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VIX : Fear Ready To Rise Again?

The VIX has so far made a nice decline that still looks very corrective and may have hit a low point this morning. Patterns are starting to overlap again which is pretty normal in diagonal wave structures. Either way, the VIX  bull party is far from finished, as we should see another record high develop in the next 3-5  weeks.  Any impending wave 3-4 in Minor degree is going to give us a problem as a triangle could develop. A triangle inside a diagonal wave structure can be a real nightmare to sort out so we have to give it time to work through that part of the VIX correction.

One more low could happen but that should be cleaned up by the end of the week.

Commercial hedgers are already building short positions while the trend chasers are still net long.   Once any Minor degree 5 waves are starting to complete then I will turn very bullish on stocks. This may still take a month or so with the exact time always being a challenge. March is a very popular month for turnings along with October as they reflect the yearly cycles.

Investors may stuff more money into funds in January to take advantage of any taxes they may want to avoid. Its when they stop, that the markets can crash again.

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S&P Midcap 400 Review

The markets have been bullish but any rally will still be a bear market rally. This S&P Midcap 400 index is important to keep as it could be acting a bit like a leading indicator. The 2015-2016 bearish phase had the world in a mini panic. Not much has changed as fears have returned with a temporary breach in the bearish action.   I have mentioned it many times how deep any market can fall and it all depends on what degree the bear market is supposed to be.  The 2015-2016 is not the previous 4th wave one lesser degree if we are looking at a Cycle degree bear market.

2015-2016 is only an Intermediate degree 4th wave. If the “C” wave ends towards the bottom range, it would only match Intermediate degree to another Intermediate degree bottom. This is a good thing as once this bottoms we are forced into a higher degree. The SP500 and the DJIA are still a long way away from doing the same thing. Comparing one Intermediate degree with another helps to keep us from bouncing into a higher degree before its time.  Many wave analysts are at a “B” wave cycle degree top so they require 5 waves down in Primary degree.

They will never find those mythical 5 waves in Primary degree even though this is the third time they will be trying since the 2000 peak. Some of the wave counting experts have already reached GSC status in 2000 which throws time into disarray.  The majority of “All” wave analysts have time-warped into the future by 50 years or more. Change a few more degree levels and we could time-warp for 90 years.  This may be hard to understand for readers, but flipping numbers and letters around with no respect for the time-warping that happens each time, has never worked.

The short version is that wave analysts working in higher degree levels are feeding us a mythical world that may still be 50-100 years away. GSC degree wave three might get close by 2071, not 2000!

The majority of wave analysts are showing you a mythical world which means nothing. My world is all in Cycle degree which every person on this planet will experience at least once maybe twice, in their entire lifetime.

Minor degree runs happen more frequently, with 5 waves in Intermediate degree, also being part of the landscape. I believe the markets are in a Cycle degree bear market which could take until after the 2020 elections are finished, with Solar Cycle #25 slated to start by then as well. If a market creates its 20% decline is that the top of a bear market, or is it the bottom?

Once this Cycle degree 4th wave bottom arrives, then we can dust-off the idealized 5 wave sequence in Primary degree.

If we go back to 1932 or 1974 and you see a 4th wave bottom in SC or Cycle degree then these analysts are telling us that 5th waves can extend 50-90 years or even longer. Nowhere in market history has this ever happen, as it is impossible for any 5th wave to last the time span of multiple generations.  The EWP is never about what you think we are seeing, but it’s all about how well we visualize what the real idealized impulse is supposed to look like.  The idealized pattern is the blueprint for market action and when we are wrong, we shouldn’t throw out the blueprints because we are too lazy to find our own mistakes.  I spent over a decade chasing GSC and SC degree wave positions and for 5 years have been working the markets from a Cycle degree perspective.

Every big bear market investors will ever face, can give us 3 simple corrections. Eliminating the least likely patterns first reduces our choices and what is left may be the right one.

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Crude Oil Daily Chart Update

This is the March oil contract month, which is a bit early to use but the end result will be the same. Yes, we hit a bottom, but we may still be a bit too early for another bullish move to crank up. There still may be a little upside to go and I’m taking a chance as one more downside move can also still happen.  The commercial hedgers are still net short crude oil which can keep a lid on oil prices. The speculators are the trend chasers and are building net short positions.

The Gold/Oil ratio tells us a different story as that ratio hit about 30:1 briefly in the last few weeks, but it is sitting at 28.25:1 right now.  44:1 was the last extreme bottom while 17:1 ended up being one of the extreme expensive ratios. Oil has crashed from this 17:1 ratio twice since the July 2008 peak.  Our present crude oil market is 6-7 months shy of a 10-year bear market, with no signs of an impending strong 5 wave run.

When we look at the crude oil monthly chart we can see a crash, then a huge rally and then another crash into the 2016 low. This would make a great looking zigzag crash which may not be finished.

It’s a game of splitting hairs and only short-term trades may work.  One thing is certain and that is if you are a crude oil follower for any reason then use the gold and oil price on a smartphone and calculate the gold/oil ratio several times a week. Using the little Forex gold and oil units works just as well. Making the calculations consistently about 2-3 times per week will get you started.  After a while, you will memorize the extremes and what can happen after extremes get hit.  Don’t try and forecast the price of gold this way as oil is not money, crude oil evaporates into thin air when it is burned but gold can’t be destroyed.

If some clown forecasts gold going to $5000 next year and our present gold/oil ratio is 28:1, then $5000 gold would produce a $178 oil price. Oil at $178 in 2019 is highly unlikely so you know that the gold price forecast is just a pipe dream!  At the 2008 oil peak, bullish oil price forecast was being made with $200-$300 oil prices still to come. All the experts were bullish on oil at that time, yet oil imploded from $147 down to $34 in just 8 months.  The Gold/Oil ratio was at 9:1 at that time and I knew that oil was going to crash.

The idea about gold ratios is that it gives us more of an objective look at the oil price and we can see through the emotions that are always present in any market.

 

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Gold Daily Chart Year End Update!

I still have a “B” wave peak in Minor degree as the decline could fit into a diagonal 5 wave sequence.  It is priceless to see gold scream higher and end in a near vertical spike to the upside at the end of the month and the end of a year.  Even though gold gave us an impressive run so far, I believe a correction is due.  Of course, this correction may never happen if the entire move in gold was just a bear market rally!   Gold sliced through the 200-day MA on this daily chart, but on the weekly chart gold just hit the 200-day MA. That hints of resistance which matches many of the peaks in 2017.

I labeled the Aug/Dec run as a triangle which can happen in 4th waves, but the exact same wave count can double as a diagonal set of 5 waves with a degree adjustment. A potential diagonal wave one will still force a substantial correction for gold, where gold can crash back down to the $1200 price level before it cranks up again.  This move has the look of a “fear” run as it started at the same time stocks started to move to the downside.   Gold would have to travel much further before a Golden Cross is created. The 50-day may not reach the 200-day MA before gold turns down again.

The December 20th COT reports showed that the commercials were making a very bearish move by adding to their already net short positions. At the same time, the commercial hedgers removed long positions which just adds to their bearish outlook. We’re not at any extreme but it sure does not support any huge bullish phase still to come. Gaps to the upside have opened up, so they will get filled before gold can keep heading north.

Meanwhile, the speculators are taking the exact opposite side of the trade as they are chasing this bull market. FOMO is a very powerful motivator, but emotional moves seemed to have a limited lifespan.

Silver has also soared with the COT reports showing the same moves as with gold.  2019 is a new year and we could get a new direction in gold as well.  Gold peaked in 2011 which matches the first peak in solar cycle #24, this peak was not some little peak in an ongoing bull market, but it was a once in 30-year mania peak.  In this case, it was 30 +1 years from the 1980 peak. 1950 was the previous peak all matching Cycle degree peaks. Do not underestimate the power of the solar cycles on gold as solar cycle turnings seemed to attract but can also alternate by repelling.

2011 was a wave 3 peak in Cycle degree so until I see a complete zigzag or flat coming to an end, I will look for the bearish moves.

Commodities run on a different idealized diagonal pattern than what stocks do, and it was the Roaring 20’s when impulse waves started to take over and the choppiness of commodities disappeared.

Have a Safe and Happy New Year!

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SPX : Potential Bull Trap Update.

The DJIA and this SPX index look very much the same and are on the same path to wave 3 in Minor degree.  The story remains the same as   Cycle degree wave 3 ended with the January 2018 peak, not at the September 2018 peak. It’s not an extended top, but an expanded top, which is completely different wave patterns. I’ve searched for months and you will not find a single wave analyst anywhere on the internet, that sees an expanded top!  Counting is a secondary act of trying to confirm what you think we are seeing.

This fast counter rally sent shock waves around the world as it seemed to have broken a few records. I was impressed that a Minute degree rally can cause such emotions around the world. A new low is coming if you like it or not, as the 5 wave sequence in Minute degree is far from finished.  High-speed algorithms were blamed for the move but this has been going on since 2000 already. I’m sure we will see more,  but fast moves like this don’t last very long as the algorithms can panic on the way down as well. The problem with any computer trading program is that the can’t judge human emotions.  They don’t use COT reports or any sentiment reports like the Market Vane report I have used.

It might take a few more months for the 5 waves down in Minor degree to complete after which I expect a rally from another huge bear trap. There are no Primary degree sets of 5 waves down coming, as a run of 5 in Primary degree all come from much higher degree levels that I work with. You can bet that the Primary degree “A” wave will be wave 1 in Primary degree, which has “never” work in 18 years.  If a set of 5 waves down in Primary degree has never been confirmed, then we must throw out at least 3 higher degree levels.

That means we have to check all the wave counts starting with the 1929 peak and look for all wave 3 extensions. You can’t have a 44-year 5th wave extension (1974-2018).  If 1974 was the 4th wave bottom in Cycle degree, then the two bear markets we have had since 2000, should have entered its price territory a long time ago.

2019 is a new year and I expect more bearish action but it will come to an end sooner or later. Keeping our minds open for another month or so could show us a different picture that few expect.

Have a safe and happy New Year!

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DJIA: Another Mini Bull Trap ?

The majority of the world is convinced that the Sept/Oct 2018 peak was a bull market top. What they don’t realize is that expanded tops are more common than what even the wave counters see.  Expanded tops also have extreme forecasting qualities built right in.  For the last 3 months or so we had a bearish phase that still has not completed. This bullish rally soared extremely fast which is common in bear market rallies.  By the end of January 2019 this bearish phase will be 1 year old already.

What any expanded pattern tells us is if the DJIA eventually crashes to 7000, then we already know that this 2018 peak will get completely retraced.  The DJIA will never crash that deep without huge counter rallies slowing it down. Often turnings happen closer to the end of a month like the DJIA is doing now.

Some compare this decline to the 1987 crash which is 31 years old. We are nowhere near those 1987 times as the markets will always do something a bit different to confuse as many investors as it can. The Cycle degree wave 3-4 is still valid and a Primary degree bear market is what is required to complete any 4th wave bearish phase.

The entire universe of wave analysts believes that the markets are in a huge 5th wave extension. One from the 1932 bottom and another 4th wave bottom in 1974.  I’m being very direct or blunt about this, as 5th wave extensions, this long has never happened in 500 years of market history, least of all 86 years long which covers about 3-4 generations or seasons. The crowd of wave analysts has been looking for 5 waves down in Primary degree for over 18 years, and not a single set has ever developed or confirmed.

Short term another new low should happen after which another rally could surprise the investors again. Until all 5 waves down are completed I will remain bearish, but I will have no problem at looking for a Primary degree “B” wave rally in 2019.  “A” wave bottoms are buy signals but it is important what degree of an “A” wave we are talking about.

All the mini or micro mini wave counting  you see is useless work if we keep missing huge bull or bear markets.

 

 

 

 

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VOO: Another SP500 ETF

I may post this VOO ETF more frequently. It also has a very clean pattern to it at this time. Readers may not agree with any expanded top and wave analysts certainly do not agree as I have not seen a single wave analysts see 2018 as an expanded top. They happen frequently as  I might working 5-8 asset classes that had expended wave three type tops.  The real top was in January as the markets went vertical.

My 5 wave decline is still valid but the 5 waves in Minute degree is not finished just yet.  The big rally is a fake or just a bear market rally and we will get proof of this when VOO creates a new record low. That may happen in the spring.  Any 5 waves in the “C” wave location can produce 5 waves where the 5th wave can expand, or do the opposite and become very short.  Any triangle I would expect in wave 4 in Minor degree as it would also force this wave count to end one degree higher. Since there is an Intermediate degree in progress our next major bottom must be a Primary degree position. (Primary degree wave “A”)  It will certainly not be a wave 1 in Primary degree. Modern wave analysts have tried the 5 waves down in Primary degree 2 times already and I’m sure they will try again this time.  Any 5th wave position you see anywhere on the internet that is “uncapped” is sending me a clear message and that is, “I don’t have a clue where I’m at”  They flip numbers and letters around like they are flipping hamburgers when they should be acting like a “Surgeon”.

Every major wave analysts believe that a 5th wave can be 3 generations long! This is impossible and has “never” happen in over 500 years of market history.  Yet the herd of analysts insists otherwise. Besides that, the last two bear markets should have retraced back to the previous 4th wave of one lesser degree already. This has never happened because no big 4th wave bottom ever happened. They are all wave 2 bottoms and you can wait until pigs learn to fly before this market will ever fall that deep.

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DJIA, Just A Mini Bear Trap?

Instead of a Santa rally, the markets gave the worst Chrismas performance ever. It broke some records. I look at this during the holidays and had a sneaky suspicion a counter rally may happen. Sure enough, the markets have roared back from the dead and made up of the price it lost last week. Nobody calls the December decline as deflation, but that is exactly what it is. The USD can now buy more stocks than what it could all year.  Sure we can see some more upside but a good correction should happen as well.  Right now,  I bet we are in a Minute degree wave 4 rally that still may flop around before it resumes its bearish phase.

To confirm that this is just a mini bear market rally the DJIA  has to retrace the entire move below the point of origin, which is wave 3 in Minute degree.  The big bear is far from finished as we are coming off the biggest stock bubble/mania in financial history.  This is my third bear market I have tracked in the last 18 years and each bear market will be different. We are not going to get anything like the 2002 bear market and it will be different than the 2007-2009 bear market. I searched the internet for most of December and there is not a single wave analyst out today has recognized a 2018 expanded top.  One of the most important markets moves there are and the experts don’t see it.

Once the bigger bearish phase resumes we should start running into wave 3 and 4 in Minor degree after which we could be approaching the “A” wave bottom in Primary degree.  Any Minor degree 4th wave can contain a triangle as a triangle always forces a move into one higher degree, sometimes 2 higher degree levels. When that happens I assure you I will turn bullish on stocks.

Oil has also reacted tonight and only time will tell if it has legs to move much higher on this trip. One good thing about watching the markets during night trading is that you know all other ETF related asset class will roar in early trading sessions.

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T-Bond Weekly Chart Update

This is going to be just a quick update as the last 3-4 years could be an expanded pattern as well.  I love to recognize expanded tops but we have to be careful not to hallucinate an expanded pattern where none exist.  From the 2016 top, I can work 5 waves down in Minuette degree which we can’t see if I switched to a monthly chart setting.  Since 1982 T-Bonds have been in a bull market that has a long way to go and will break out to new record highs in the next few years. What is special about all this and other T-Bonds is that it is the only asset class that is in an SC degree bull market and it all points to a potential wave 1 in Cycle degree. It may sound insane but T-Bond trends run in 120-year trends made up with 60-year cycles. The first 60-year cycle will be due in 2041-2042 so only the younger wave count crowd will be able to confirm this.

Without a doubt, T-Bonds are in a diagonal bull market and we can best see this with wave 1 in SC degree being closer to 1861! Imagine a bear market zigzag 120 years long!

The Fed has been raising rates which I see as no longer being justified. Gold is mute and oil has crashed. Much of the talk is just pycholocial warfare but any higher rates drain the liquity out of the markets, which is what higher rates are designed todo.

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Brent Crude Daily Chart Update

The big drop in Brent coincides well with ETI oil but with a small price difference.  The near vertical drop in the oil crash with this daily chart does not do it justice as with a weekly chart this 10-12 day crash was straight down. It looks like there is an expanded pattern involved as the decline is just to steep for a normal 5th wave.  These fast moves travel at maximum speed and maximum speed can never be maintained for any length of time.  One day they will invent an indicator that actually measures the speed limit of the price move.

We should find out soon if the impending counter rally will happen and if it does, this rally should give us 5 waves up in Minuette degree. You can read a 1000 different analysts fundamental opinions, and you will get a 1000 different reasons why oil has crashed. It will make your head spin trying to figure it out. From my perspective technical indicators are far more trustworthy and objective. Besides fundamentals are lagging indicators.

There are many other reasons as well, like the Gold/Brent Oil ratio which reached 23.45:1. This is now the cheapest it has been in all of 2018! I don’t have a big database set-up with the Gold/Brent ratios but enough to see one type of extreme.  Once this rally does start to move then we should see the Gold/Brent ratio start to compress again.

Even the commercials are net long by a good margin but still not at an extreme. The speculators are in their normal Brent Crude bear traps as they figure that the trend is still down. The only way for the speculators to get out of their bear trap, is they have to buy or close off all their short positions.

I have been trading WTI Forex oil units and I added one Brent crude long position as I post.

The Death Cross on this chart happened at the $72 price level and we have witnessed the results of what Death Crosses can do to investments.  I would rather be early about any counter rally than miss a move that could contain a 5 wave run.

 

 

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DJIA, The Big One: 1929-2018 Review

I have been posting small charts which can make my wave positions hard to read.  The fonts may be hard to read but I will not make my fonts on the charts any bigger. Instead, I increased the chart size that I post. This chart is one of the first that are full-sized and I did a printout comparison with my original chart and found little difference. The difference might be the speed of the page loading up. If the change makes the charts clear for readers, and they make better printouts then I will try full-sized postings for the rest of the year.

Learning any EWP is impossible when all wave counting is done on a computer screen. The majority of my wave analysis is done on paper where I can take weeks looking at it before I lay down one single number or letter.

1929 was a wave 1 peak in SC degree and definitely is “not” a wave 3 peak.  Starting with the 1929 peak we have a 1-2 wave count then by 1942 the second wave 1-2 completed. After the second set of 1-2 waves is when the wave 3 can start to extend producing the wave 1-2 in Primary degree which ending 1974!  During the ’70s and early ’80s 3 back to back 1-2 waves developed with wave 5 in Minor degree really kicking in the extension.  I looked at all the wave failures during that time as the majority were all looking for 5 waves down in Primary degree. They didn’t learn anything from that but tried to repeat the same 5 waves down in Primary degree by the 2009 bottom.

I’m sure that the experts are going to repeat the same mistake in 2019 especially if you see major peaks with uncapped 5th waves. When “Any” wave analyst leaves a 5th wave uncapped he or she is sending a clear message that they have no clue where they really are!  So if we give our present decline a few more months and you are searching for other wave positions with any wave 1 in Primary degree then feel free to send me the link.

Our present peak contains an expanded pattern which is the first step in a potential flat yet to come. This flat may end up looking like a zigzag as nobody is looking for expanded tops. Expanded tops are powerful forecasting waves. For an example, if the DJIA crashes down to 7000, I will turn very bullish and will call DOW 34,000 or higher for the next major SC degree wave 3. I have at least 5 major expanded patterns in progress, so all of them will join the new bull market sometime after the 2020 elections. Solar Cycle #25 will also kick in at that time so I’m sure the stock party will return.

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SP500 2000-2018 Review

The debate about what degree level we are in continues, as the majority of wave analysts all have different wave positions. The Elliott Wave Principle is not what you think you are seeing, but it’s what you visualize what the idealized pattern is supposed to look like. Every major wave analyst has 5th wave extensions when in fact wave 3 does most of extending in the stock markets. About 5 years ago I switched to looking at the markets from a Cycle degree perspective because I also tried GSC and SC degree for many years.

The 2000 peak is an Intermediate degree peak while the majority have the 2000 peak as a GSC peak or SC peak. An intermediate degree is a minimum of 4-degree levels lower than every major wave analysts has today. Most wave counts published today are nothing but a “Dog and Pony” show or a great “Smoke and Mirror” magic act. Elliott Wave is not about flipping numbers and letters around like we are flipping hamburgers, but it’s more like being a surgeon where you must think out any moves with great care.

Every number and letter also represents time,  so when I see switches being made between a GSC and SC degree wave count we can jump 50-100 years into the future without realizing it. Cycle degree is basically jumping back in time which puts any SC, GSC and Submillennium degree in our future. The 2000-2002 decline took about 30 months while the 2008 decline only took about 17 months. That’s a big difference and is mainly due to the type of corrective pattern we get.

Before we ever get there this market has to suffer through a bear market for a few years before a new major bull market will start. This may take until 2020 or after the US elections before the markets start to crank up again. Every major bull market peak for the next 100 years will terminate with a wave 3 position and since Cycle degree wave 3 is used, the next major peak will be wave 3 in SC degree.

Our present bearish phase can still last into the spring of 2019, after which we should see a rally in stocks that will convince the majority that the bull is back.

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Berkshire Hathaway Cycle Degree Update!

Those that are staying long (Bullish) on Berkshire Hathaway stock are now taking a beating. Will it continue?  I have no doubt that it will as BRK.A is just about the same as the DJIA. Since the January 2018 peak, BRK.A  also looks like it contains an expanded top. I can’t repeat it more often as expanded tops are powerful forecasting patterns. No matter how deep BRK.A will eventually crash down to, we know that Berkshire Hathaway stock will comeback and exceed 2018 highs again. That could take until SC degree wave 3 comes due some time towards 2041! First BRK.A has to suffer through bear market that can also take the next 2-3 years to play out.

I have no gold ratio data base built but following the DJIA or even SP500 will give us a potential temporary bottom.  Wave 2 (up) has completed with wave 3-4-5 still to come. This may drag on into the spring as the rest of 2019 could be very bullish.  Markets always retrace back to the previous 4th wave of one lesser degree, but most don’t know where that previous 4th wave sits. The 2016 low is only an Intermediate degree low, not the Primary degree 4th wave we would need. The main reason why many markets have not retraced back to the previous 4th wave of one lesser degree, is because they were never 4th waves in the first place. 1932 and 1974 didn’t end on a 4th wave so that is the main reason markets did not follow that popular guideline. The EWP didn’t break any rules or guidelines here, as it was all caused by highly biased wave analysts.

Any wave 1-2 in Primary degree that you see being attempted, is sending you a clear signal that they are in SC or GSC degree already!  The short version is that they have time-warped 20-30 years into the future.

I have been connecting all the Cycle degree dots for 5 years now and I will never change back as there is a direct EWP mathematical advantage that few can understand.

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Nasdaq Daily Chart Cycle Degree Crash Update.

All support for 2018 has now vanished with nothing but empty space below. It’s not completely empty as there are always some protective stops below. I’m sure that many are looking to get-out as the majority of analysts now call it a bear market. It’s always easy to call something in hindsight, but that is always too late.  We are going to find out if the current crop of talking heads can pick the next strong bottom.

We still have a long way to go even thought we are getting some great looking spikes to the downside. It all looks good as a 5 wave run in Minor degree. Usually about 3 sets of 1-2 wave show up but the rest may never be seen as they are just to small. Right now I have 3 sets showing after wave 2 in Minor degree, so we should start to run into ending wave 3s. A quick scan of the commercial positions has not switched to the positive at this time but the spread is shrinking.

From 1987 to the January 2018 peak we have what is part of the 30-year cycle +1 year. I’m sure readers or investors want clarity but it’s the job of the markets to always confuse the majority every step of the way.  The easiest group to fool are the modern wave analysts that have never experienced the 2008 crash and have never gone back in history to do their homework.

An example is the 2018 market that contains an expanded pattern. Not a single wave expert seems to see the same pattern, and ignoring this type of  top will screw up the wave count forever. An expanded top gives us a huge look into the future that is hard to imagine at this time. The short version is that no matter how deep the entire bear market will get, eventually the market in question will rise and surpass the expanded part!  For an example, if the Nasdaq ended just below 2000 then I would have no hesitation in calling that the Nasdaq will eventually go above 8000!

Mind you that could take several decades to accomplish. It may take into 2019 before we see a strong bottom in Primary degree, after which I will turn very bullish. When you see any wave analyst produce a wave 1-2 in Primary degree, you instantly know that these analysts are in a much higher degree than “all” the work on this blog.

All the components inside the Nasdaq are taking big hits with Apple being a prime example. I’m sure Warren Buffet is scratching his head as his investment in Apple gets shredded.

The Gold/Nasdaq ratio was at 4.8:1 today which is down from the extreme of 6.38:1 in September.

 

Commercials are net short but not by that much. This will change in the months ahead as they switch to long positions.

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S&P Midcap Crash Daily Chart Update

This Midcap chart is one of the best forming wave patterns I have. We are getting spikes to the downside but that is pretty normal. Soon we should get to a point when wave 3’s start to appear, then you can bet that the waves will start to get real choppy. More diagonal waves will start to show up and wave patterns will get more confused. The goal is wave 3 in Minor degree so hang on to the saddle as this market is as wild as an unbroken horse. We will get many  reasons why this market is plunging and these reasons will change like the wind. What investors don’t realize is corrections and bear markets will always be  part of the landscape and the difference is just the degree!

In a few years we are heading down to a Cycle degree bottom, which is only one degree higher than what the 2009 bottom was. Most expert wave analysts are already in SC and GSC degree because wave 3 in the past has  “Never” been extended. We are dealing with a wave 3 in Cycle degree that is close to 76 years long, while modern wave analysts are working on an 89-year wave 5 extension.

There is no way that during an entire human lifetime we are in a 5th wave extension, spanning multiple generations as well. It is easy to tell when wave analysts are into a bigger degree than what they should be, and that is to look at the 1987 crash wave position.

Any wave analyst that is looking for a wave 1-2 in Primary degree now is way off in a time warp into the future. A Primary degree decline cannot happen, folks as not a single SC or GSC degree wave count has been confirmed in the last 18 years.

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DJIA Intraday Bear Market Update.

I will not spend too much time on my postings but let the charts do more of the “Talking”.  Yesterday the DJIA hit another bottom after which it rallied but also made a wild move that can only fit into a corrective move at this time.  I may be on my last 3rd set of 1-2 waves so soon this process will start to show wave 3 labels.  Wave 3 in Minor degree is the goal which could take into early 2019 to finish.

This rally should not go that high and if it does, I will have to adjust the wave positions as well. This bearish phase is  far from over, but rallies can convince the talking heads that the decline is a done deal. It all depends on the big size of this market correction is going to be. We are in a Cycle degree bear market and what we have witnessed so far, is just a wake-up call for the non-believers.

Yes, in 2018 the markets achieved world record highs and this bear market will not be over until we have achieved world record “lows”.  A big counter rally is coming but not just yet. It may take until late January or even February before this decline finishes.

 

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Crude Oil: Can It Find Support?

Since the September peak, oil has plunged to what some call a “Historic Move”. Oil has crashed many times before, so I don’t call this “Historic” at all.  So far oil has hit a bottom just a bit above $45.

I had mentioned that $45-$40 could be support, but support for what? A new bull market going to the moon? I doubt it, but I sure would like to see this rally to continue for the rest of the trading year. The commercial hedgers positions are still net long but the Gold/Oil ratio was 27.52:1 this morning. This is the cheapest Gold/Oil ratio registered all year and hopefully the year-end bottom is in.  We could be landing on a Minor degree bottom, from where we could expect a wild counter rally with a run back up to about $50-$55!

For those that have any doubts what a Death Cross can bring, you are seeing it now with this daily chart.  It would have to be a strong rally before a “Golden Cross” might form but even then oil may be for short of a “Golden Cross” situation.  I’m sure bearish traders are in a bear trap as well and that the “Buy” orders are piling up above present prices.

Yes, the oil fundamentals change like the wind with many analysts each finding a different reason why oil is crashing.  If the Gold/Oil ratio hits the 27:1 brick wall for any length of time then that would also be a bullish sign! Flying and driving this holiday season can make a difference but only time will help to confirm that.

On a quick note, yesterday we had a very powerful storm come in that took out my power for over 6 hrs so my updating was curtailed.  I will also take a break but will post a little to cover a few asset classes for year-end review.

Happy Holidays and Best Wishes 🙂

 

 

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GLD Review

This morning I still have a problem connecting with my futures site. The problem still exists and fixing it may take sometime. I will use more charts from Bigcharts.com as a temporary fix. I also have a serious issue inside my editor which slows down any posting I do. We also have severe wind conditions here today, where the lights start to flicker once in a while. When it rains it pours, as it seems issues come all at once.

Since the 2016 bottom, GLD was in an upward bullish trend  before it turned and then plunged. Since about August 2018, GLD has been in slow and boring bullish phase. This 5 month run sure looks like a set of 5 waves, but we will not find out until an impending correction starts to really show. I can fit the entire move into a triangle which do not develop in any wave 1-2,  but sure can happen in 4th waves. Diagonal waves act like triangles, so they can be confused with a wave 1.  Any wave 2 correction can go very deep and the net move can retrace 60% or more.

Gold or GLD is the only asset class with this upward sloping trend as all other asset classes like gold stocks are not even close to following GLD. Silver is also a prime example of this.

The USD is far from a potential decline even though the commercial hedgers are net long. That might change by Fridays COT report.

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SP500 E-Mini Intraday Update

This is the March 2019 contract where every trader has to move to sooner or later. Support has now failed as the Fed has threatened more rate hikes in 2019. I find this very strange at this time as many asset classes are already crashing and liquidity is draining the life-blood out of the economy. Nobody is lining up to borrow more money and gold is not going to soar to the moon. Gold sure didn’t like the rate hike, which I will update later this week. In the end the Fed has executed the perfect stock market bull trap. The majority all believe that just a simple 10% correction was coming, but they under estimating the size or degree of this impending correction. They won’t call it a correction much longer as every hope for support will get dashed.

I might add a few more of these intraday charts on this page as the days of seeing sets of 1-2 waves is going to come to an end. Wave 3 will come to an end and the degrees will start to get higher each time a run of 5 completes. This is a wave three extension in progress but heading down. In bull markets the entire wave structures are reversed.

Only 49% are bullish towards the SP500 Market Vane Report, which is not extreme just yet.  The Death Cross on the daily SP500 chart happened at the 2770 price level, with the Gold/SP500 ratio sitting at a perfect 2:1. It takes 2 gold Troy ounces to buy one unit of the SP500.

Besides all these negative indicators the commercial hedgers are still net short by a good amount.

It will take far more downside to get the commercials to change direction. Even then there is no guarantee that commercial hedgers will pile into long positions.

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SPX: Having A Bad Hair Day Again!

The Fed is draining the life-blood out of this stock market and economy. It still amazes me when the herds decisions are based on words from the Fed. The talking heads just declared that a bottom was in a few days ago, but the markets didn’t care once Powell made his speech!  Today all support failed and the SPX plunged to new 2018 lows. What I’m showing with the above wave count is a 1-2, 1-2, 1-2, wave count. I still have 5 degree levels left before I run out, but there is also a physical point where the smaller degree levels get harder so.

Sorry,  I don’t have an electron scanning microscope at my disposal! 🙂 Lets say I can see one more set of 5 waves completed in Subminuette degree, then after that my entire wave counts will start to switch where we could get nothing but ending 3 waves.  This is telling me that a wave 3 extension is a very high probability. I don’t like to change the settings on these charts but I can get more detail from the intraday futures charts. Even the Gold/SPX ratio is still extreme and only 49-50% bulls were present in the MV report. That’s a boring number, as at 50/50 you may as well just flip a coin.

When Minute degree wave 3-4-5 complete and wave 3 in Minor degree is due, then this will coincide well for closing of shorts. A 4th wave counter rally in Minor degree could shred gains and it is better to play with light positions. If wave 3 in Minor degree appears this year, then January could see positive inflows. The whole idea in trying to be more accurate with the degrees and patterns is so, we can catch a huge error as soon as we can. On any 5th wave, we could also start seeing really choppy waves, as Diagonals just love to make wave counting a challenge.

 

 

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Crude Oil Intraday Bounce Update

My last posting price bottom did not hold for very long, maybe this crude oil bottom will last a little longer. This is the March 2019 intraday chart which can have completely different wave patterns. I look for the next busiest month contract which might have a slightly different price. I think oil is in for a bigger bullish phase but that might happen next year. In more move up and another move down would help to complete this wave count, which are diagonal wave structures.

Yesterdays Market Vane Report showed only 35% bull present. This is low but not an extreme just yet. The gold/oil ratio is a bit more telling as it registered 26.44:1 this morning. This is a record Gold/Oil ratio, in all of 2018. Getting close to the year-end also helps.

The fundamentals have been distorted and change at a whim as it seems every producer around the world is trying to manipulate the price of oil back up by cutting production.

Our oil policy is so screwed up that our government has tried to kill off our oil industry which got Alberta mad as hell. Then Prime Minister Justin Trudeau throws $1.6 billion cash at Alberta. Our government has no respect for the tax burden on ordinary working folks while the government drops cash out of a helicopter. Alberta has the upper hand here as cutting production will also cut oil revenues going back to the government.

 

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Nasdaq Daily Chart Death Cross Review

This is a daily chart using my standard 500 bar time periods. What is very important is technical indicator called a “Death Cross”.  Call it the Grim Reaper if you want,  but they both are guaranteed to steal bullish investor dollars. The 50-200-day MA is a deadly technical indicator that signals a long term decline, and we are just witnessing the start to this decline.

With the weekly chart the 200-day MA is down at the 5400 price level which could supply support and the potential for a “Golden Cross”. The Nasdaq is not the only asset class with a “Death Cross” as the SP500 also has one.

With this drop we would expect the Gold/NASDAQ ratio would improve. It did, but we are coming off a record extreme ratio of 6.38:1! This beat the old record by a wide margin of 4.94:1.  We want this ratio to compress as 1.18 is one of my “cheap” ratios which could still be years away.

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Crude Oil Intraday Chart: Bears Still In Control!

This morning WTI crude oil hit  a bottom  of $47.84 after which it started a bit of a rally. Since the December peak crude oil has been grinding down with many overlapping waves that I can’t count as impulse waves, but they sure look like they can fit into diagonal waves.  If we just bottomed then another zigzag rally should happen. This rally has no speed limit to it, so it can take its sweet time if need be. The only thing oil can’t do is soar above my wave 2 in Minuette degree.

The Commercial hedger COT report still shows that they are net short by a wide margin which hints that a super bull market in oil is not about to materialize this morning. We are dealing with wave position “unknown” to us most of the time. Fundamentals are also unknown as every country around the world is fudging its own oil related numbers. This is all about the process of eliminating wave counts that just don’t work. I manged to get in a couple of short trades on the way down but hesitant to go long with anything but a very small position. Even this mornings bottom may not hold, so I will wait it out.

The Gold/Oil ratio has improved with this recent oil price drop, but can still get much better. The Gold/Oil ratio sits at 25.65:1 which is much better but still far from being extreme. We don’t have to hit a new extreme ratio, as hitting the “Ratio Brick Wall” will do the same thing.

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SPX Crashing To New Lows And The Impending Elliott Wave Bear Trap!

This SP500 index gives a much better wave count as the futures specific month can give wild and erroneous spikes most of the time.  The herd of analysts has just figured out that the markets are in a bear market. This is not rocket science if every conventional  analyst on the planet uses the same set of numbers. The majority will take much longer to figure this bear market out because we really don’t know what the bubble degree top really is.  My bet is that most wave analysts will be looking for wave 1-2 in Primary Degree!  They tried that trick in 2009 and it didn’t work then and it sure in the hell is not going to work this time.

My wave count also has to end on a Primary degree which will produce a dramatic reversal that could be longer and much bigger than what any wave 2 in Primary degree will produce.  Besides that point, 5 waves in Primary degree will never complete before solar cycle #25 starts to wake up! New solar cycles are bear market “Terminators” and we still need to see a recession arrive.

Solar Cycle #25 has not started yet as the new solar cycle starts in the northern part of the sun.

The gray bars represent the recessions we’ve had since 1950. It sure looks like another recession is due and the only difference will be the severity of it all. It may take until  2020 or longer before the entire devastating picture can be seen,  but I’m sure another gray bar is going to get added to this graph in due time.

Trillions of investor dollars and your pension dollars are going up in E-Smoke as they call it “Lost Money”. There is no lost and found place to reclaim this lost money, as it is all built on debt. Debt is leverage and some of the worst leverage is in the real estate world.  Until most of this leverage world is unwound no true bull market will emerge. The worlds problems are not going to get fixed in a 2 or 3 month bear market!  One of the worst bear markets from 1929 to 1932 only took three years, so we can expect about the same with speed being the defining factor.

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DJIA Index: Bears Are Still In Control!

I have looked over many other wave analysts work and I haven’t seen a single wave analyst that recognizes an expanded top. The majority will show you intricate wave counts and mostly done using candlestick settings. EWI has never used candlestick in any of their books and neither will I.  I will never post thousands of super-small or super-micro-mini wave counts as that is not Elliott Wave analysis. The crop of new wave analysts are showing you how much free time they have as they are trying to baffle us with bullshit. The Elliott Wave Principle (EWP) is basically a visual technical painting tool. They might paint you a beautiful picture but many times what they paint in their computers, they can never repeat it in freehand on a printout.

I have always done Elliott wave analysis in freehand and still do. Once 2018 finishes, I will only show the late September position as the most important wave to count from. I have Cycle degree specifications I follow and Minor degree wave positions are my most important waves. Minor degree is 3 degrees below Cycle degree. I also work 3 degree levels above Cycle degree, so I end up with a spread of 7 degree levels. Keeping the degree levels down stops us from time warping into the future. Being out by one degree can send us into the future by 30, 90 years or longer, so changing wave positions should be done “Like a Surgeon” not like some person flipping hamburgers. The more they flip numbers and letters around the more obvious it is that they don’t have a clue where they really are.

It is amazing how many wave analysts fall into the trap thinking that 5th waves can extend across multiple generations. 1932 to 2000 would cover about 3 generations (68 years).  At a minimum the markets should have crashed back to the previous 4th wave of one lesser degree, but the markets have missed this 3 times already. Yet they insist we are in a Grand Supercycle degree world.

It may take another few months into the spring of 2019, and as a rough count we can use about a month of time for each of the 3 remaining waves still to come.

 

 

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HDGE, All Aboard The Bandwagon Heading North!

I’m a big fan of westerns and there is no difference in riding a wild stagecoach than riding a Bandwagon that is still empty at this point. Once more people jump on this asset class is going to get over-loaded and then become prone to a crash. If I’m right we still have a long way before the stage fills up and the horses get tired. HDGE is going to meet resistance but eventually leave that in the dust. This run is far from finished as investors are in for a rough ride to put it mildly. Just like with other indices I see an expanded pattern, so a nice set of 5 waves in Minor degree should fully develop counting from the September 2018 bottom.

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Apple Decline Still Going Strong!

Readers may not understand any analysis done with the EWP, but wave counts that do not follow a strict sequence will never work.  Not until I switched over to Cycle degree specifications about 5 years ago did the EWP start to make sense to me. One of these special or complex corrections of an expanded pattern can also happen with single stocks. Of course, if we are not aware, or not looking for expanded patterns, our wave counts will be all over the place on the charts.

Many think that the market we are in is just a correction, but this is very misleading at best. The smartphone era is dying and saturated. Tim Cook is a late Boomer and still has many good years to go, but the older any CEO gets the less innovation and risk-taking the company takes.

With a big Apple price drop already behind us, you would figure that the Gold/AAPL ratio would get better.

I had one expensive reading of 5.27:1 on October 4th and our recent reading is 7.50:1. This is a bit better but nothing to scream out across the rooftops for.

Cheap would get us closer to a 21:1 ratio so we have a long way to go before that ever happens. I will have to adjust my smaller degree wave counts and even if my expanded top is not “real” the big correction might end up looking like a zigzag!

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Russell 2000, RUT Update

 

The Russell 2000 index has lost support and is one of the first indices to do so. I’m sure there will be more joining this club  but you may not hear about it until the SP500 or the DJIA does the same thing. The wave count also has an expanded top to it, which most wave analysts don’t even look for. The Cycle degree wave three top finished in January 2018, while the secondary top of August 2018 was a “B” wave top in Intermediate degree. These expanded tops are very important patterns because they also forecast the fact some time in the future this market will once again push to another new record high. If the big bear crushes RUT to below 500 then I would have great confidence in saying that RUT will exceed 1742 again.

The problem with making a forecasts way too early is that investors will think it’s going to happen soon!  A bear market is only a correction to a bigger bull market in Cycle degree. The next bull market will be a solar cycle induced 5th wave in Primary degree. Just like the majority missed the 2009 bull market so will the next group of investors. Every major wave analysts expert missed the 2009-2018 bull market because e they though a wave 1 in Primary degree just ended!

Buying into a market that is so overpriced will always burn the participants (Investors) and this time we can see it’s not any different. Of the top of my head, we may have about 5 expanded patterns in progress so it’s not just a single one shot deal.

The Gold/RUT ratio is sitting at 1.1532:1 which is expensive by any stretch of the imagination and 2.63:1 would be cheap in the world of ratios.

 

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SP500 Mini Intraday Update

A few days ago some analysts have declared that a bottom was in. They were very bullish but this chart would have to soar soon for the stock bulls to be in control.  I doubt anybody is in control right now but once this E-Mini SP500 chart breaks below the 2590 price level then we know that the bears are in control.  Those reporters that are still super bullish are going to find out the hard way which direction this market is going to head.

Commercial traders are net short, but not at any real extreme just yet.  There is a slim chance this 5 wave pattern I’m working, will finish by the end of this year. It may take until February or even March to clear up. We know that January can be a critical month but March has also produced some amazing reversals.  The Gold/Sp500 ratio is 2.13:1  which is still off the charts for being expensive.

Some asset classes are in a funk as some investors are still undecided.  It could take very little to get a herd into a panic.

 

 

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Quick Natural Gas Update

This is the January 2019 NG weekly chart and it looks nothing like the daily chart. For the last month, Natural Gas Prices were correcting after which NG prices exploded. This morning NG prices exploded again, so chances are good a small 4th wave has developed. An NG rally going into the winter/spring season is not all that strange. There is an open gap open below, which could get filled at a later date. For now, one more push to the upside would be nice. There is an LNG terminal planned in BC, and I think that is a good thing. Still, there are seasonal changes that affect the NG prices which can still drive the prices a bit higher.

I would be very bullish longer term if the commercial hedgers were net long instead of net short. They are far from being net long, which does not support a huge impending bull run at this time. NG sure is not on a 5 wave impulse run as the angle of the 2018 move has been too fast and straight. Natural Gas prices are also diagonal wave structures so you can always expect a wild ride when you least expect them.

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