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Category Archives: INDICES

SP500 Intraday Gyrations Update.

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

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

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Crude Oil Daily Chart And The $100 Forecast!

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

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

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

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

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VIX Daily Chart: Falling Wedges Are Bull Traps!

 

 

 

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

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

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

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

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

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

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Nasdaq Intraday Bullish Phase Update!

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

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

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

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DJIA Intraday Bullish Progress Update

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

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

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

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

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

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Mini SP500 2000-2018 Review: Buying The Dips?

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

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

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

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

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

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

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DJIA “Big Dip” Update!

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

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

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

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

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Is Nasdaq Friday 13th Bad Luck?

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

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

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

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

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VIX Intraday Update: Calm Before The Storm?

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

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

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

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Is The Mini SP500 Going To The Moon?

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

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

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

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

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

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

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Mini DJIA Intraday Rally Update

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

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

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

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

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Mini Nasdaq Intraday Bullish Phase update.

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

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

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

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

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

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

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

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Mini SP500 Intraday Rally Update

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

 

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

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

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

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

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

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

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

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

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S&P/TSX Composite Index

 

The bears are slowly taking over in Canada  as it is getting more and more difficult to keep painting Canada’s outlook with a rosy brush, at least in the short term. Since the 2009 bottom the TSX produces a diagonal 5th wave as well, which just about looks like the diagonal came off of the EWP book. I labeled it the lazy way this time, but it’s a diagonal that already has finished. I don’t think Canada is going to be insulated from world turmoil as it could get hurt the most if we can’t get pipelines to ship our crude oil out.   Even the Permian has bottle necks with not enough pipelines sending crude oil out of the US Permian region.

Either way, no matter what, all trends must come to an end, busting the myth that stocks will stay permanently high! The majority of stock investors believe there should be no volatility in the markets with no crashes so when markets do crash, investors blame everyone else except themselves for buying in at extreme tops. They will find the evil culprit or a company that will bring the TSX down, if not they will make some shit up or create a “consensus opinion”.

I think this TSX has to crash below 11,000 which will produce a big support base at the same time. That price range should not hold as the previous 4th wave low is still closer to the 8,000 price level.  If I painted for readers a bullish picture with SC or GSC numbers and letters, then I/m in the same bull trap as the investors presently are.  That is unacceptable to me as mainstream media will not call a bull market top in fear of being mocked. Since 2000 this will be my third bear market that I’m counting down, but even that is not good enough if we haven’t learned anything from the two other bear markets!

I have covered some of the biggest markets in the world, looking for those mythical Cycle degree wave 3 tops I keep talking about. It is impossible for me to track them with the detail required to confirm any move and no one has stepped forward that wants to count down a Cycle degree bear market in any market I cover.

Elliott Wave 5.0 is all about locating all 5 waves in Cycle degree which must be found before we can ever enter any part of the SC degree world. Stepping from Cycle degree sequence into the SC degree world, is like stepping through a Stargate so we want to be extra careful to make sure we have the right combination of numbers and letters to let us through. You need to have the right passcode to let you join the SC degree world.

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DAX 1995-2018: Elliott Wave Review From A Cycle Degree Perspective!

This is the 4th world index that I looked at recently. It looks like the DAX investors have had a wild ride in the past and now it’s coming back!  The DAX history is linked to the US markets as the DAX crashed and burn right along with US stock exchanges. Back at the 2000 bubble, I thought there could be an expanded flat, but it also works as a great diagonal 5th wave in Minor degree. After 2000 the bottom fell out of the DAX but this DAX crash counts out very well as a zigzag.

The zigzag bottomed in early 2003, after which the DAX took off in yet another bull market. The DAX also counts out well as a set of 5 waves in Minor degree. “In a bull market “every” 5th wave top must be joined or connected to a one higher degree number.  So in mid 2007 the 5th wave in Intermediate degree topped, but also stopped on a wave 3 in Primary degree. After which it crashed again.

Then by early 2009 the DAX bottomed right along with the rest of the world, but also participated in the 2009-2018 bull market. The 5th wave in Primary degree counts out very well as higher quality 5 waves, which keeps it out of the diagonal wave classification. I could only squeeze the 5th wave in Primary degree into the chart, which should be capped. The 2018 peak, is a wave 3 in Cycle degree, not SC degree and especially not GSC degree. Being out by just one degree, we can be out by a mile, so we want to take care about what we stick onto the 2018 peaks.

All my DAX peaks are ending with a wave 3 count and so are all my other indices that I work with.

A friendly warning, “Don’t trust any wave count ending with a 5”  from anywhere on the Internet. They have broken the Elliott Wave sequence, if they don’t cap any bull market 5th wave.

To confirm any future Cycle degree 4th wave correction, it will take a very attentive wave analyst to keep tracking the DAX which I don’t have but I will track some of the bigger turns when I can.  It’s the crowd psychology that is being damaged as they don’t know what to do with all this volatility. One expert claims that this is the most volatility he has seen in the markets in his entire  career.  What? Stay tuned as youv’e seen nothing yet!

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Nifty: India Stock Index 2001-2018 Review

Starting back in 2001-2002 I had an Intermediate degree 4th bottom, which matches the bottom with most US indices. The pattern is also made up with diagonal wave structures, especially from the 2009 crash bottom.  That’s one ugly run from the 2009 bottom, and it is a pattern only a mother could love!

From 2009 to 2018 looks like it is right out of our EWP books as the entire 5th wave is a diagonal. I counted the diagonal with a simple wave count, but technically they are all connected zigzags. Any wave 2 or wave 4 can contain a flat type pattern, but in most part waves 1-3 and 5 should be zigzags. Expanded “B” waves could make this pattern but then we need a very strong down crash to confirm that.

I don’t think that is the case as any “B” wave rally should be far more volatile than what we can see. Is this Nifty index also at a wave 3 in Cycle degree? I sure think so, but it will take an attentive wave analyst to confirm any bear market that we are going to get.

One lesser degree from a Cycle degree top is the 4th wave in Primary degree, not Intermediate degree. This wouldn’t even kick in until the Nify hits about 6000, but most of the time corrections will travel to the lower end of the scale, which is at the 3000-2500 price range. Sometimes even a bit lower. A 73% crash may do it, and a Cycle degree bottom will correspond very well with all other markets I track.

Looking at another wedge sure will kick the enthusiasm out of the bulls,  so all I can say is “Watch Out Below”.

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Shanghai Composite Index (INDEX): SHCOMP

 

I have a large following from China and I wish I had more time to post the Shanghai more frequently. From the 2007 peak, the Shanghai crashed right along with all the US markets, but after that the Shanghai started to do its own thing. We have a major secondary peak that is a lower peak, which puts the Shanghai into a bear market. Big bear markets are just big bull market corrections from my Elliott Wave perspective.

The 1000 price range could put a bottom to the Shanghai as that would be the previous 4th wave of one lesser degree. From everything I looked at most of the solar cycle turnings has been from the tops of solar cycles not from the bottoms as most US markets have been doing.  Now the Shanghai seems to be drawn to the bottom of solar cycle #24, just like US indices have been doing.

It still may take 3 years for the Shanghai to bottom, but it can turn into a bull market right along with US markets just the same. Despite Trump’s efforts in a trade war we will still be in a world economy, relying on each others products. China is a big buyer of LNG products and imports more oil from Asia than the US does. China now gets more oil from the Middle East than the US does – Vox

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Nikkei Index 1989-2018 Review: Mother Of All Elliott Wave Triangles?

It took the Nikkei index along time before it topped but in the last few months a spike has appeared after which the Nikkei has started to decline. The Nikkei has turned very close to the US indices turning dates. Which could be ending on a Primary degree “D” wave bull market.  This also means that the Nikkei could suffer a 3 wave decline resembling another zigzag, but it will be one degree lower.  My bottom big trend line is parallel to the top trend line, with the bottom trend line pointing to new all time record lows for the Nikkei stock exchange.

In a nutshell, the Nikkei could end on the same Cycle degree 4th wave right along with all the other 5 indices I cover.  I did not keep a record of the Gold/Nikkei ratio, but presently we are sitting at a 16.6:1 ratio. It takes 16.6 Troy gold ounces to buy one unit of the Nikkei. This makes it about as expensive as any of the US indices.  I would have to do some back checking to find the cheapest ratios, which I will have to  put on my list. For now we have one ratio and I’m sure it is also hitting a brick ratio wall.

Checking the COT report with the Nikkei I see the commercials are net short by a ratio of 1.7:1, which isn’t all that bad, but the speculators are net long by a ratio of 4:1. The speculators are far more bullish than the commercials are bearish, which puts the speculators into a typical bull trap. A “D” wave bull trap.

The single rising trend line I have may give the Nikkei a pause, for a potentially strong counter rally.

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DJIA Bullish Rally Update.

During the end of last month we can see that the DJIA pattern started to bunch up. That broke any rhythm the DOW had as this correction sure looks like a triangle. Yes, I do have some overlapping waves, but they can disappear and even smooth out some, once the bearish phase kicks in again. With this DJIA we have a secondary peak, which I will keep working as a wave 1-2 In Minute degree. It may look short but we know that 5th waves can extend dramatically and in a very short time period as well.

If you see another wave count, anywhere that has wave 5 in Cycle degree at the 2018 top, then this cannot happen, you need one higher degree stuck on the end of a 5th wave. A Cycle degree wave 5 peak, instantly puts the wave counter into the SC degree world and all the labeling must change as well. SC degree wave 3 for a peak will not fit as well because all the experts counted that back in the 1929-1932 bear market. Two SC degree peaks within 89 years is far too short of a time period to be real, but it sure fits better into my Cycle degree set of 5 waves, with wave 4 and 5 still far from being completed.

Give it three years before the end is near and then solar cycle #25 will shred any bearish algorithms that are still stomping around in the markets, at that time. Even algorithms will not stand up to the power of the sun!

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Mini DJIA Intraday Update: Bears Still In Control?

In the future, I will try and restrict my trend lines to only use  two or three lines, but they must be parallel in nature. The other set up lines I use you can call a  “Wedge” or Scalene or Megaphone.   Trend lines can be very subjective because I can paint you a different picture if I changed the angle of the bottom trend line.  At times trend lines are helpful so we can see the lower highs that are being formed. Right now the DJIA is stuck in the middle of the two trend lines and I would eventually love to see the bottom trend line get sliced in two.

I find it hard to call the March peak a running flat or even a running zigzag, so for now I will see how long this wave count will last. At this intraday scale, it’s not hard for the markets to soar well outside the trend lines, and when they do it usually calls for another degree change as well.

If you haven’t noticed yet, bearish news has attacked many of the big tech names which is a classic sign that we are in a bear market and it is also telling us that this bearish phase is going to take a lot longer to play out before a complete bullish reversal is being setup.  No, 10%, 20%, 30% or even a 40% correction, will clean up the mis-allocation of funds present in the markets. (Leveraged to the Upside) Different charts will give us different DJIA peak numbers with 26,700 being one of them.

Many are hoping for a return of the bull, but what if that January peak is the very last high of 2018? I don’t think investors are ready for a 2-3 year decline and sinking markets, watching their capital base erode as it evaporates into thin air. Sounds like Bitcoin to me! Anybody that has been fully invested at this extreme top will see their accounts get shredded and the majority of their paper gains will disappear.

The majority of wave analysts believe we are living in the age of SC and GSC degree and they will show you all sorts of SC or GSC degree bearish wave counting gymnastics. If the majority of wave analysts have finished this bull market with a wave 5 in Cycle degree, then they are in the GSC degree world already. Forecasting in a GSC degree world means nothing if GSC or even SC degree has “never” been confirmed.

I have already created a different bearish template decline which looks more like a 5 wave decline than the flat or a zigzag that I have been using. It hasn’t been posted yet, but I will post the template and Idealzed wave count at a later date.

The GSC degree wave 1-2 crash from 1834 to 1842 only took 8 years with a zigzag decline, the 1929-1932 SC degree zigzag wave 2  crash only took 3 years. The next wave 2 crash from 1937-1942 took five years.  They were all zigzags but they also differ in shape and degree. A zigzag in a wave 2 position usually spawns a flat or triangle in the wave 4 position as alternation between the two sets of waves is the rule not the exception. It still doesn’t completely rule out another zigzag, but the zigzag must be more complex than the 1942 zigzag wave was.

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SP500 2009-2018 Bull Market Review

This is the index for the SP500 and does not move during the night trading sessions. I will try and only use two types of  trend lines with both trend lines being even. In this case the trend line is based on the top trend line and then it is duplicated with the bottom trend line. At times I do add a third parallel line in the middle as it can track trends that are one degree lower. I don’t believe in this perpetual bull market going on forever as “ALL” trends always come to an end, and they come to an end when nobody expects them to end. The herd of investors that surged in last week, are already losing money. They have been brainwashed to buy on the dips, but they are buying on the dips for what?  They are hoping for the bull market to return which tells me that they have no clue how deep this next correction will be.

The monthly ETF outflows have not slowed down last month.  ETFs Register Outflows For 2nd Month In March | ETF.com Those that are selling seemed to be more knowledgeable than the investors jumping in, so this does not send any overwhelming bullish messages to me. It all depends on what you believe, what the peak 2018 stock market wave count is, because that determines on how deep this market can eventually go.

I’M looking for a Cycle degree correction, not just some short blip in an ongoing bull market. At the very minimum any 5th wave will get retraced, and that might be the end of the correction, if we just finished a wave 1 in Intermediate degree. I have seen wave counts that called the 2009 bottom a wave two in SC degree, but then we would have to be at a wave 1 top in Cycle degree now! The markets are not ending in a wave one, they are ending on a 5th wave, and a very choppy 5th wave it was. In an entire sequence of 5 waves, the 5th wave is always fundamentally the weakest, even though they can extend and look very strong.

The majority of all expert wave analysts are working from a 4th wave base. I think it is impossible for a 5th wave bull market to survive three or more solar cycle seasons. The SP500 didn’t show any triangle between the 1970 and 1974, but at that time period, it sure fits into a wave 1-2 in Primary degree.

In our little “Blue Book” (EWP) a big correction can crash back down to the previous 4th wave of one lesser degree, and sometimes they travel a bit lower like the 2009 bottom did. To even get close to entering any part of the previous 4th wave of one lesser degree, this SP500 chart has to go below the $1576 price level.

If nobody knows where the previous 4th wave of one lesser degree is then even that forecast will be worthless and irrelevant. Since 2013 my goal has been to hunt, find and confirm all the 5 waves in Cycle degree. Until the 5th wave has been found and completed, there is no mathematical chance to slip into the world of SC and GSC degree wave counting. Every letter or number we change sends us traveling forwards or backwards in time. When we are counting in SC degree, then we’ve made a time “jump” from Cycle degree at the same time. In short a SC degree world is in the future and its’ forecasts mean nothing in our present day Cycle degree world.

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Mini DJIA Intarday Update: How’s Buying On The Dips Working For You?

Investors just pumped the most money ever into stock funds for 1 week

Investors have been brainwashed to buy on the dips, and last month’s surge of funds clearly demonstrated this. All those that believe in buying the dips are convinced that this bull market is far away from ending. I’ve seen it all before as this will be my third bear market I will be tracking since the 2000 peaks.

These investors that are jumping in at the top of the biggest bubble in market history, will find out the hard way not to believe in the crap that analysts spew out on a 24/7 basis. When the media paints us a rosy picture for an extended period of time, then everybody in the world is already invested, and no one is left to get in, except for the stragglers. This bear market is going to be bigger and last longer than anyone suspects. At a bare minimum the DJIA 15,000 price level must get breached. That may only be stage one as even 15,000 is not deep enough for a Cycle degree wave 4, bear market.  The support we are going to get will only last for a short time. When we see choppy rallies, we know they are just bearish rallies and the trend will resume on its crash course heading south.  I have created a new template for this Cycle degree decline, but they have not been posted. In a big bearish phase, we will constantly see lower highs and lower lows which is the opposite of what happens in the bull market phase.

I’m counting from the secondary peak as it could fit into a running pattern, but will adjust later when need be. When the masses are pushing the stocks up, then I use one of my templates and have the bearish side all drawn. What I call “templates”  have no Elliott Wave numbers or letters on them, as it can be used for any wave degree that we need. Once I print out the template I count out all the waves with pen and paper to make sure the sequence looks good. Then I scan this 8×10 into my computer.

The bear market (big bull market correction) from 1937 to 1942 best works as a zigzag with a short “C” wave. This also created one wicked looking wedge.  All this  keeps my flat at the top of my list of corrective waves to come, and the only question is, how big any counter rally will be?

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Nasdaq Weekly Chart 2000-2018 Review

One of the most powerful patterns that we can find is what they call a “Wedge” in conventional technical analysis. A wedge can have a rising bottom and a falling top which eventually compresses the chart after which it has no choice but to explode and then soar.  The earliest we may have spotted this wedge , and take advantage of it, is in late 2008.  Sure, it’s all in hindsight, but unless we know what a wedge is we will never look for them in the first place.

For many years I have grappled with the 2000-2002 decline as it looked so much like an impulse, but this impulse did not fit anywhere. Maybe because it was not an impulse, but part of a triangle decline, ending with a running “E” wave. Running flats are common, and even zigzags do contain shortened “C” wave. I don’t like to call waves “truncated” as that is an excuse to not count anything. From my perspective the DJIA from 1937 to 1942, contained a wedge that forecast the huge Cycle degree wave 3 which may have ended March, 13, 2018.  I also have several large scale wedges that all indicate a huge bull market will come in the future.  Sure, I can change the wave count, but in the end this wedge will remain for all of financial history.

I only use parallel lines and I use the top rising trend as my base, then I create the same angle from the record bottom of early 2009.  The top trend line contains 5 waves up in Intermediate degree, so when the Nasdaq crashes and takes out the bottom trend line I also will be moving by a minimum of one degree. Cutting the bottom trend line I would also be finishing a potential Intermediate degree correction.  The 4000 price level  is not deep enough, if we need a 3 wave, Primary degree correction.

The gullible are brainwashed to buy on the dips and last month saw another huge one week share buying madness!

Investors just pumped the most money ever into stock funds for 1 week

You have to ask, “Buying on the dips for what?” Once a new low has been established, then all those “Dip” buyers will start to lose their capital base. All present dip buyers clearly tell us that they think that they are in a bull market. They think that another huge bear market will never come as that is old ancient history. The majority of investors never take the time to do historical research and most of them believe the brainwashing going on at market peaks.

The majority of all wave analysts have been brainwashed into believing this SC and GSC myth, but since the 2000 peaks this has never been confirmed by anyone. Since the dotcom bust in 2000, there  has “Never”  been a set of 5 declining waves in Primary degree. Only the Nasdaq looks like it has a set, and it doesn’t fit into any zigzag.

The Nasdaq hit a 2018 high of about 7200, and this is also the time I look for the highest peak of the year. The short version is that investors will not benefit from buying on the dips this year, and it may take over ten years before they ever break even again. They may have to wait until the “Roaring 2020s” arrive.

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Intraday Mini DJIA Update

For now I’m calling this a “truncated” “C” wave, which in reality can be part of a running zigzag. If it’s not, I know I will have to adjust my wave counts to include or exclude this secondary top. The Nasdaq has already pushed lower so I see no reason why the DJIA will not do the same.  I’m going to keep my updates shorter, but still want to cover the US dollar, Gold and oil.  The Gold ratios seem like many of them have been hitting a brick wall.  At 19:1 the Gold/DJIA ratio is about as expensive as we can get

This means it takes 19 gold ounces to buy one unit of the DOW from a record of 21:1 which is the highest that I have calculated. This ratio should compress in the years ahead until it no longer takes so many gold ounces to buy one unit of the DJIA.

For those traders that are looking for that mysterious “Support price”,  have to ask, “support for what?”  Support big enough to push the DJIA to 34,000, or just temporary support in an ongoing bear market?  By this time sell stops are piling up below present prices so any new downside will start to trigger them as well.

Yesterdays dark pattern in the chart looks like it was computer generated as the DJIA wasn’t the only futures contract where this happened. Among the 5 indices I cover, two of them are very different, so this will provide some unique wave counting challenges down the road. This has all happened before and only time can tell us if the bearish phase is going to carry on.  The start of solar cycle #25 will destroy all bearish wave counts, opinions and forecasts so I consider following the sun cycles extremely important. The sun cycles are responsible for the business cycle, as it sure was not the government that saved the markets in 2009, it was the start of solar cycle #24 that killed all the bears.

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Nasdaq Intraday Crash: Showing Us The Way!

Do we still have lower highs since the peak of the Nasdaq?  That’s a trick question as we can get this in any decline! Because the Nasdaq broke to a new record low at bullet train speeds, We could get a violent reaction but 5 waves pointing in a direction is telling us there is more downside to come. The other indices will catch up, but small difference will happen, is when a big difference appears, then it always needs a second look. The Nasdaq  marched to a different drummer again, this time it was just to be the last index to top out.

There are only two trading days left this week, so more downside is an option, but wild swings will surprise us. This may all smooth out a bit more once the Nasdaq trend is more established.  Either way we are heading what the mainstream might call “critical support” will come at the 6300 price level. Critical support for what? A new phase in the stock bull market? I doubt it very much!

The only support important enough is the one just before stocks strike out into another 8 year bull market. Not until the majority hate stocks again will a new bull market hatch!  Now if only AMZN would crash! After a quick check  Amazon’s stock price peaked at $1617 and is now down $120. I will create an Amazon post, but also talk about the Gold/AMZN ratio.

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Mini SP500 Intraday Rally Update!

 


 

The markets have started to correct, but for how long is arguable at this time.  I would love to see this wave structure finish and push south, but the fact remains, a diagonal wave structure could be starting so this market can still push much higher.  We need to see a small correction and then push higher again if the present bottom is going to hold for a little while longer.

Any bullish phase could head up forming a double top along the way as this market is trying to fool us again. Don’t get me wrong, this market can go south dramatically, but  that would be the easy thing to  expect. For this SP500 to leave us with a clear Cycle degree top, is just too simple or easy to accept at this time.

The small bullish move we’ve had in the last few days has to completely retrace itself, before it can be called a completed zigzag. My updates will be a bit short at times this week, as many other wave counts need attention as well.

For now we have to see if this rally has legs, but if it does not, then only a complete retracement of this move would be acceptable.

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Mini DJIA: Are The Bulls Returning?

I mentioned that the DJIA had  a move that would put it into Minute degree already. Another finished zigzag pointing down, can send the markets the opposite way, which looks like it already has started.  The DJIA counter rally has already gone far enough, so if this impulse goes ballistic chances are good, it’s in a “C” wave bull market. This would just lengthen the time this wave 2 can play out, but it’s that odd secondary peak that was out of place.

We are building a base for support, but this is only a temporary roadblock. It may take the rest of this month before this rally hangs in there and keeps soaring. March seems to be a popular month for reversals, but we’re also running short of time. If an inverted zigzag still needs to finish, it will still get retraced by 100% or more.

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Russell 2000 Intraday Update

The Russell 2000 did not travel to new record highs, but it came close to doing so. The tape also shows a great H&S pattern after which the Russell 2000 started to decline again. My main Plan “A”, (5 waves down in Minor degree) is the top contender at this time.  There is very little action trading the Russell 200o futures so I use line type settings so we can see this part better.

It’s not Elliott Wave rocket science to know what idealized 5 wave patterns are supposed to do, so when it deviates dramatically then we know we have to look for alternatives. Even now I’m looking for a 1-2, 1-2 count still to come, as we already have completed the first set of 1-2 waves.  We are not at wave 1-2 in Minute degree just yet so that would be the second 1-2 wave count, and then two more would show as well.

This would give us a wave 3 extension, but the last 5th wave could also extend, or short just like our present wave 1-2 in Minor degree. We just can’t have all three sets of waves extend at the same time. In this case we already know that the first 1-2 wave is going to be the shortest.  Once the third 1-2 wave has completed, then only sets of 3-4-5 waves will come in. This is exactly how I count the different 3 wave tops in the stock markets. The only difference is that we are in a set of 5 waves in Minor degree but heading south.

The Russell 2000 also has a huge base at the 2009 lows, which the Russell 2000 could head to.  The Russell 2000 would have to fall close to the 750 price level just to get into the price territory of the previous 4th wave of one lesser degree.  Sometimes  markets, even go lower than the previous 4th wave of one lesser degree. Any price retreat to the 550 price level would put the Russell 2000 just below the 2011 lows. Markets are born to disrupt the millionaires who are rich, on paper at this time, because in a bear market the millionaires will start to disappear along with some of these freshly minted billionaires.

It’s not just billions that will be lost when the markets go down, it will be trillions of dollars that will evaporate in a cloud of e-smoke.

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VIX: Another Leg Up?

So far it looks like the VIX wants to keep the bullish run alive, and I’m sure not the one to try and convince the VIX  into going the opposite direction.  We have a small gap above present prices, but we also have a bigger gap still open below, at the bottom trend line.  In the long term the peak $50 price level must get retraced if this VIX bullish run is to continue. Since the January bottom, the VIX has created higher lows which is encouraging that the VIX may have some running room left yet.

A small H&S pattern has been created, but this can be a very bullish sign as the VIX could be getting ready for another upside breakout.  Besides the VIX retracing the $50 price level, it should also break the $90 price level in the next few years. Vertical fear levels cannot be maintained over the long term as investors would fall dead from all the stress fear creates!

The entire VIX pattern is diagonal related so it’s next to impossible to pick out a good looking 5 wave impulse, except for very small ones.

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A Look At The Dow Jones Transportation Average Index!

Dow Theory

Since many are starting to talk about the “DOW theory”, I decided to look at the DJT index to see what has happened. In short the present bearish phase is not different than the DJIA I have been using. A recent correction in the DJT has also taken place at the same time as all other markets have been doing. So this just confirms, that the DOW theory may not be any help at all.

All my trend lines are based on the angle of the top trend line, with the middle line helping to determine the trend of at least one lower degree. At a minimum, we would enter Intermediate degree wave patterns when we get to the center line. At the 2000 price level, we have a huge base that would present  an extremely bullish setup in the future.  Any Cycle degree correction would have to slice through the bottom trend line, as all general markets I cover can go below 2011 bull market lows.

I’m not going to update the DJT on a regular basis, but it is another Index we can watch, to help determine the next big bearish bottom.

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