Monthly Archives: March 2017

Apple Intermediate Degree Review: A Perfect Fibonacci $144

 

 

Apple has pushed into all time record highs, with the added bonus of achieving the $144 Fibonacci number. What else can we wish for as I love it when markets turn at whole Fibonacci numbers.  In any potential Cycle degree wave IV bear market,  I’m sure we could see the $89 and maybe the $55 price level again. 

We have at least 3 easy to see gaps, that are open below present prices, and it would not surprise me when all these gaps get filled in the next 2-3 years. 

When it comes to the Gold/Apple ratio we are sitting at the extreme ratio of 8.67:1. This means that gold will only buy 8.67 shares of AAPL, which is one of the most expensive readings I have calculated so far.  To stay long with these readings is just asking for trouble, as the markets will swing back to a point when Apple becomes cheaper again. The Nasdaq has also pushed to new record highs, so it stands to reason that Apple followed along.   

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

 

 

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

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

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Nasdaq 100 Intraday New Record Highs!

 

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

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

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Gold Intraday Bullish Review

 

 

In a big unknown bullish phase any decline is just part of a correction. In the last 2-3 days the markets have created many expanded patterns and I don’t think gold wants to be left out. Looking at an expanded pattern is also a very easy choice.  Expanded 4th waves can create some pretty dynamic 5th waves,  that are also connected with zigzags. 

We have a great looking H&S pattern, which in the short term has to create the right shoulder before it can soar north again. Many can call this a very bearish move, but I have seen these exact moves be very bullish in the long term. Besides, we would never look at it from a very bearish point of view, if we are in a much bigger gold bull market.

Even if there is a very high probability that this gold bull market is heading up to a “D” wave, which eventually  become bull traps.  We still want to milk any run to its maximum when we can.  The last thing we need is to be extremely bearish when there is no reason to justify such a wave count at this time. 

Short term the markets will always try and fool us and gold is not any different in that respect, from any other asset class.  We are now well over a year,  into this gold bull market, and there is still lots of upside to come.  The big hurdle will be the $1375 price level, after which we need a 4th wave in Minor degree before the bull market can even be considered dead. When the time is right, a few good contrarian indicators will help give us a heads up. The gold pattern will really get choppy as inverted zigzags come out of the woodwork.  This is still far down the, “Yellow Brick Road”  so don’t think it’s starting to happen right now. 

End of the month and the end of the first quarter,  can always create some dramatic moves, so in the short term anything can still happen.  Now if gold still crashed much deeper than this, it would be an instant signal that a complete review must be initiated.

Short term and longer term I’m bullish, until all the parrots start squawking much louder again. 

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Mini DOW 30 Intraday Bullish Review.

There were server problems this morning, but hopefully things are working as normal again.

The DJIA also has been on a trip north, but, if we have passed to the bearish side of this market, then another leg down should happen. 

There is a good chance that since about the 22nd of March,  the markets have given us a, Crazy Ivan” made famous in the movie, The Hunt For Red October”.

A crazy move one way and then a reversal the exact opposite way. That last move was a set of  5 waves that would work best as a diagonal wave. A “C” wave bullish phase,  ending at a potential 4th wave rally in Minute degree.  The intervening “ABC” crash to new lows was a flat and I had trouble making it fit into a another 5th wave down. 

It may look crazy as this was a very deep plunge, but these happen on a regular basis, and are not that easy to identify in real time. Even if I did count it out like that originally, readers may have difficulty in understanding it.  The SP500 fits much better with an expanded pattern,  so I have no problem with looking for the same pattern in the DOW. 

This could make for a very bearish setup for the next few weeks. I would need another zigzag to complete the 5th wave heading down. From my experience these diagonal 5th waves can extend dramatically, when they want to. If this happens then it could also produce a nice long spike to the downside as it would end with the start of wave 1 in Minor degree.  So far it all points to a potential zigzag in Intermediate degree, but time will be the overriding factor to confirm this. 

Cycle degree wave III is still holding so that is a very good sign at this time. 

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US Dollar Bear Market Rally Review

 

The US dollar bearish phase has been going for nearly 3 months, and it’s far from over. The recent rally fits better as an  impulse, so it must find a home where it is connected to. “C” waves can be part of expanded patterns which can look like impulse waves.  When I see a set of 5 waves stuck out there on its own, we can think about a bear market rally.  Of course it would be normal to look at this rally and think a much bigger impulse is coming.  Only time will give us more information and next month may be the month to do it. 

Later, when we find a potential “B” wave rally,  the waves could be very impulse like as well.  We don’t want to be fooled into thinking that the return of a major US dollar bull market is just around the corner, as that would also crush the price of gold.  We are in a potential Primary degree “E” wave decline with an Intermediate degree zigzag, so we have a long way to go.  2008 to late 2016 was what sure looked and counted as fake bull market, which technically has to be ompleteley retraced. 

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Crude Oil Intraday Bullish Price Action Review

 

 

Crude Oil has been smoking hot recently, adding on another little spike today.  It will never go in a straight line to the moon, as those pesky corrections always get in the way. In the longer term, it may be that the bullish phase of oil has returned and the only way to confirm it,  is if we can keep building on the diagonal impulse wave structure.  What it means is we need corrections which contain “ABC”  type mini crashes. The “C” waves must always end pointing down. 

Any real wild change to inverted zigzags may signal an end to this rally, but for now it’s a go.  No gaps have opened just yet, which is also a good sign.  To some degree, oil has been going up and down with the stock markets, but that may just be a temporary thing as well. The Gold/Oil ratio also compressed a bit today, which makes crude oil  more expensive when compared to gold.

The Gold/Oil ratio would eventually have to hit the extremes and become very obvious. This may not happen until far below the 12 or 10:1 ratio.  When we get closer, then recording the Gold/Oil ratio more frequently will be also be very important.  Above all we want  to milk the entire bullish phase as long as possible, and not call any peak too early. 

The Market Vane Report saw a low reading of 29% bulls last week, which also gives us lots of room for many bulls to still jump on the oil bandwagon.

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Gold Intraday Bull Market Review

 

 

Gold seems to have made a decent correction closing the little gap we had in the process. The diagonal type 5 waves up may not be finished as a 5th wave should still come. I think there is little prospect of getting pure impulse waves except for very small degree levels. Once any diagonal is in progress,  there is little chance of it suddenly changing to impulse waves.  Diagonal waves are one of the very best patterns in painting us a picture where we are. Any, “C” wave bullish phase can contain diagonals.  The entire 5 waves up in Minor degree will be like this so there will be many, “ABC1, ABC2, ABC3, ABC4 and ABC5 type labelling.  

In the short term we may still see lower prices, but after which gold should show us another leg up.  We had a wicked Head&Shoulder pattern as well, and which initially can seem very bearish, but long term can  be very bullish.

A bull market is not that easy to kill once a bigger bullish phase is in place.  The big bullish phase has been in effect for well over a year already, and there may still be a year or so to go. At least for the rest of 2017 and possibly into Match of 2018.

The server has been down this morning, which seems to be fixed for now. 

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Mini Sp500 Intraday Rally Evening Review

 

For the last day or so the markets have been on a tear, in a 5 wave impulse fashion. This 5 wave sequence has to fit, in a diagonal world. One of the locations we would find this type of a move is in a “C” wave.  This 5 wave sequence sure can fit into and expanded wave 4 that started way back with the March 21st bottom. After the wave 3 bottom the SP500 rallied before it made another steep plunge, which cannot fit into a 5 wave impulse. It contained a 3-3-5 pattern which is a flat. 

I love catching an expanded pattern, and this one can fail, but we can be brainwashed with the impulse mentality where we can miss most all expanded patterns.  I have stressed it many times that diagonals should be labeled differently so we make sure that diagonals are identified.  Expanded patterns happen very often, but are not counted that way, as it is just easier to count it as part of a 5 wave sequence. 

This can fail again, and the only way we will know, is if the next decline becomes an obvious correction. Otherwise the trend down should resume, and then new record bear market lows will get established.  Once the next leg down is firmly established, then we should get close to another wave one, but in Minor degree.  The next trend down should be another 5th wave zigzag, but maybe we will get a faster set of moves and travel deeper,  well out of proportion to what we have had so far. 

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Crude Oil Intraday Rally Review.

As much as I would like to see a very strong bottom in the oil prices, we still have far too many probabilities at this time.  Inventories could disappear in a flash once the summer driving season gets  into a full swing.  Anyone can come up with a huge list why the fundamentals can send oil much lower.  In this case I will not argue that point at all, as trying to find the bottom price of crude oil, has been a crap shoot at best.  Since about the 16th of March, crude oil has developed 7 waves down, all roughly the same physical size.  These are diagonal waves,  and even the last 5th wave crossed to now lows with a 3 wave pattern. Since they are zigzags, then technically, crude oil should retrace all of these  7 waves.  The majority of wave analysts, ignore three wave declines to new lows and just count them as an impulse. This is wrong  as  we would be ignoring one of the best location pointer wave structures, that the markets can produce. 

A spike just formed, but oil seems to want to keep going. Any run back up to the $50 price level can happen, after which we can have a hard fight to get past that previous peak. 

Any Gold/oil ratio numbers have not changed that much and still are nowhere near any extreme expensive side. 

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Mini DJIA Intraday Rally Review

 

 

The markets sure demonstrated how violently they can behave once they turn. I was expecting a rally, but at that time we were still well below the gap. This gap has been filled, like it never existed, and now we are coming up to some resistance levels from a previous 4th wave type rally.  We are a bit short of touching any invisible top trend line, and it would not help this wave count any, if the DJIA produced another leg up.  Another leg up would make this a 5 wave run, and a potential “C” wave in an expanded 4th wave. 

If the bigger bearish trend is in place, then sooner or later the markets must make new legs down. 

Worst case scenario would be that all this was just another fake zigzag correction,  and then the  markets keep going to new record highs.  Any major degree top is now stuck out there all by its own, which makes it much easier to count from. When many tops form, it takes a long time to sort them out, trying to figure out which peak belongs to which side. As I post  the markets are still making bullish patterns so in the next 2-3 days anything can still happen. 

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US Dollar Counter Rally Review

 

 

The US dollar has executed a nice rally  and has just about gone far enough for a single zigzag bounce.  This sure can fit into a 4th wave rally, as any gap we did have has been closed shut. This is all good, and the next leg down should produce some more US dollar bear market lows.  Wave 3 seems to be an extended wave, but the 5th wave can also get extended. Two waves in 3 of the impulse waves  can always extend, but never all three of them.  For the 5th wave to finish before the end of the month is going to be a bit dicey as we are running out of time. 

We can end on wave 1 in Minute degree or wave “A” but there should still be lots of downside to go, with the US dollar.   Can all this go sideways with a triangle type pattern? Sure, it can but this may still be low on the list. Any triangle may fit much better in the 4th wave of Minor degree, but the triangle would be the least of the worries.  We also would be expecting a “B” wave rally, which itself can contain an expanded pattern.  It could turn into a complex pattern, that will keep us scratching our heads the entire time. 

Long term, we need a zigzag in Intermediate degree for the US dollar bear market to be completed. This is still a few years away, as we need to find the first set of 5 Minor degree waves first. 

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US Dollar Intraday Rally Review

 

I mention that we could get a violent reversal, and we most certainly did. It closed the gap with little effort and now we have an extreme spike as well.  I would love to see this reverse and then head south, creating new US dollar bear market lows in the process.   Any Minute degree wave “1 or A” is still ahead of us, so there is a lot more downside to go.  In the long run, we need to confirm an Intermediate degree zigzag,  and then break all time new record lows below that 70 price level.

Sooner or later the majority will figure out that the US dollar is in a bear market,  and then they will get serious in jumping on the gold bandwagon as well. Of course, when that happens, chances are good the gold bull market will come to an end, and then it will implode as well.  

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Crude Oil Daily Chart Review

 

 

To put it bluntly, I’m not a happy camper when it comes to the crude oil wave counts, at least on the short term basis. Long term this is still a bull market until such a time that the contrarian indicators tells us that prices have been pushed to the extreme. So far none of these indicators have shown up, so what we have is still a correction. When this correction is going to stop can still have two strong options.

The recent small rally looks corrective so I think there is still more downside to come. The wave count I do have would have a limit about around the $46 price level, and if the entire structure is an expanded triangle, then the $44 price level would still be a target. 

The Gold/Oil ratio hasn’t changed that much and is still sitting around 25.83:1. This is still very decent and I would like to see a 10-14:1 ratio when we get to the very expensive side in oil.

Besides that,  chances are good that Steven Jon Kaplan will Tweet something when he sees the end of this big oil bullish phase. Also the Market Vane Bullish Report will also give us a clue.

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Mini DJIA Intraday Bearish Review

 

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

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

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

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

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

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

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Mini SP500 Intraday Bear Market Review

 

 

So far the markets have made a rally before they started to turn down again last night. I know it is real easy just to turn everything into impulse waves, but as the book shows the markets also contain diagonal waves. The majority of waves, are the diagonal types, not the perfect impulse waves, that the majority wave analysts use. There is a good chance that starting out we have 5 diagonal waves heading down, and we still have wave 3-4 to contend with. They are all connected with zigzags and have a nasty habit of fooling us when a zigzag does not follow through to a new high.  Five waves down in Minute degree could lead us to wave 1 in Minor degree, which sure would make an Intermediate degree zigzag a high probability. 

The March rally could be another “AB” count, which would then connect to wave 4. In other words, we have to expect another leg down, which can extend dramatically.  The end of the month is approaching fast, and anything can happen as traders get out of positions that are going nowhere.   We need another new low to confirm the short term bearish outlook, and we may get it by the end of the week. 

Wave 4 in Cycle degree seems to be active, and it may take 2-3 years to finish. 

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Nasdaq Intraday Rally Review

 

 

As usual the Nasdaq is marching to a different drummer,  and which drummer I’m not exactly sure. 😉 Hopefully it’s a Rock and Roll drummer.  I’m confident that the Nasdaq is also over to the bearish side, but just barely.  The big test will come if  the Cycle degree wave 3 position will hold, which means no more new record highs are supposed to happen.  A wild diagonal move up, and then what looks like a straight move down, before it started to soar up again.  Technically, I would like to see the Nasdaq break the “A” wave peak even if it is by a very narrow margin.

Here is another good example how price is irrelevant if a position is going to hold or not. So far it looks like a triple bottom, but if the rally is a fake, then eventually that triple bottom will get, “taken out” and left in the dust as the winds of change return from the North West. Every chart move has only three possible directions, as the winds can never blow from the east.

Our present rally can also be a diagonal where it can dick around extending the time for this single wave quite a bit. This inverted 1-2 wave can also fit into parts of an “ABC” wave, where the present double bottom will definitely not hold.  It may still take a few days or so for this to play out, after which the Nasdaq would once again resume its larger trend.  My longer term outlook is very bearish, as the Gold/Nasdaq ratio is still at an extreme reading of 4.28. This means that it takes 4.28 ounces of gold to buy one unit of the Nasdaq. This ratio has to compress by a large amount, closer to 1.18 before the Nasdaq becomes cheap again.

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Gold Intraday, Short Term Bull Trap?

 

Gold has soared, which I love to see, but it also comes with some warnings that are too hard to ignore.  Right now we are just dollars away from breaking out past my old wave 1 in Minor degree.  In the short term this can offer some tough resistance as gold battles it out with that old $1263 price level.  I’m sure gold will win, as nothing will kill a bull market until it is ready to die. 

Of course, right now we  have a great looking Head and Shoulder pattern showing. In the short term they can be very bearish, but long term can also be very bullish.  At $1246, gold has a gap so in the short term this gap should get filled. Gold may head south far past that gap, so be prepared for a potential wild little ride.  The rally at this time fits better into a diagonal, and may have terminated at yet another wave 1 as well, and it wouldn’t surprise me if the $1242 does not hold.  

This gold bull market is alive and well and those that don’t have the confidence in knowing this, will get freaked out with any swift downward move. 

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E-Mini DJIA Intraday Crash Review

 

Last night gaps started to open up on this mini crash heading down. It was not just one chart, but gaps showed up on many of the asset classes that I cover.  This makes it too much of a coincidence, so these sets of gaps have more meaning than just some single gap in a single asset class.  There is now a huge potential for a counter rally to close these gaps before the markets resume their largest trends.   At this point not too many  know what the real trend is, but I’m sure that sooner or later we will get a consensus, when they all agree that the trend is down. 

The funny part of it all is that once the majority agrees with the trend, then this trend, will reverse and head the exact opposite way.  Most pros can handle a small reversal or counter rally, but anything bigger they will get freaked out just as well.  Most trading is done with computers and Algorithms, which execute trades in milliseconds. Triggering or hitting stops can make for some pretty dramatic moves.   Right now it is all still pretty mundane.

There is a big possibility a 4th wave type of a rally can creep up on us this week. One reason is that today is a full moon, and full moons can make the bulls go crazy, forcing their little fingers to move their mouse over to the “Buy” buttons.  We have a full week to go before the end of the month, so it may encourage traders to dress up their accounts. Of course, any rally should not last, but eventually it should resume the greater trend. It could go sideways or barely retrace the 4th wave top which is at that 20,700 price level.  Any higher than that,  the counter rally will dip into wave 2. When that does happen then we have to try and fit it into another pattern, especially if we just ended on another “ABC1” wave count. 

At this time the bigger trend is still holding, but any evidence of an intermediate degree zigzag that may start to form, is just a gut feeling at this time. Any gut feeling has to eventually get confirmed by the markets in a reasonable fashion. 

Any big Cycle degree 4th wave bottom does not have to make some new historic low,  as the markets will always do something different trying to fool what the majority will be expecting.  Remember the majority have all been brainwashed to think in much higher degree levels, as for my work has gone down by a minimum of 2 degree levels. I look at the markets with a Cycle degree perspective, not SC or any GSC degree perspective. Finding, tracking and labeling all 5 Cycle degree locations is my only priority as without them we cannot move into the SC or GSC degree worlds.

Having some assets in SC degree and another bunch in GSC degree will never work, as that is a mathematical impossibility.

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GSCI – Goldman Sachs Commodity Index (GD) Review

 

 

At this time I think the Goldman Sachs Commodity Index or the GSCI gives us a better picture of the bullish phase that started in early 2016. It represents oil more that it does gold, and it also shows the diagonal better leading into what could be the “A” wave in Intermediate degree.  Even after the June 2016 crash the following bullish phase is very foggy as so many critical waves overlap. 

A zigzag with an expanded running flat could have sent us to the first wave in Minor degree. After all, we are in a bullish run that has some extreme diagonal waves in it. Waves 3,4 and 5 will also be very choppy, and it is also a good reason why this bullish phase can still take so long to play out.  Even that last 5 waves were so choppy that they fit better into an ending diagonal, than a logical 4th wave triangle.

Crude oil rolled over long before that,  and is a bit out of  perfect sync, to this GSCI. I would have to start from scratch,  and build a Gold/Gsci ratio with a few calculations from at least two extremes. Four extreme readings would be much better. Any potential wave 2 in Minor degree may not be finished as well, so in the short term anything can happen.  Tomorrow on the 27th we start a full moon phase, which can be very bullish for stocks as well, even though it may only be a short term thing.

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SP500, 1980-2017 Cycle Degree Elliott Wave Review

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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VIX Daily Chart Bullish Review

 

It’s been awhile since we looked at the VIX. In general the VIX has already been in a bullish phase since late January 2017, about 2 months ago. Is there more upside to come? I think there is even though the VIX just created a spike to the upside.  Diagonal bull markets have a tendency to do that, and the VIX is a chart that has extreme diagonal waves in it.  

Short term the VIX should retrace the entire drop from the gap above. This would be very close to the $23 price level, which also coincides with Trumps election results. Two events or indicators around the same price level is a great price target as, the entire Trump VIX decline should get completely retraced.  Of course that would push the VIX past my top wedge line, which just adds some nice fuel to a bullish perspective. 

All the bull talk with the VIX, is very bearish for stocks, which the SP500 reflects the best. Many ignore anything to with the VIX, when they do look at the VIX,  they can twist its action in many different ways. Don’t tell that to any contrarian as they know how to use the VIX very well.  The VIX is an excellent contrarian indicator for the stock market, which served its purpose well, in the 2015 stock bottom and the August 2015 VIX top. 

Longer term that August 2015 top will also get retraced, but that still could take years before this happens.  Our near term $23 price level is about the only thing we need to watch right now.

The COT report still shows the commercials as being net long by a wide margin, but I would expect that number to change when the VIX upside is running out of wind it its sails. If the expert wave analysts had incorporated the VIX back in 2009, they sure would not have come up with the insane stupid call that they did.

Five waves down in Intermediate degree in the SP500, was a forced wave count, which the VIX never confirmed in a matching pattern. It was not even close!

Of course Steven Jon Kaplan had already been calling for the biggest bull market since the depression, while wave analysts were still dicking around drawing mindless numbers and letters.  Don’t think that the 2009 bottom was a fluke when wave analysts got it wrong. They got it wrong in 2002 as well. It is not a stretch of the imagination that they will get the next bottom wrong as well.  It may take another 2-3 years to find out, but every bearish stock wave count that will be  in sympathy with the herd will fail. 

If we refuse to learn our lessons to buy low from the 2002 and 2009  bottoms, then they surely will not learn anything from any potential 2021 low as well.  

I may criticize modern day wave counts, but that is because they do not want to do the hard work required to find their mistakes. It is much easier to create cosmetic changes to their wave counts than going back 100 years and finding the true positions.  The reason for so many big wave count failures with the stock market is that since 1929 they all worked with extended 5th waves and not even looked for the extended wave 3.  

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Gold Intraday Bull Market Review

 

Gold seems to keep on making it’s bullish moves, and that is a good thing. That does not mean that an unexpected plunge cannot happen.  Diagonals are famous for unexpected drops, and when they happen, they are just corrections in a much bigger bull market still to come. I don’t think we are close to any Minute degree wave 1, as it may take until the end of the month to do.   Any wave three going up, can produce extensions that can look pretty dramatic when they are finished, especially when they are part of a bigger “C” wave bull market.

This gold bullish phase is far from over, as at a minimum, gold should cross that $1375 price level., and if we have the force of the waves with us, we may even see $1700-$1800 gold during this phase of a potential “D” wave in Primary degree.  Once a big bullish phase takes hold, there is nothing that will kill it, until it is ready to die.  This can only happen when an extreme bullish mood is present, across most mass media sites, and several good contrarian indicators also start to show up.  

Right now any bullish mood is not unanimous, as hedge funds had been dumping anything related to commodities.  Like my contrarian friend has mentioned, ” Without the Panic selling from time to time, contrarians can’t buy low, and make any money”. 

Last week, the Market Vane report showed that the bulls present hit  58%. Longer term I think this number should hit above 80%

In commodities markets move in the opposite direction of fundamental, as oil has clearly shown us many times. Even gold back in 1999, the fundamentals were so bad, but yet gold rallied to well over $ 1900.  Back in 1999 all the gold bears also ignored all the contrarian indicators, and the Elliott Wave Analysts did as well.

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Mini DJIA Intraday Review

 

The DJIA has been drifting up and sideways. Even without any wave counts, the pattern sure looks like it’s still in a temporary rally. I think this is a 4th wave rally as I can work it as a triangle with little problems. Yes, I would like to see one more push to the upside, as that would retrace my “C” and “D” wave, by 100%.   After which stocks are free to crash with another leg down.   This could all be part of a Minute degree, “ABC” crash, leading into a wave 1 in Minor degree.   We still don’t know what type of a bear market we are going to get but a Cycle degree triangle is the very last choice from a list of three.  There is not enough time in the next few years to allow a triangle to fully play out before the start of solar cycle #25.

There is a good chance that this bearish phase will take a bit longer than the other two bear markets,  we had since the 2000 peaks, as we are one degree higher this time. One degree difference between one single degree can mean a 61% difference in all our forecasts. 

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Crude Oil Daily Chart Review. Bad Actors Or a Bad Script.

 

If there is one pattern that is giving wave analysts a hard time, crude oil would be at the top of the list.   Sure, I can start making a bunch of “WXY” waves, but that really shows I have no clue where we are. Every time I change the chart style a bit, I can create a new pattern.  If I make a giant “WXY” wave with the “Y” wave inverted, then technically crude oil should fall to new record lows. When analysts draw inverted “WXY” waves,  they are painting us a picture. Technically, every inverted zigzag should get retraced and “WXY” waves are no different.  

Inverted zigzags means, oil is in a bear market rally, and the entire rally must get retraced, after the “Y” wave has completed. 

That isn’t going to happen, as two sentiment readings in late 2015,  were about as bearish as I have ever calculated them. 

Until these readings reverse, combined with a very bullish media mood, long term, oil is still in a bull market.  Just aimlessly making inverted “WXY” zigzags tells us that the wave analyst is very bearish. For now I looked for a potential expanded pattern, which would be a running expanded flat.  A retracement to the $46 or $45 price level would be better, and the last little spike bottom would also get retraced.  In any panic to get out, amazing spikes to the downside can happen.  

The Gold/Oil ratio has improved in the last week, as we are sitting a bit above 26:1. 

Even the Market Vane reports last week, hit some highs of 30% bullish, which does not support an oil crash to new record lows. 

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E-Min DJIA Intraday Gyrations.

 

In the last few days the DOW took a big swan dive followed by another wild ride up, which may have completed this morning.  Now we have to see it the recent peak will hold  and then push lower and make a downside breakout. The majority are working on what the call key support price levels to be broken, but the price does not determine support. It is the pattern that supports a price, and the problem with that is the pattern is really ever that clear. 

We have already been over on the bearish side for most of the month of March, and they will not declare a bear market until it retraces about 20%.

Little do they know that the this market could ultimately drop by 70 or even 80% in the next 2-3 years, so support price levels will have little meaning in the log run.  Even when we get to an “A” wave bottom,  support will only be a short term bet at best.   The best turnings are always the turnings that force the majority betting in one direction, and then forcing them to bail out, and go the opposite direction. 

Very few traders have the drawdown capability to stay in a huge “B” wave rally, so most of these turnings I like to see will contain lots of fear. 

The VIX would be in a vertical move and gold stocks may be overbought by a large degree. We still have lots of time before we even get close to this “A” wave in Primary degree, so anything can still happen.  I still favor a flat in Cycle degree as wave 2 in Cycle degree looked more like a zigzag. 

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HUI, Gold Stock Bull Market Review

 

 

The HUI will give us a pretty good general idea about the gold stock bull market. The GDX ETF also reflects the HUI very well. From the early 2016 bottom the HUI exploded in a wild ride up until about August 2016, before it imploded again down into  the December 2016 bottom.  I believe that this was just a correction, in an ongoing bull market that still has two major legs up to go. Waves 3 and 5 of a diagonal “C” wave.  This should take the HUI well above any bull market highs, even though it could be a “D” wave bull market.

Wave 1 and two in Minor degree have already completed, so gold stocks should have no problem in clearing the wave 1 peak in Minor degree and the “A” wave peak in Intermediate degree. Somewhere along this path I’m sure we will get extensions and vertical moves, that the majority could not even imagine could happen. “C” wave bull markets are notorious for doing just that, and time will be the biggest factor, to make it come true.  

We may just be, at the first wave in Minuette degree, so we have a long way to go. The Gold/Hui ratio is still in the middle of two extremes, and with a bigger number with the HUI, the ratio moves at a snails pace. Very expensive was about 3:1 and today this ratio is at about 6.29:1.

When the entire gold stock bull market has extremely bullish news with it, and when the 5th wave completes, then it will be important to see what the Gold/Hui ratio is at.  The Gold/Hui ratio is just one contrarian indicator, as insider selling will be another.  All other gold stock ratios will also show us ratios to the extreme expensive side. Until then, this bull market is alive and well. 

When we do get closer to another extreme,  I will increase my ratio calculations as now I may just do it once a month or so.  

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Gold Intraday Bull Market Review

 

 

Gold still seems to be in a bullish move, and that is what we want. Gold had a strange start and silver was even worse, but eventually a diagonal will become more clear in the long run.  The February and part of the March decline, works as a Minor degree wave 2 crash, and now is still a bit short of a complete retracement. 

I’m sure the complete retracement will happen, but it may look like it will be a struggle. This rally is also a good example how small degree levels come out of hiding. The wave 2 in Minor degree is now just shy of being retraced, but yet the 5 waves up so far are at least, are two degrees lower. 

Does it mean that wave 1 is an extended wave? No, not at all as first waves are the shortest waves most of the time. When they look long, chances are good they are “A” waves, and not a wave 1.  

All price targets are still valid and when we cross these hurdles, then this will help to confirm,  that the gold bull market is still alive and well.  Even if gold is heading up to another “D” wave in Primary degree, the majority will never know the difference, between a fake and a real bull market. They only care that it keeps going up. A real bull market will have a better defined set of impulse waves.   It is my obligation as a wave researcher to let my readers know when a bull market can be a fake,  but that does never mean that we should not buy low and sell high into and out of these large degree swings.  There are contrarian indicators that will give us an early warning when we reach a major top, but if we ignore these indicators, then our wave counts will not mean much. 

Hedge funds have been reported to flee the gold bullion market, but since when have the speculators (managed money) ever been right? 

 

 

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US Dollar Intraday Bear Market Review

 

Since early 2017 the US dollar has been in a bear market that still will take a very long time and price distance to go.  Of course, how deep the US dollar goes, or how long it will take, all depends on our personal opinion.  Due to the big choppy bull market starting in 2008, this gives us an Elliott Wave clue that the entire bull market to the 2017 top, is a fake.  One big bear market rally, which can always get retraced by 100% or more. 

This translates into a “D” wave top in Primary degree, which all wave analyst counted as an impulse most of the time. I tried, but that fell apart rather quickly as well.   Any “D” wave can give us very bullish fundamental news, but contrarian indicators tell us that a huge correction was coming, or the downright end, to the US dollar bull market. Just two indicators were enough, to convince me that a bigger bear market was going to happen. 

The type of pattern should be another zigzag decline in Intermediate degree, which wave, 2 up in Minor degree, may have already been completed. 

We would need two sets of 5 waves in Minor degree, with a huge counter rally thrown at us to keep us very confused. 

I hate drawing trend lines, but when I do, I only draw them in parallel to each other.   Any kid with a ruler can draw trend lines, and it is one of the most abused technical tools used by all the Technical analysts. After such abuse, trend lines have little meaning when we see many wedge like lines drawn on the charts.  

At this time I will work this as a potential impulse decline, but may have to adjust later if the 4th wave does not materialize. It could be a very violent reaction, and over before we know what hit us.   

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Crude Oil Intraday Crash Review

 

My last attempt for a bullish reversal ended in failure, as crude push yet to another new low. This decline is not an impulse as only diagonal waves can be this ugly, and give us such a hard time. 

As much as the oil bull market looks like it is over, it’s not. The looks of a wave pattern can be very deceiving, especially when it has any diagonal tendencies.  At a minimum if we had landed on another wave 3 bottom, we should get a rally retracing the short term peak 4 or 5 days ago.  We could get a lot more upside even in a 4th wave rally, as diagonals can do amazing things, when they are ready to do so.   Any higher with more cleaner impulse wave structures, could make todays bottom, a major bottom as well.  Long term oil price target at this time would still be above $89 with a potential push to the $115 price range. 

You can waste your time chasing the fundamental news, but what few investors know is that in commodities the markets act the opposite of fundamentals.  During the middle of one of the worst fundamental oil gluts in history,  crude oil started to charge up in price. Does that sound logical? Not really, but this has happened in the middle of every world oil glut we ever had. 

In late 2015 we set another record low sentiment reading, so until all those sentiment readings turn extremely bullish again, then this oil bull market is far from over. 

The opposite happens at major tops as all the fundamental experts got wrapped up with Peak Oil and the $200 price level, they had no clue how expensive oil was at that 2008 top.  I registered an extreme Gold/Oil ratio of about 8.9:1, which gave oil little choice but to crash. Kaplan saw that 2008 oil crash coming, including the gasoline price crash, which the majority thought was a crazy call.  Sure enough Kaplan’s call was right on the money. 

Using ratios and other sentiment reading is a far more objective approach in how we look at the markets, and I owe Steven Jon Kaplan a big thanks for introducing them to me. All the very best of the contrarian indicators that I talk about, should be incorporated into the EWP.  Just using the EWP for short term trade setups is a very inefficient use of a great analytical tool. Of course, if we are chasing some super wild SC or GSC degree wave count, then the EWP is pretty useless.   

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