This GDX ETF started a bullish phase in 2018 and has carried through to the end of January, so far. If GDX still heads higher then my diagonal set of 5 waves down will get trashed. GDX just finished a small vertical spike but a small correction below $20 would turn GDX into a diagonal set of 5 waves up. These moves can always be a toss-up between a single zigzag and a potential set of 5 waves. If this so-called bull market is true then GDX must not dip below 2018 lows and must produce a good corrective move instead.
The Gold/GDX ratio this morning is standing at 58.86:1 which is just below my record of 57.3:1 in August of 2018. The cheap Gold/Gdx ratio was 84:1 which we may not run into until another major bearish phase materializes. Any move above the $25-$26 price range stops the wave count in its tracks and forces another review.
Reports on Fridays can send the markets on a wild reaction and I’m sure gold stock traders will not control their emotions when violent moves starts to come back. BTW, Monday, February, 4th will have a new moon which can be very bearish for stocks as well.
The SP500 E-Mini has just pushed to another new high for the month of January 2019. Investors and analysts are bullish while a big group is bearish as hell. My Market Vane report is ending but this week there was only 50% bulls present which I don’t see as extreme. A 50/50 reading is not extreme enough to help determine any potential great move still to come.
I see this entire January run as a bearish rally but once the government clears up the economic backlogs we don’t have any COT reports to help us. I do have the Gold/Ratios which never shut down but are always active. The Gold/Sp500 ratio was 2.03:1 this morning which it has been in a tight range since May 2018 which had the exact same reading. This expensive ratio doesn’t make me jump up and down expecting another huge bullish phase to come. Cheap is a .75:1 ratio which means we still have a long way to go before stocks become very cheap again.
The DJIA has about the same wave pattern but looks like it has peaked already. This top may not hold as Friday’s can bring some very unexpected surprises which the markets may or may not like.
The DJIA is a bit cheaper when we use gold as a measuring stick, but it is still pushing the extremes at 18.77:1 this morning. 21:1 is the record to beat which happen in August of 2018.
We are at the end of a month and this bullish phase could be just the public stuffing or topping up their contributions for the 2018 tax year.
Continue reading “DJIA And SP500 Intraday Bull Market Update”
This morning gold spike to a high of $1315 before gold started to back off. Analysts are bullish but most of them give emotional reasons why gold has been going up. “Trade Concerns” is just another mild way of calling gold’s bullish run as a safe-haven run. There is a good chance that gold can dip to the $1300 price level, and then give us another leg up. Sure, silver has also gone up but gold has left silver in the dust!
Even the gold-related ETFs and indices are lagging far behind the gold price. At this 90 minute scale, we get more “Crossings” as it didn’t take to long to travel from a Death Cross, right back to a Golden Cross. On the daily chart, we are still under the effect of the Golden Cross.
Ultimately it’s the USD dollar’s bearish action that is pushing gold higher. My Market Vane report has expired and my COT reports may get published this Friday. Last time the commercials had very bearish positions, so it will be interesting to see how they shifted their positions. This Friday economic reports usually come out as well and if investors interpret them wrong, it could start a mini sell-off.
For well over a month the DJIA has been defying gravity. We had another peak yesterday at the 28,400 price level which is also the right shoulder of an H&S pattern. That’s just one indicator that the markets are approaching bull market resistance. Technically, this 4th wave rally can handle more, as diagonal 4th waves can dip into the previous wave 2. Right now the DJIA is in the midst of a 3 wave move, but two more can develop, pushing to another record high! Gold has also soared during the same time period and this morning gold was close to $1310.
The Gold/DJIA ratio has not changed much as the DJIA is still very expensive at 18.76:1. That is better than the 21:1 ratio we did get and a far cry from the cheap readings of 7.19:1. Maybe if we are lucky more government reports will come out this Friday, Feb,1, that will include some COT reports. Since Friday would be a new month other economic reports will also come out. All this could produce some very violent moves with the cold winter blast grounding flights. Grounding planes will affect their earnings as well, which could take some time before they report.
Once it gets colder in Chicago than the Arctic, then you know it’s fricken cold out.
Looking back in time always gives us a different perspective if we take the time to actually do it. I’ve done this thousand’s of times, and each time looking for a better fit. The common question is, “How deep or low can the DJIA fall down to”? Since the 2000 peak we’ve had more forecasts of the DJIA crashing well below 1000 many times and yet this has never happened. In 2009 the markets sure dipped to a new low and well below the previous 4th wave of one lesser degree. The DJIA stopped dead in 2009, but nowhere near any previous 4th wave during the 1990’s stock mania.
The reason this has not happened is that all other wave counts are calculated as 5th wave extensions. I will stress the fact that it’s, “Impossiable” for the EWP to create 5th wave extensions lasting 2 or even 3 generations.
The 2018 peak is a Cycle degree peak which eventually has to be fully corrected before another huge bull market in stocks will start. The public will call it a bear market and the big question may be, “How deep can the DOW fall”? We have three important turning points, with the 2016 low being just one price area that we can see again. At a bare minimum, the DJIA should slip below the 14,000 price level. Longer term, any price low below 2011 lows, will get us closer to a bear market that is finishing.
This will not happen overnight as it will take as long as solar cycle #25 has not started.
The DJIA has made an impressive short term run that, at a minimum should give us another correction soon or the end of this bullish phase.
Last week Apple’s stock price recorded another bullish high and could still hit a price target of $160. The huge gap to the downside has now been filled! The question is, ” Is this rally just another bear rally or is it the real thing”?. I tend to believe that the rally that started in January, is part of an expanded 4th wave and one more move to the downside should eventually happen. If Apple turns down it may take all of February to accomplish, but when it does I will turn very bullish on Apple’s stock price once it hits my potential “A” wave in Primary degree.
The hedge funds saw this Apple crash coming and it takes only a few of them to unload billions of shares swamping buyers in the process. I’m an Apple product user but that doesn’t mean I’m permanently bullish. Earning are extremely easy to manipulate and Apple is as good as any other company that manipulates earnings. I would be far more bullish if insider buying news filled the financial news blogs, but that has not yet happened.
As more backlogged data comes out in the next few weeks, it could surprise many investors and set off another mini selling panic.
The Gold/Apple ratio is at 8.25:1 today which I still consider an expensive reading. The more shares we can buy with one Troy ounce of gold the better, but not until we establish a large database over some extreme cycles, will it make sense. The cheap Gold/Apple ratio was closer to 21:1, so we have a long way to go before that ever happens.
News of a truce in the shut-down wars, forced a reaction from gold, while the US dollar imploded. The Euro and the CAD also reacted on Friday. It looks like the US dollar is going to keep heading south, but this could also be just another correction. We only have about 5 more trading days until the end of January after which the US dollar can add another leg up. Above all, and to help confirm another bullish leg up, this US dollar chart can’t crash below the January 10th low of about 95.050. Besides a few “flash” type moves the markets have been pretty boring, but with the government ready to publish some economic data in the next few weeks, all hell could break lose.
My updates are going to be sporadic in the next few weeks and months. I will put up a permanent page posting when I have more information.
This platinum bear market is about 7 years long with a major bottom in August of 2018. With that kind of a bottom, we could turn very bullish. There are no COT reports due to the government shutdown, but at least the Market Vane Report keeps on coming, which I will comment on later.
If we look at the pattern from 2016 to the 2018 peak, this pattern is identical to gold except with gold the entire pattern is pointing up. Virtually all other gold-related asset classes during the same time period have been facing down or sideways. Silver was on the verge of a new bear market low while the price of gold was pointing up.
If the pattern in platinum can dip to new record lows, there is no reason why gold and silver can’t eventually do the same thing. The excuse that gold is special due to safe-haven buying is all pure BS as emotional moves never last long. The pattern we see at the intraday scale looks corrective to me so a new record low should happen. Mind you it could be as slow as molasses flowing in the winter.
Any price plunge below $750 would sure help to support my near term bearish stance. After that, I will turn very bullish for a bigger long term bullish phase. One reason I will turn bullish is the Market Vane Report (MVR) which showed that only 22% bulls are present. In other words, there are a large number of bulls that will come back. From a list of 35 MV items covered, the 22% low in platinum had the lowest reading out of all other asset classes. The next lowest reading was the S. Franc at 30% bulls.
Palladium is at the opposite end, which is not covered in the MVR.
PPLT is the ETF equivalent to this futures chart and it looks like the ETF is doing a good job of tracking the metal.
There is a good chance that this DJIA bullish phase is coming to an end. Investors are all waiting for some miracle to happen to give them the green light to jump on board this rally. All it takes is some more “bad news” and this market can switch by selling. Beside that many stop-loss sell orders are piled up below present levels even when we can’t see them. There aren’t too many traders that can handle a 2500+ point decline in the DJIA.
In the long run in order for this rally to be confirmed as just another bear rally, the DJIA has to decline well below the 21,700 price level. With this government shutdown, economic data is rather scarce just like with all the COT reports. About the only truths we have are the charts and those that don’t know any technical analysis are at a distinct disadvantage.
This market rally is just a Minor degree rally and many analysts are very bullish. Getting fooled by a Minor degree bullish phase will be worse once we start a potential Primary degree bear market rally.
“A” wave bottoms in Primary degree are “buy” signals and they should last a bit longer than just a few weeks. I think it’s impossible to have double expanded tops like what all wave analysts are trying to tell us. Most are looking for 5 waves down in Primary degree which has never happened in over 18 years, and it’s not going to happen this time. The reason they have never materialized is that we are nowhere near any SC or GSC degree wave counts.
The Gold/DJIA ratio is at 19:1 this morning which isn’t that far of from a record expensive ratio of 21:1. We have a long way to go before this market becomes dirt cheap again as a Cycle degree bear market will take more than a little dip to resolve.
This March 2019 contract created another spike to the upside which may not be finished just yet. Is the $54-$55 price level resistance. From the bottom, the bullish oil move looks more and more like a 5 wave run. A 5 wave run that could be part of an expanded pattern never lasts, and eventually, the entire 2019 run should get retraced. COT report is worthless information until the government shutdown is settled. I do have the Market Vane report still coming in every Tuesday, and it shows 40% bulls are present. 40% is not nearly enough to push a huge bull market, especially if the 24 month high was only 59% bulls. Now if yesterdays reading was just 20-30% bulls then, I would have to look for a bigger bullish wave count.
The Gold/Oil ratio got a bit more expensive around 24.12:1 but old records make a Gold/Ratio of 17:1 extremely expensive. Incidentally the 25:1 ratio has been hit about 2 times since the 1999 bottom and both times huge bull markets developed. We also have established a new ratio benchmark since then, as 44:1 showed that crude oil was extremely cheap.
Demand for oil also changes with the seasons but any fundamental supply and demand readings are not trustworthy. It’s too easy for any oil player to manipulate, cheat and lie about numbers especially when the oil or gas is still in the ground. Opec is trying to pump up its take on oil because of the Aramco IPO slated for this year.
In Canada, we have the federal government trying to block all pipeline construction because our smiling Photo Bomb leader is trying to turn Canada into a European country. Canada has wasted its oil opportunity blocking First Nations who want the jobs and economic benefits from higher paying jobs. What you don’t hear or read about in the media is there are far more First Nations that want to work with oil and mining companies, rather than against them. Native controlled energy companies are out there and more are being formed.
Investors had a bit of downtime on Monday but the SP500 peaked out on Friday, January 18th. Since then the SP500 has been slowly grinding down. The entire move since late 2018 sure fits into a 3 wave move which can be just a bear market rally. On Sunday we also had a full moon which can act like a bull trap at certain times. The world sad state of affairs will not get fixed with just a short correction as it will take years to unwind the deep debt that all governments are presently in. At the 2680 price level, we also have a very tall H&S pattern being set-up which would be very bearish if the bear market rally is real.
The trend lines are there as it also looks like a rising wedge at this intraday level. Not until the SP500 crashes well below the 2580 price level, can we still be in a bigger bullish phase?
The question I always have for the stock bulls is, “Where is this bullish phase going to”? Is the “bottom in”? Is it a bottom for a return to a multi-year bull market? I’m looking for a bullish phase as well, but this is not it no matter how bearish the stock bears become. Insiders would also be buying their own shares back and I don’t mean using shareholders money to try and manipulate their own stocks. Buy-backs manipulate earnings with only a temporary effect even though they waste shareholders money. Companies that pay dividends or buy their own shares back are sending clear signals telling you, ” We have nothing better to do with investors money”.
Apple fits that description very well and once it started paying dividends under investors pressures, its innovations declined. When we read countless stories about insider buying their own shares back then we might see a potential bottom for a big bullish move. Insiders did this on a massive scale in 2008, and they do not buy on a whim, and they most certainly don’t sell on a “Whim”. A bottom with insider buying lasts much longer so if you were still bearish in March 2009 you will be left holding a wooden nickle like all the wave analysts did. Thinking back to 2009 can give most investors brain cramps as researching that far back sounds too much like work. Talking about the market peaks in 2000 would be 18 year ancient history.
Solar Cycle #24 was underway by early 2009 yet all the wave analysts ignored this fact as in 2009 they all had very bearish wave counts. The wave analysts that are still chasing 5 waves down in Primary degree are living in La-La Land as they have learned nothing in the last 18 years! Expert wave analysts are also telling us that 5th waves can extend 50 years or more which I think is impossible as 5th waves always contain the weakest fundamentals. Besides that, not a single 4th wave bottom in 1932 or 1974 have the markets ever retraced back to. The reason this has never happened is that 1932 was not a 4th wave bottom in SC degree.
2020-2021 could see the arrival of solar cycle #25 and being bearish when a solar cycle starts to crank-up will put investors right back into a bear trap much like early 2009! Solar cycle studies were in the books of EWI, yet at that time they ignored solar cycles just like they ignored insider buying.
Since there is always news about the Chinese Juan, I thought I would look up its chart on bigcharts.com. USDCNH is offshore money much like US dollars are offshore as Eurodollars. If we start back at the 2014 low we can see what looks like the start to a fantastic 5 wave impulse. The Juan’s bullish phase that ended in late 2016 sure works well as what followed was 7 wave decline. I don’t have exact dates for each bottom but many tops and bottoms happen spring and fall as well. The bottom in early 2018 produced another fairly clean set of 5 waves which can work as my first 1-2 wave set if wave 3 is going to extend. If and when we see two more sets of 1-2 wave structures then as sure as I’m typing this, a wave 3 extension will happen.
2017-2018 we now have a great looking double top which is an H&S double top as well. In a bull market, H&S patterns are extremely bullish, so I wouldn’t be thinking bearish thoughts here as the Juan still has a long bull market ahead. Unless I’m far too early with the Minor degree wave 2 bottom. We should find out in about 3-5 months as I fully expect the Juan to break out in 2019!
At this time I will keep counting like the January/February 2018 peak is a 4th wave peak. During the last 8-9 months, the EURO pattern produced a choppy pattern that contains an expanded pattern in a 4th wave position. Since November 2018 the EURO rally was also very choppy which fits a bear market rally very well. I can’t create a set of clean 5 waves up, so the EURO has the best chance of completely retracing its bearish rally. All the experts in the world will give you reasons why the EURO goes up and down. I don’t need to regurgitate all the fundamental reasons for the EUROs up and down action because you can’t trade on fundamental reasons that change like the wind.
The bottom trend line would be an early warning that the bearish run is over but we have to keep alternates handy just in case.
Since the 2011 peak when all the experts were bullish on our Canadian Dollar, it turned and started to crash. Our CAD started a bearish trend that still has not finished. The 2011 peak matched the gold&silver peak as well so when the CAD crashed so did gold stock related asset classes. Since 2011 each counter rally has proven to be a bear market rally as record lows were continuously broken.
Since the 2016 bottom, the experts claim that the CAD is back in a bull market. From the December 2018 low our CAD exploded which really got the CAD bulls all excited again. The thing is no new record lows have been produced which has to happen for the markets to confirm a bear market rally is still in progress. On this chart, the .68 cent price level would certainly confirm that a bear market rally has taken place. Since the 2017 peak, the CAD declined in a choppy fashion which fits best as a diagonal set of 5 waves down.
None of the COT reports are of any use until the US government shutdown is resolved and even then we may get a surprise or two with a potential “COT Shock”. As much as I’m still bearish on the CAD it doesn’t mean it will stop on a dime and head south again.
This sideways move has also produced a Golden Cross but now the “Death Cross” is clearly visible. The CAD would have to switch back to a Golden Cross in order for the bullish leg to keep going.
Since August 2018 Palladium finished a correction and then started to soar. Palladium produced decent corrections during this time. I believe we are coming to the end of this bullish cycle as on January 17 palladium peaked at $1430 and then proceeded into another correction. Many may think it will be a correction but a bigger bear market will push palladium prices much deeper than anyone can imagine at this time.
In January 2018 palladium also peaked and a 7-8 month bear market ensued. The entire palladium Cycle degree Idealized wave count is diagonal, so another Primary degree zigzag bear market can happen and they happen when market players least expect.
If this wave 3-4-5 in Minor degree is true, then the 4th wave bottom in August 2018 will never hold. Palladium might give us temporary support at $830 but bigger support would be closer to the $500-$600 price level.
You will read many stories about the palladium supply shortage with forecasts that prices will be much higher this year. I’ve heard all that “fundamental logic” many times before in gold and oil, and still, the market in question crashed. All we need is for buyers to take a rest and all the protective sell stops can start to get hit. All the bullish traders suddenly turn into palladium bears and the analysts will start telling us the change in fundamentals. Fundamentals are lagging indicators and you just have to be patient and the analysts will find you a reason why palladium is crashing.
The crowd loves to buy high, and they can get convinced to be “bullish” just when they should be very bearish. The COT reports are just about one month old, but commercials were net short in late December 2018 already. Not until the shut down is over and done with will the COT reports get updated.
Another crude oil spike this morning can be a sign that another correction is due or spikes can also be the end of the entire trend. It now looks like I have 5 waves up, which can be part of an expanded pattern. I kept the wave counts small but chances are good I may need to change it at a later date. We could get a correction back down to the $49 price range but if crude oil travels.
Many times 5 waves like this make a run and we can get excited about another large leg up in oil. Many times we can get fooled especially in an expanded 5 waves. A wild move that completely retraces the $42 price level will confirm that this move was just another bear market rally. Going long at this point is a FOMO move and chances are good your bullish bet will get stopped out pretty quick.
The Gold/Ratio has also become more expensive as we are at 23.81:1 today. 17:1 will put us back to where oil would become extremely expensive again when compared to gold. A large zigzag decline is not of the table but we will not know that for some time. If the present Gold/Oil ratio stays the same for a few weeks then it could be hitting what I call the “Ratio Brickwall”
We also have a very convicing H&S being set-up at the $54-$55 price level so anything can still happen in the next few weeks.
SPY is very popular with investors and there is lots of liquidity until buyers take a rest. Being bullish in a vertical price move that seems it doesn’t want to stop, is exhausting.
This ETF will go a bit higher than what is posted, and there is still upside that we can take. Diagonal 4th waves can soar well into any part of the previous wave 2. Triple tops at the $280 price level would be close to my maximum what I would allow. Even before SPY gets near that $280 target price we should start seeing a strong correction. The stock market sure doesn’t care about any government shutdown as it just keeps on trucking. Maybe the shock will come once the shutdown becomes history, as they will have to sort through tons of date just to catch up.
Nobody knows when the shutdown is going to end, but they believe that the stock market will soar once this trade war comes to an end. Any COT reports have not been updated and when they resume posting traders positions we could see a mini “COT Shock”. We can’t tell until it happens as it could act just like a “Flash Crash”.
This Mid-Cap ETF is also a diagonal wave as IJH has now dipped into my wave 2 in Minor degree. IJH should resume its bearish trend and if this was a fake, or bear market rally then a 100% retracement must happen.
The biggest asset manager in the world (Blackrock) says the bottom is in and we are off and running into the next big bullish phase. Of course, they always have a fundamental reason, that may derail the bull market. The world’s problems are not going to get fixed in a short correction, as it will take much longer then most of us have the patience for. We could get another zigzag decline that will look like 5 waves, or we can get an obvious zigzag that stands out like a sore thumb. Either way, a new record low will be a trigger to close off shorts positions and even look at going long.
I have a small short position with this ETF and once IJH drops below $175 it will turn my short position green. Below $156 my short position will be closed off, as sure as “shit”, a counter rally will wipe out any gains we may have at that point.
HDGE moves inversely to the SP500 but it doesn’t follow it in a perfect lock-step manner as the deep crash went deeper than expected. The only way HDGE can crash so deep into wave 2 in Minor degree is if it’s a diagonal wave structure. HDGE is now forming a double bottom with two spikes in a row. HDGE can take more downside but I see a bottom starting to develop. One more bullish leg above the $9.00 price level would work well to complete this bullish run. That will not happen today or tomorrow as it could take well into February or even March before this run completes.
After that HDGE should suffer a much bigger correction and should also take much more time completing. We would be in a Primary degree world by then and heading down to a Primary degree “B” wave. The VIX has also plunged in the same manner, so it’s not just one asset class that has displayed this bearish decline.
So far the SP500 is keeping its bullish trend while the VIX created a huge decline. I have only one trend line which the SP500 is starting to cross or roll over. Any bigger dip will help confirm that the SP500 could be losing it’s power, as buyers take a rest. Markets are just big auction sales which always gets sold to the highest bidder and I see the markets reacting the same way.
I can’t get a correction out of the VIX as it looks like 5 waves down. I’m sure the VIX will crank up again as the VIX could be on a “C” wave decline. All this might still take the rest of the week to play out, as little choppy waves stretch time. US government shutdown has killed any COT reports and once the government gets up and running again, we could get a COT “Data Shock”. My last report will be a month old by January 20th so positions could make dramatic shifts when it gets released again.
The Market Vane Report I still get is a private report, which shows that 47%-48% bulls were present all last week. There are still too many bulls around to keep fueling this bullish phase for another major leg up. Our 24 month high was 73% bulls, which is not as extreme as it can get, but enough to kill the stock bull. The basic logic is when the majority are bullish then who is left to get in. Is it a tribe that just came out of a cave or just another greater fool chasing a bull market? FOMO is a popular bull trap
The markets keep pushing higher, chopping up all the bears into hamburger meat in the process. The DJIA has already gone sideways long enough to where it has broken the bigger trend line that started in 2018. I’m showing a wedge which some even call a bullish flag. I see a wedge at this time but the DJIA can keep pushing north, but it can also suddenly reverse in a surprise bearish mood swing. Analysts will always find a reason why any asset class goes up and down but can we invest or trade with any single fundamental opinion.
Without a doubt, some analysts are very bullish when the markets are pointing up, and they become very bearish when the markets are pointing down. Only a few have the courage to be bullish when the markets make a big dip like in December of 2018. Most investors didn’t have a clue a market drop was coming in October 2018. To say that Apple didn’t see the slowdown coming is not being truthful as Tim Cook was the expert on China long before Steve Jobs passed away. Apple has a position in the DOW, so chances are slim that Apple will soar when the DJIA reverses its bullish trend.
The Gold/DJIA ratio and the Gold/Apple ratio give us a clue when an asset class becomes very expensive or cheap.
The record Gold/DJIA ratio to beat is 21:1 which happened a long time ago in August of 2018! Today we sit at 18.40:1 which still makes the DJIA expensive. Cheap would be 7:1 but that could be a pipe dream if you think it’s happening now.
I think options are due this Friday which can always cause some unwanted turmoil as well, and we will find out how committed the stock bulls really are. Usually, funds enter in January for income tax and retirement funding, and when the flow stops, stocks can make a huge plunge. When the DJIA retraces the 21,500 price level then this rally will be confirmed that it was just a small bear market rally, in Minor degree. If any Minor degree rally can trap the bulls then any Primary degree bear market rally will trap many more.
January 15, 2019
I apologize to my readers for inconsistent updates, but one of my personal email accounts has been hacked and spam mail has been flooding in for months already. The threats of blackmail demanding Bitcoin payments have intensified and have also become more vicious. I stopped into my provider’s office and showed him a printout. They also gave me an e-mail where I can send some of the worst threats to. In short, my private FaceBook Account has been hacked because the problems did not come from this blog. A friend is coming over this week and he has had the same problems including death threats. Needless to say, he had to delete his FB account which I might do as well. I have changed and increased my password strength, which is just one step I can take. It will take time to see if the spam mail slows down. Phishing emails are pretty common and I report them as well. The writing is on the wall as I think it is time to reduce my digital footprint as much as possible.
This year other things have developed that further hinder any consistent postings which I will elaborate on in the future.
Crude oil created a bottom on January 1-2 and then proceeded to make a bullish run that has now turned into a correction. If this entire bullish move is just a bear market rally then crude oil should still crash to new record lows below that $42.50 price level. A bearish rally will slice the bottom trend line in two, but this correction can be the 4th wave as well. We might get support at the $49 price level which may take several weeks before we find out. None of the COT reports are working while the US government is shut down.
Even my Gold/Oil ratio has not changed any recently, as we are now at 25.46:1, from a January 2, 2019, reading of 28.77:1. If the reading jumped back to a 17:1 ratio, then I sure would be very bearish on oil.
Crude oil sure developed a nice H&S pattern and if it fails and oil goes higher we know that the bullish trend might be real, at least for another leg up.
There are so much hype and BS regarding oil that the fundamentals can change over-night depending who you listen to. Saudia Arabia with it’s planned IPO is trying to come clean with its reserves which have been kept a secret for decades. Nobody will know unless independent sources verify their claims of all this new oil they have been hiding!
Talk about going ballistic we have to look no further than this NFLX chart. What Netflix is showing is more a diagonal move than an impulse move. Since the November 2018 bottom (Wave 3). Netflix created an expanded pattern which are more common than wave analysts give credit to. Our present day move has at least three open gaps which would not get closed until NFLX hits the $270 price level. We could get another zigzag decline which could close that open gap we have back in January 2018. NFLX sure repelled from this gap, but there is still a small part of this gap open. Ideally another new record low can happen, but we must be open to a bull trap before then.
I don’t have any Gold/NFLX ratio database setup, but today we are sitting at a ratio of 3.81:1, which is only slightly cheaper then when NFLX was at $420 in June of 2018.
GDX is a gold stock related ETF, which has been in a bearish trend since about June/July 2016. The gold experts tell me I’m a dumb ass as they think gold prices are still going to the moon. They could all be right but gold stocks tell us a different story. Since the June 2016 top, GDX traveled sideways and down while at the same time gold was pointing up. Other gold stock related ETFs are much worse than GDX. Late summer 2018 is when our recent bull market started and GDX would have to play catch up to come close to what gold performed during the same time period.
Gold stocks have been lagging behind gold, which has been normal at most turnings. In order for GDX to continue its so-called bullish trend, then that top trend line “Must” get breached by a long shot. The GDX $26 price range would be the minimum that GDX would have to retrace back up to. If and when GDX moves below that 2016 low, then we know for sure that the entire move was just a big bear market rally.
Any gold stock move that is fear related or safe-haven related never lasts in the long run, because those are all emotional moves.
The Gold/GDX ratio is presently at 61:1, at 84:1 GDX would be pushing the extreme cheap side when compared to the price of gold.
Mark Hulbert also wrote a review showing how bullish gold stock investors have become.
I will stay with the big wave structure until this wave count shows me otherwise. Fast moves like this tend to never last that long as most moves like this are just emotional moves. FOMO or unstable algorithms producing flash crashes is part of the landscape that we can’t avoid. The SP500 is starting to flatten out a bit so it’s just a matter of time before some mentally unstable algorithms start to freak-out. I’m just having a bit of fun here as algorithms are not human but very few people can tell the difference. Algorithms are created by humans just the same. Traders can’t move as fast so spikes are produced which usually develop at turnings.
The bigger the spike the bigger or longer any counter rally will last. Since the 2018 January peak, we’ve had more spikes that we can count and each one produced a reversal.
In candlestick form, you would have to count all the “Hairs”, (Wicks) and always know the price of each “hair” tip. If this rally is a bearish rally then a new low below 2040 should happen. Many analysts are very bullish at this point, but they were also bullish at every major top we’ve had so far.
Since the 2011 bottom, the USD turned bullish again which also matched the stock market bottoms of 2011. Stocks soared and gold-related assets started a major bear market. I believe the bull market in the USD has a long way to go, but where we are in this bullish phase is the challenge we face. The COT reports are useless due to the government shutdown but my last readings from Dec, 20th the commercial speculators were very bearish. This is a very bearish sign for the US dollar but the commercials were also very bearish on, silver, Gold, aluminum, palladium, and platinum.
During the late 2018 peak the US dollar produced a very complex pattern that may have finished on January 10 2019. During this USD decline gold gave us an impressive performance that has many convinced gold is going way above $1400.
The US dollar is on a 5 wave run in Primary degree. Take the Euro and invert it, and it would just about look like the US dollar. Only time will tell if the USD has bottomed but eventually the USD should go well above the 104 price level.
The DJIA is now well within 2018 spring lows which can work as resistance for a bear market rally. Any retracement back below the 21,700 price level will confirm that this rally was just another start to a fake bull market or bear market rally. I will leave the top as is for now, until this 5 wave sequence gets confirmed. In the long run, a wave “A” in Primary degree is in our future where we can get a decent chance at a longer sustained bear market rally. From a Cycle degree perspective, this so-called”correction” is far from finished, if the markets have a Cycle degree wave 3 top.
If we start from the 2009 bottom the following bull market was about as choppy as they come, which is very typical in 5th waves. 5th waves are fundamentally much weaker than 3rd waves are, but the majority of wave analysts think 5th waves can extend 80 years or more. Nobody has a real clue what degree we are in but if analysts keep chasing 5 waves down in Primary degree we know that the majority think they are in GSC degree already! That logic does not wash with me, because not a single wave analysts have ever confirmed any Primary degree 5 wave sequence since the peaks in 2000.
Albert Einstein: The definition of insanity is doing the same thing over and over and expecting different results.
This is the best way to describe what has been happening with the majority of wave analysts for the last 18 years.
So far the markets have refused to die, as they keep on ticking and heading higher. Many are convinced the correction is over and higher highs are coming. Dynamic bullish moves like this happen in bear market rallies frequently and most of the time they never last that long as well. From a Cycle degree perspective, every bear market rally gets retraced which in the Nasdaq started from the 5900 price level. Any move below this 5900 price level would confirm that our present rally was just another fake.
If investors are getting fooled with just a Minor degree bullish move then there is little hope in convincing anyone that there are Primary degree bear market rallies.
The SP500, DJIA and the Midcaps all seem to match this Nasdaq rally on the intraday scale, which I think is a bear market rally. The Nasdaq has dipped into the previous wave 2 which automatically makes it a diagonal pattern. The Nasdaq has already backed off but another short spike may still turn up.
The COT reports are unreliable until after the government goes back to work. This is when the gold ratio database is helpful how expensive or cheap the markets are when we always calculate using the futures gold cash price. My new record for the Gold/Nasdaq ratio was 6.38:1, and today it is at 5.1:1. This is a bit cheaper but still on the extreme expensive side. Cheap was 1.18:1, so I would like to see a 3:1 or even a 2:1 ratio.
Last night the DJIA has started to back off from a wild bullish run which has convinced many to jump back into this so-called bull market. Wednesday is also a good turning day during a week!
Since December 2018 this move may not be finished yet if a bigger bullish move is still in progress, but if the zigzag rally is real then that December bottom of 2018 will not hold. (21,500). This move can be just a small bear market rally, and the best way to confirm that is if we see the DJIA completely retrace this bullish move. This 2019 bullish move was a very fast move which is normal in a bear market rally but seldom can maintain the move in the long run.
This morning the Gold/DJIA ratio was 18.40:1 which is an improvement but still not cheap enough by a long shot. I figure that at about 14:1 this market may be cheap enough to sustain another bullish phase, but at this time we are not even close. I have a Gold/DJIA ratio that made the DJIA “Cheap” when compared to gold, which was about 7.19:1. One day in the future this 7.19:1 ratio could get beat again and if and when it does, I will turn extremely bullish.
With the shutdown no government COT reports have been issued so we only have Dec 20, 2018, as the last time the COT report has been published. At least the Gold/Ratios never shut down as they are always in effect.