going to spend a lot of time on this chart as I just finished the DJIA which is very close to the same wave count..

They both have the same wave patterns that are very similar, with a few small differences. A run of 5 waves in Minor degree is what I’m after but at this time that could take into 2019 to finish. Any month in the first quarter will do!

I normally try to avoid inserting wave counts from other wave analysts but the above wave count has been completely blown already before the digital ink had dried. The wave 2 top did not work, and he has no clue what happened in 2018 as he left an Intermediate degree 5th wave top uncapped! About the only thing that is the same as my wave counts, is the 2018 peak. He still has 2-degree levels missing.

Elliott wave patterns are not what we think we are seeing as they are what our best visual Idealized chart is. If we don’t follow our vision of an Idealized impulse then how do we know when we are wrong?  I have two big Idealized patterns posted and the diagonal one is used for all my commodity wave counts. 

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DJIA Index Update

This is the DJIA index from Big Charts which shows some violent moves that have occurred in the last 2 months or so. Many of the asset classes I use also contain an expanded top. I look at some other analysts wave counts and they are oblivious to any potential expanded pattern.

If you see any wave count with any 5th wave not being capped then that wave analyst is “Clearly” telling you, ” I have no clue where we are”.  Even the expert wave analysts leave the 5th waves uncapped.

I’ll be pretty blunt in saying that in January of 2018 wave 3 in Cycle degree has completed and my expanded top pattern is still my best bet. We’re only in an Intermediate degree crash right now, but eventually, it will turn into a Primary degree crash.

I need 5 waves down in Minor degree which has a slim chance of finishing this year. The Gold/DJIA ratio today sits at 19.54, which means it takes over 19 Gold Troy ounces to buy just one unit of this DJIA index. This is only a marginal improvement in stock markets getting cheaper, but this ratio should change by the time the DJIA corrects from a Primary Degree “A” wave. 

All support will fail when the 23,400 price level gets breached and panic will ensue again.  So far, I have 2 sets of 1-2 wave counts completed and if I’m lucky I might see the third set. 3 sets of 1-2 waves will extend wave 3 very well, and the 5th wave can also do the same thing. First sets of 1-2 waves are always the shortest, if they are not then chances are good we have an “A” wave.



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BOTZ, Global X Robotics & Artificial Intelligence ETF Update

We can see that the January Peak at $27 is a single top all stuck out in the open. There is no expanded top here like we got on at least 5 other indices.  This January peak is the real peak which I see as wave 3 in Cycle degree. There are always three sets of simple corrections we will have to choose from and we would need a single correction in Cycle degree with 3 stages in Primary degree. It all points to a big flat in Primary degree with this single zigzag being the intro to the “A” wave in Primary degree.

I don’t think this decline can play out by the end of the year, as it may take until February-March 2019. A full set of 5 waves has to develop, and a landing at a Primary Degree “A” bottom would be a buy signal.


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Solar Cycle #24 Update

Some solar cycle watchers have already concluded that solar cycle #25 has already arrived. I question that assumption. Each dot above represents a single month and if we count backward, we can count 5 months when sunspot activity bottomed in July 2018.  

The problem with solar cycle #24 ending in July is that they don’t show up on the sun! New sunspots have to show up in the northern limb or the northern hemisphere of the sun. There should have been 5 months of sunspots show up in the northern hemisphere of the sun.  We can check online and look directly into the sun without burning our eyes. Spaceweather.com does a very good job of this and I clipped out a section that has only one sunspot active today, and it’s right at the equator 



The entire face of the sun is empty except for one little sunspot active near the equator of the sun. Sunspot # 2729.



2018 spotless days have been about 60% days, not yet matching the 2008 73% spotless days. 


I have to apologize if this posting doesn’t look right as they have introduced a new editor and I will have some trouble with it until I get use to it. 

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T-Bonds Daily Chart Bull Market Update.

 

This is just a quick update as this T-Bond chart is off and running on another bullish phase that should produce a new record high in an ongoing  37 year bull market. This bull market will not end folks as it could be on a Supercycle degree wave 3 that is far from finished. Heck if we’re lucky a wave 1 in Cycle degree is still ahead of us. Checking the T-Bonds and commercial traders positions show they are mostly all net long. This helps me to turn bullish on these T-Bond Charts. Even today we had a small spike develop, which should turn into another correction.

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Palladium Daily Chart Cycle Degree Peak Review.

Yesterday Dec 5, 2018, palladium spiked to the upside and then instantly reversed. I was anticipating such a move as palladium finished a new world record high at about the $1245 price level. This is only about an $8 difference from the gold price.  I believe traders are set up in another bull trap and they will panic to try and get out. You can bet that protective sells stops are piling up below the entire length of this 5th wave. Also, computer trading programs can kick in at any time.

The commercials were net short by a good margin (3.68:1) which eventually will kill any bull market. The last 5th wave in Minor degree works well as a diagonal, which is more like a joke as the entire bull market in palladium were all diagonal wave structures.

A Cycle degree wave 3 top will produce a big bear market that at this point in time, could turn into a great looking zigzag. From here on some intraday wave counting would need to be done which I do with my finger pointing at my screen. (Air Wave Counting) Also after a sufficient decline, I can print out a 90 min intraday chart and take my sweet time looking at the entire wave structure.

Since the January 2018 peak a Death Cross formed followed by a Golden Cross, so the next crossing should be another Death Cross which has a way to go before that happens. This is not going to be little correction folks, so don’t get caught in some wishful bull market that will not arrive.

The only time we may get a buy signal is when we arrive at a Primary degree “A” wave. Even a Minor degree “A” wave bottom is pretty dangerous, with an Intermediate degree “A” wave bottom only being a bit better.

 

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DJIA Index 2000-2018 Review

I love to make this DJIA index using a linear setting, as it shows how wild the bull market has been since that 2009 bottom.  If the younger readers think that it’s a good time to invest then they should figure out how deep this impending bear market is going to go. We are heading into a Cycle degree bear market that will not finish with a mear 20% correction! The general guideline is that markets do retrace to the previous 4th wave of one lesser degree.

How can that work when we have no real clue as to what degree level we are actually at.  The 2016 bottom was only an Intermediate degree correction so the 2016 support level will not even get us close to the previous 4th wave. At the very least, this DJIA index has to dip into the 2007 peak, but most of the time the bottom of the markets go to the lower end of that scale, which would be closer to the 7000 price level.

I would bet that the majority of all wave counts you see out today, are a minimum of 2 degrees higher than what my wave counts are.  They still think that the 1929 crash was a 4th wave crash in Supercycle degree. This makes the bull market from 1932 to 2018 a 5th wave extension!

It’s impossible for this to ever happen as there will never be multiple generations 5th wave extensions. In this case that would be a 5th wave extension lasting 86 years already! 5th waves may be technically strong but they usually are the weakest fundamentally. The bull market from 1932 should show diagonal wave structures which they don’t. It seems that wave analysts just love to talk SC and GSC degree bear markets but to be very blunt about this, we must get a very specific corrective pattern that contains a decline of 5 waves in Primary degree.

Since the 2000 peak, no wave analysts have ever confirmed 5 waves down in Primary degree, so it is mathematically impossible for the markets to be at an SC degree top already.

Supercycle degree wave 3 and GSC degree wave 3 are still far in our future. Of course, only the younger generations will run into that because the boomers are going to be out of the picture.

Flipping numbers and letters around is not an option for me as being out by one degree can mean be wrong forever.

Elliott wave is not what we think we are seeing, as it’s all about how well we can visualize the true idealized pattern. Any wave positions in the past that looks like a simple 4th wave triangle are the simple easy patterns we can see. They are also traps for the lazy wave counters that refuse to go back in history and look for wave 3 extensions.

 

 

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Mini SP500 Daily Chart Death Cross Update

 

With the wild moves going on in late trading this March 2019 contract charged up and then down again when the bears attacked again. This time the 50-day MA sliced across the 200-day MA which is the classic technical indicator called a Death Cross. I have a slew of Death Crosses forming and now we have another one. These Death Crosses forecast long-term declines and the Death Cross on a weekly chart is way down at the 2340 price level. My best bet is that any wave 3 decline could slice right through that price level with ease. This fast drop could have ended at my first wave 1-2 in Minute degree then I would only look for 1 more set in Minuette degree. I might need an electronic scanning microscope to see the smaller waves. If the wave three extends then even the 5th wave could extend so this bear party is not over by a long shot. Don’t blame President Trump for all the problems, as it was the Fed that took the alcohol away from the stock partygoers.

This is nothing new as I watched different Feds do the same thing twice before since the 2000 peaks. Since late January, we have 4 bottom support prices showing, and each one of them will get trashed, or rectraced. That would also confirm that from that February bottom up and down again was just part of a bear market rally.

All those misguided investors that just finished putting billions into the markets are now sitting on a Death Cross. Think of anything above the 200-day MA as a group of partygoers all standing on a porch and there are too many on the deck! When the deck legs buckle and snap, then it’s too late to do anything about it. Not too many people listen to a technical analyst, but investing blindly right before the Death Cross is strictly FOMO driven so who cares about some mythical Death Cross!

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HMMJ Bear Market Continues!

 

I’m sure many investors are still “High” on marijuana stocks but I think reality may be setting in for those that didn’t expect pot stocks to crash. I knew they would crash as as this new industry turn into a mania instantly.  This ETF is showing the way and today HMMJ has created another spike to the downside. A correction may come but this market decline is far from over. I think the industry also has it shares of crooks as they just love to take advantage of the emotion. Many big companies have also crashed and the only people that made any money are the ones that participated in any of the IPOs.   I will never turn bullish on this sector until all the ETFs and stocks have been crushed, and even then there is no guarantee they will go anywhere.

The wave count is more like a diagonal which is normal for anything commodities related but they are a bit smoother set of waves. Sure, the price has come down to the point where the Gold/HMMJ ratio is at about 80:1. The most expensive Gold/HMMJ ratio at one point was 49:1 in September  2018.

The dirt cheap ratio was 150:1 so we have a long way to go before this ETF turns real cheap. It may never return to the 150:1 ratio but we may catch it if it keeps heading into a ratio price brick wall.

I don’t have the time or don’t want to spend the time, tracking this ratio as I have a data base of over 28 ratios I’m already tracking. I updated most of them today while US markets were closed.

The potential start of a 5 wave run in Minor degree would match the stock markets wave count as well. I doubt that this will finish this year as it could stretch into early spring 2019.

I think many companies will disappear as margins are going to be razor thin with huge start-up costs involved as well. Then the biggest con of all is that there is a shortage of pot! Yeah right! The dispensaries in Vancouver never shut down. They’ve had their licenses for a few years already and never missed a beat waiting for the rest of Canada to wake up.

If the legal markets can’t supply inventory just yet, then the black market will always come to the rescue.

 

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Algorithms Caused Market Sell-Off?

  This sell-off was caused by a computer-driven ‘footrace,’ Jim Cramer says

We may think that Jim Cramer is full of BS, but he has more knowledge about how markets work and what he says is not just a bunch of hype. The speed of the sell-off on Tuesday was far too fast for humans to be part off. I see them as Algorithms being programmed to sell on certain indicators before the herd gets the same idea. These computer-driven moves will always happen and they are run by hedge funds, that can afford to create the programs in the first place. Flash Crashes work this way which has happened many times before, but they happened in a bull market when after the Flash Crash stocks always went higher. This time that trick will not work if Investor Joe/Jane starts to hate this market and refuses to hit the “Buy” button.

I guess everyone has to learn how to code Algorithms and create AI robots to do all the trading for us.

 

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HDGE Bear Trap Update

 

HDGE runs inversely to the stock markets so I look for the same pattern but I have to look at it as a Cycle degree 4th wave bull market. It will be the wildest bull market you can imagine if the recent bottom did complete wave 2 in Minor degree. HDGE dropped like a rock producing an insane spike to the downside and then reversed in a spectacular fashion. It’s those long spikes to the downside I like to see happen, as they are signals for a reversal or a correction. The only thing that matters now is if the rest of this 5 wave run comes in.

We know a bear trap was forming because HDGE can’t go to zero, and at the $5 price level, they tend to have an inverse stock split, which would have made the news. HDGE should develop 5 waves up in Minor degree and since there is nothing but fear involved this ETF should travel up along with VIX.

I wouldn’t be happy until HDGE goes off the chart, but there could be another 2 sets of 1-2, wave structures we may run across. We should see the next wave 1-2 when it comes, and then after that nothing but 3-4 wave structures will arrive until wave 5 in Minor degree is finished. We are going to run into 5 wave sequences and if I’m out by one degree on this run then I’m out by a Fricken mile.

From here on we should get higher lows which are all corrections. It’s also starting to become obvious that the odds of this 5 wave run finishing this year, is too optimistic as it may stretch into February/March

 

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HUI Gold Stock Review

 

 

For all the wild swings the markets have been making, gold stock related ETFs and indices have been acting like they don’t care. Nothing in the last month or so has fired up investors to hit the “BUY” button. What does it take?  The wedge you see will certainly tell us, as the HUI has to “Breakout” or ” Meltdown”. There is no middle ground as the only other option is for gold stocks to keep going sideways. The Gold/HUI ratio was at 8.2:1 this morning which is getting cheap but not an extreme just yet.

 

 

RING is a gold stock ETF and it looks much like the HUI does. Gold itself is fooling us because the same pattern in gold is facing up! The same wedge applies to RING which is trapped in the “Cone” of the wedge.  I have no large database of Gold/Ring ratios but this morning the Gold/Ring Ratio is at 80.9:1. HUI and RING look like twins, but other ETFs are much lower.  Some Canadian ETFs have had new lows a week or so ago. RING had about a 49% drop from its peak, while the HUI had dropped about 52%.

I would love to go long but there are still too many bulls around for my liking. Next time I will post some of the worst gold stock ETFs that are near to hitting new all-time record lows.

 

 

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VIX Daily Chart Golden Cross Review

 

 

Most analysts ignore the VIX, and investors ignore the VIX even more. When the VIX soars, you know that the stock market will plunge. In January 2018 the VIX bottomed trapping all the VIX short players. This caused the spike up to the 50 price level which is an illusion. When I switch to line mode the 37 price level is the max. For all of 2018, the VIX has been in a bull market, and chances are good we will never see a new record low for many years. Stock euphoria and complacency would have to return in order for another huge leg up to happen in stock markets.

It’s next to impossible to be super bearish with the VIX as without fanfare the VIX has created the Golden Cross with this daily chart. The VIX is built with SP500 options and is the main reason why the VIX is this choppy. SP500 investors are walking into a bull trap while VIX bears are in a bear trap. The VIX would have to drop for weeks (50 days ?)before another VIX Death Cross can happen.

Right now the VIX is sitting on the 200-day MA  and it created a couple of gaps on the way down. Those gaps will get filled on the way up as fear will return for investors? The Fed created a nice stock market bull trap and the VIX is the big indicator where we can watch it happen. Switch this chart to weekly settings and you will see that the Golden Cross just happened in November. These are very bullish long-term VIX indicators and most of the world ignores them.

It may take the rest of the week, but some more downside can happen, after which I expect a full reversal and a new record high for the VIX.

Stocks soared in a wave 2 in Minor degree yesterday,  as the VIX crashed in wave 2 in Minor degree. Once these set of 5 waves start to come to an end then chances are very good, I will turn into a stock bull as we would be at my VIX  “A” wave peak in Primary degree.  “A” wave bottoms in stocks are Elliott wave “buy” signals, escpecially if they are Primary degree “A” waves.

 

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Gold Daily Chart Rally Update And The Death Cross!

 

The gold Death Cross on this daily chart happened around the $1305 price level. Fundamental analysts don’t have a clue about what a Death Cross is or the long-term damage that they forecast. Gold was well below the 50-day MA but now has found a bit of support with the 50-day MA.  The 200-day MA is still far away before the 50-day slices into the 200-day MA.  The 5 waves I show are all diagonal wave structures so the 5th wave is also a small zigzag. I’m going to stay with the same degree level even though I only had about 3-degree levels to work with. I stay with 15-degree levels as when I run out at Miniscule degree, then I know that all degree levels may need a second look.

Switch this gold chart to a weekly chart and we can see gold sitting at the 50-day MA.

Since the August bottom of $1160, gold looks like a triangle, but we should not get a triangle in a wave 1-2 positions. Any break above $1240 will work to finish off the last zigzag wave.

Gold is fooling us as silver has gone the opposite way and was on the cusp of creating a new bear market low. Last weeks COT report still have the commercials net short in gold and silver which does not get me excited about some super bullish move still to come. Three or four gold stock ETFs have already created new record lows, so it’s not just one thing that I look at.

Commercial hedgers are short in palladium, platinum, copper, and aluminum, which is also very bearish in the longer term.

 

 

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Brent Crude Rally Update

 

 

This is a daily chart from the  February 2019 contract month as all 2018 contracts are starting to end. Brent like WTI has held its bottom price, but don’t get all excited about some major bullish move that will provide trading bliss with no worries. Good luck with that, as trends do not just reverse because of some single event or conference event.

Last month Brent crude hit a low of 57.78 and started a reversal producing another spike in the process. There should be more upside to come as small degree 5 wave sequences have started to develop. Any zigzag can produce nice impulse waves, and it is just a matter of time when this Brent crude run starts to run on empty.

Commercial hedgers have had net long positions for some time, but they have massive short positions in WTI. Two conflicting indicators by any stretch, so a call for this bullish move to eventually end will not be popular.

Since May 2018 I have been tracking the Gold/Brent ratio which can tell us a different story. Today it sits at 19.99:1, which is a bit cheaper than what it was at 16:1, but still on the very expensive side when compared to the gold cash price.  Yes, there are small differences between WTI and Brent which can change the ratio a bit.

I don’t look for some wild Fibonacci retracements as nobody really knows what wave count we are really on. Looking for a previous counter rally peak is quicker and far easier to look for another potential turning. This could be at the $68 price level. Everybody gets a Santa gift this December as investors jump back on the bullish bandwagon. Emotional panic moves in or out of an asset class never last that long as most of it can be due to panic short covering. All fundamental reasons for oil’s bullish move can’t be trusted as there is a lot of cheating going on with fake news as well. You’ve heard about fake news and one source of fake news is just propaganda practiced by every dictatorship around the world. Even democracies get in on the propaganda wars.

 

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USD Index From A Bear To A Bull in 23 Years: 1985-2008 Review

 

From the February 1985 peak (164.720) the US dollar index started a meltdown that should have sent gold soaring. By the time the USD hit this peak gold already had crashed. In 1992 the US hit another record bottom that I can only count as a diagonal wave structure. Another fast move up and then down again producing a higher low, which is a sign of a bullish move still to come. This move had 5 waves in it alright, but only in Minor degree. The entire USD bullish move was coming to an end and the gold price was crushed at $252 in August of 1999!

From this 2001 US dollar peak, the bearish move resumed, driving the gold price and the oil price with it. By March 2008 the US Dollar was coming to a major bottom that many of the good contrarians of the day saw coming. The 2008 bottom was a Cycle degree wave 4 low. It was not some little bottom in an on-going bear market. Everybody on the planet hated the US dollar at that time, and a panic into gold started to pick up speed.

It was oil that crashed in 2008, 3 years before gold. Since the 2008 bottom, I counted the US dollar as a bear market rally which proved futile forcing a review looking for a much bigger bullish move.

The big top declining trend line has now been broken also signaling a bigger bullish move still to come. Another indicator that a huge US dollar bull market is still in progress is that falling wedge we see.  For most of 2018 the trade war rhetoric has been flying all around the world and yet the US dollar was in a rally the entire time.

Now that the Fed has given the green light, investors jumped back into the stock markets again. Shouldn’t the US dollar keep soaring if trade war peace is being declared at the G20 meeting? With tensions around the trade issue being reduced there would be no need to hold gold as a hedge. Commercial traders are already net short by a wide margin and it will be interesting to see if they close off their short positions with this Fridays COT report.

Longer term the US dollar looks like a run of 5 waves in Primary degree is in effect, and the 89 price level is the start of the 5th wave in Intermediate degree.

Understanding the US dollar bull market is critical as this is not a short-term bullish blip on the charts, not by a long shot. Recently the US dollar has made some moves that could still be bearish which may support the gold price this week.

There are three main prices that should get retraced and the first near-term price target is 103.800. The 121 price level is next which could take a few years before it gets hit!

The real threat is deflation, which has more to do with demographics or the world birthrate crash than a good stock market.

 

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DOW 30 Index 2018 Review, And The Impending Death Cross!

 

 

This is the index which does not move during the nighttime trading sessions. They also produce far better wave patterns than what individual futures contracts do which have contracts space 3 months apart.  This a standard daily chart and is the first place to look for an impending death cross. So far no Death Cross has formed but by the time the next leg down is in progress then we should expect the Death Cross to happen. My 5 waves up, ended with the late January 2018 peak and what followed fits best as part of an expanded pattern that produced the secondary top on October 3rd, 2018. What followed after the October peak was a set of 5 waves in Minute degree which ended on my wave 1 in Minor degree with a double bottom like pattern.

It has now surged further than I would like so, this calls for an instant review for an alternate short-term wave count. The big wave count has not changed at all.

Last week the Fed gave the green light based on the rate increases taking a break. I mentioned this could happen as the Fed has done this at every major peak since 2000.

Investors are not looking at technical indicators, as the Fed decisions are based strictly based on Fundamentals. Fundamentals will “always” tell you the wrong things at the extremes.

When was the last time the Fed mention that a potential Death Cross is coming? That was a trick question as they never mention technical indicators and they never will. The DOW index is getting close to the 50-day MA and may even go above it for a little while. In order for this market to soar, the 200-day MA must become support again, but once this Santa rally runs out of steam then a new record low will drive that 50-day MA into the 200-day MA line, then instantly a Death Cross on this daily chart has occurred. Death Crosses forecast the most bearish long-term moves that you can expect and the Fed has put all those fundamental worshipers into a bull trap. A  Cycle degree bull Trap!

Many good mainstream analysts also have mentioned Death Crosses so warnings have been issued.

Since 2000 each bear market that has developed got worse and lasted a bit longer than the previous bear market. Since we are heading into a Cycle degree bear market, then this decline should also last much longer than the 2001 and 2008 declines. It may not go as deep as the 2009 bottom,  but even if the DOW crashed below 2009 bottoms, it will have no impact on my present-day wave counts. Solar Cycle #25 will kill the big bear just like in 2009, but Solar cycle #25 might not arrive until 2022, some say 2019 could be the end of Solar Cycle #24 but this is far too early.

I have created a free hand idealized poster of the wave count above and I pin it on my office cork wall and take an iPhone picture of it.

 

This idealized chart starts from the 2009 bottom and will last until the 2022 bottom 3-4 years from now. Can you tell which wave 2 in Minor degree, where we could be?  This is another trick question as there is only “one” wave 2 rally labeled in Minor degree on this entire idealized chart. If the market veers dramatically from this, then a new idealized chart has to be made as well. The Elliott Wave Principle is far easier to understand if we have a clear vision of what the basic structure is supposed to look like.

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IWM, Russell 2000 ETF 2018 Review

 

IWM is the ETF for the Russell 2000 in the last 10-11 months. I’m sure many wave analysts do not count this as an expanded pattern because they are counting from the late August 2018 peak, not from the late January peak of 2018. I’m sure we can argue for years about expanded patterns, but if we ignore them then I know that any wave count in the future will never make any sense. I can take the Russell 1000 ETF (IWD) and do a comparison wave count, and IWD will confirm an expanded pattern much better.

The January 2018 peak is the most important peak, as the late August peak is just the “B” wave peak in Intermediate degree. In the long run, this would be part of a bigger flat in Cycle degree. Again, I stress Cycle degree wave 3-4 and not SC, GSC or even Submillennium degree!  Those degree levels are all in the future!

Recently, due to the Feds dovish report,  gave investors the green light to get into this market with billions of dollars in inflows. They are all following the Fed waiting for good fundamental news which is where all fundamental information comes from. They sure don’t get technical information from the news, as they are ignoring any “Death Crosses” that are forming in most markets. We’re not even that much lower than the January 2018 peak, so in reality, investors are jumping in at world record highs again. Powell is leading investors into a bull trap, as I’m sure investors cannot maintain these inflows for very long.

I guess the Millennial crowd hasn’t learned anything from the 2008 crash, and investors never will, when FOMO is their main method of investing. Those Gen X investors that are going to start retiring in the next 10 years, may never have the time to recoup losses. We could see a 70-80% crash in the markets in the next few years, yet the world is oblivious to the potential size and duration of this impending bear market. 2018 is a very important year as it is 89 years from the 1929 stock market peak. 89 is also a Fibonacci number or 3-30 year cycles back to back.  Not until Solar Cycle #25 appears or lots of news about its arrival will I turn super bullish again. Those smart investors that follow the sun cycles will be the real winners as Solar Cycle #25 could produce another 8-13 year bull market.

 

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Nasdaq Daily Chart 2018 Review

 

The November bottom and the following rally have now charged to the upside, which no longer fits into the wave 2 bullish move I did have. An instant wave count review should always be done if Minor degree moves cannot provide the confidence to trade it. This would only be a Minute degree run, but that would be enough to screw-up a wave count for life. This would be an expanded pattern, with the SP500 and the DJIA looking about the same.

Do all those emotional investors deserve a Santa rally? Not from my perspective they don’! Investors do absolutely, “Nothing”, as stock prices start turning green again. The hardest investors work, is lifting their fingers and pressing the mouse button. Of course, in today’s world, they need Artificial Intelligence (A.I) to do basically the same thing.

Some say investors deserve more, due to the risk they take. What a pile of BS that is, as investors back in 1984 took all the risk.

Many good mainstream analysts are also mentioning the Death Cross on many of the indices I cover, and this Nasdaq is no exception. The 50-day is ready to kiss the 200-day MA  which is also the Kiss Of Death” for a bull market. Anyone that stays invested or brushes off the importance of a technical indicator like a Death Cross, will get hit hard. It will be worse for all those individuals who are getting ready to retire. I think many investors have no clue how big the world tech bubble has become as I see it as a Cycle degree peak and not just a short-term correction.

I do track the Gold/Nasdaq ratio and today it sits at 5.7:1 which is extremely expensive when it takes 5.7 Troy ounces to buy one unit of the Nasdaq 100. A cheap ratio would be 1.18 so there is a massive amount of adjusting that still needs to happen. You don’t want stocks at fair value as that is ridiculous, only crushed stock index prices make a good investment.

All the markets need is some “bad” numbers reported and this happy investor mood can turn sour pretty quick.

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S&P Midcap E-Mini Daily Chart 2018 Review

 

The S&P Midcap futures have not acted like the DJIA or SP500 has at the daily chart scale. The Midcaps have not traveled nearly as far down as the other indices have, where we can see a higher bottom completed already.  The short story is that there is an excellent chance that the Midcaps can soar higher on a “C” wave bullish move. Futures daily charts are the best to look at the 50-200-day MA where we can see that a Death Cross has already formed. This is about as bearish of a signal that we can get. This market can charge through the 50-day MA with little effort, but could then run into stiff resistance at the 200-day MA line.

A short correction can still happen next week but any move above November highs would be the minimum to help confirm a “C” wave bullish move is still in progress. At 1920, resistance should stiffen up, but there is never any guarantee that any bullish trip still to come, can’t end early.

I have no useable Gold/Midcap ratio data based setup, but presently it takes 1.54 gold ounces to by one unit of the S&P Midcaps

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VIX Intraday Update

 

If you want to witness wild diagonal waves then the VIX will give them all to you. Needless to say, this makes wave counting the VIX all the more challenging.  The VIX also has prime examples of vertical spikes in both directions.  I show a pattern that sure looks like it is still correcting with another zigzag. I would love to see the VIX crash and take out that November low.  If the VIX still is this bearish, then stocks should remain bullish in the short term.

The commercial hedgers are net short the  VIX so that doesn’t bode well for an instant stock market bearish decline. Mind you I have seen commercial traders positions change in rapid fashion and we won’t know that until every Friday afternoon.  The Death Cross has been triggered but at these intraday levels, I don’t find them all that useful.

If the November rally is a bear market rally then this has to get confirmed by completely retracing my “A” wave bottom in Minute degree. This would be below the 16.09 price level.

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