I created this collage when I thought we were close to a bottom. It is a high res scan and with the color it is a very big file. The Cad had already bottomed and had slightly headed up. The pessimism towards the our CAD was at an extreme which the spike displayed very well. Close to that time period the bullish consensus hit an extreme low of 6%, which means the bulls have virtually evaporated.
This is one of the lowest bullish consensus readings I have ever run across.
Just about 5 months later we had a liftoff that also created the low in 2016, with a stunning vertical rally still in progress. At a minimum a correction is due as moves like this, cannot be maintained. Commercial traders are already net short on our CAD but that can still move much further to the extreme.
Again, if we look back to the 2008 top matching oil we can see about the same type of crash in the CAD as there was in crude oil. I have mentioned this connection many times in the past because it has nothing to do with our prime minister’s boxing skills or our economy getting better. The economy is not working well for all those that have lost their jobs in the oil provinces.
The 2008 peak in our dollar has also corresponded with the depth of the recession, so any CAD bull peak may also be a sign that we are heading for another recession.
Since I am reading the CAD crash as a potential zigzag with a triangle “B” wave, then we should see our CAD travel and pass that 1.06 price level.
We are a hairs thickness away from a potential downside breakout so anything can still happen in the short term. The entire March, April decline is not your average impulse, as it looks more like a double zigzag with a diagonal 5 waves.
Why should the US dollar rally if stocks are going down the toilet drain? I just haven’t figured out if stocks are turning clockwise or anti clockwise! 🙂 Stocks can stop on a dime and head north just to keep us all guessing, with a bit of stock mania returning.
The commercials are still net short the US dollar but that does not stop the US dollar from a rally, we would need a much bigger extreme for the commercial reports to be of real use at this time.
We sure can listen to the fundamental parrots that the US dollar is going to implode, but they said much worse back in 2008 yet the US dollar went exactly the opposite way and started to rally. My last sentiment report a month ago or so hit a 24 month peak of 91%, which means only 9% bears were still left to join the bull party. This would be rare if not impossible as it never can hit 100%.
Again, we are at the mercy of the next rally and the pattern it will make, and the best scenario could also be a diagonal decline with a wave 1 coming up soon.
Gold did a few things that I hoped it would, as it cleared a new high with gusto, this is very typical of a diagonal 5th wave, but we are not exactly sure as it can still go a bit higher. Running to gold as fear hits the stock markets is never a great idea as this is emotional trading at its finest. Any vertical move cannot be maintained in the long run as they will all eventually die or correct strongly.
The HUI has also made a strong showing, but it contains many gaps below present prices. Right now gold was a bit shy of $1300 which I mentioned as one my potential targets many moons ago. All downward corrections in March have now been retraced by 100% an more so this helps to confirm that “ABC” crashes can produce newer highs. I know of no other system which allows us to see that far ahead.
The sad part is that it works if we keep our degrees separated and in sequence and stay away from using WXY waves.
Now that gold has charged up to a new high, I am sure that gold still has to correct this entire April move and head below $1210 again. Diagonal waves are much the same as inverted zigzags.
The market crash was maturing a bit more this morning as we seemed to be on a very nice spike heading down. The Mini DJIA and the Mini SP500 are always on a slightly different wave count from each other. From a wave count perspective, these differences are huge as one can be counted as an impulse and the other as an “ABC” type pattern. If this were an “ABC” crash, then yes, this market will turn and head higher. What type of a pattern any big correction will make will determine how far it can go, as inverted “ABCs” get completely retraced.
The DJIA is making a decline that can still go many ways. This is not a great looking impulse at all but can still double as a 4th wave correction. As I post the DJIA is still heading down. Remember that AAPL is in this index so where the DJIA goes so does Apple’s stock. Apple has also broken to a new low but it has a huge gap above that will get closed in time. When is impossible to determine at this point.
HDGE is a good inverse indicator of the stock market as HDGE crashes when stocks begin to soar. All the choppy rallies have now all been confirmed as bearish rallies as all bear market rallies eventually get retraced. From the November bottom to the 7 wave count February top, they have all been retraced followed by a very impulsive 5 wave decline.
Will HDGE go to zero or suffer an inverse stock split? I doubt it! It’s high time the markets corrected or changed a major trend, so we have to wait what type of rally will be produced next. It’s all about pattern from my perspective and price has little to do with it.
The first two chapters in the Elliott Wave Principle (EWP) all deal with pattern as virtually no prices are used. Even the very first Elliott Wave published by RN Elliott and republished in the yellow book, deal strictly with patterns not prices.
Anything can still happen as all the DJIA has to do is rally one more time and we have yet another 5 waves pointing up. There is very little room to move and right about now I would love to see this pattern break to the downside to help confirm a potential impulse type wave.
Many times I will not fill in every little wave count as that is very silly and time consuming. All it takes is one critical move the wrong way and the next thing you know the entire wave count has to be redone. I post far more frequently than many other wave counters do and it means the difference between doing 8-13 positions or 89 positions. Did all that fancy detailed wave counting help at the 2009 bottom? No, it did not, as all the SC and GSC degree wave counters missed the biggest bull market since the depression.
It also makes no sense anymore, that our present bull market is just another big bear market rally as it would be the biggest and longest bear market rally in financial history. Besides, there is no such thing as a double expanded flat top. Any expanded flat top is extremely bullish once the bottom is in, as they also do not produce the super long “C” waves that the SC and GSC degree wave counters desperately need. They have started their 5 waves down in Primary degree many times since the 2000 top, but it has failed every time.
There is no certainty that wave three in Cycle degree has completed, but it would take a Primary degree correction to fully play out before the 4th wave bottom shows itself. I don’t think we will see a huge Cycle degree 4th wave triangle as that would not have enough time to finish by the 2020 time period, after all the Roaring 2020s may start by then.
Members are starting to sign in with their free month membership and it is also good to see past donors joining in. All Members still have access to my old blog, but there will no longer be any updating as my effort will be spent on this website.
As I have mentioned many times this gold bull market is made up with some very ugly patterns that are impossible to fit into a pure impulse. Since the January peak we have seen many vertical spikes and then gold would correct followed by more vertical spikes.
Since the April bottom gold has moved up alright, but it has moved by waves constantly overlapping. Longer term this is not good, but shorter term gold should still break out past $1280. So far this has gold in a diagonal type rally, which means that when it corrects, it may correct in a violent manner.
I sure want to milk this run as much as we can but we may be dealing with a hot potato at the same time. Sure silver has rallied, but it does not confirm an impulse by any means. The pattern dictates if any asset class is in a true bull market or not, as fake bull markets can run for years before they implode. Just look at the XAU as it retraced its so call secular bull market by more than 100%.
This is the cash chart for the Russell 2000 and I still have not found any Cycle degree, wave three top. The implosion into the 2016 bottom is a very well formed impulse wave, but I have to explore it as a potential expanded pattern bottom.
What that means is that if the expanded pattern is true, then at least the Russell 2000 can hit another new record top, closer to the 1300 price level. We are also approaching the previous 4th wave peak, which is a perfect place to turn and then head back south.
I do not want to completely throw out the wave two option, but it could be a wave two in Intermediate degree. If that declined, then 720 would be a 61% correction, which may not be deep enough to play out all 5 waves. We know we are not going to get 5 waves down in Primary degree as that would take the Russell 2000 well below zero, and that will never happen.
I thought it would be good to review my bigger picture in oil, and I assure you I do not follow the SC or GSC degree crowd. I follow or look for the Cycle degree sequence. The only high degree wave count that may be completed is my Cycle degree wave 3 at the 1980 peak.
The crash low in 1986 (Primary degree “A” Wave) was a bit above $10 with another major low in 1998-1999, also a bit above the $10 price level. It is very important to remember that the 1999 low was a higher low than the 1986 bottom was. This entire crude oil wave count contains no WXY waves as I would rather look at it from a diagonal or triangle perspective. In this case the Primary degree “B” wave contains a triangle which may have completed the Intermediate degree “D” wave bottom, in January 2016.
I believe we are heading up on an “E” wave bull market and we have a long way to go to break some old highs. Any wave action above the $115 price level will do, but I do not rule out a potential double top. We are looking very far ahead and many things have to happen for it to come true. Right now on a gold/oil cash ratio we are a bit above 28:1, which makes oil still very cheap when compared to gold.
Many have done this type of research, but it seems that many of the oil peaks corresponded with recessions. So it still may take sometime before the next recession is upon us.
Any Cycle degree 4th wave bottom could still take until solar cycle #24 finishes around 2021. The first peak you see in this solar cycle matches the 2011 peak in gold, but the 2000 peak matches the bottom in gold and oil. The exact opposite happened in 1980 when the solar cycle and commodities also peaked out.
This is the intraday wave count with many of the waves overlapping just enough to not call them pure impulse waves, but I will count them as if they were impulse waves for now. I have started on Minuette degree, but will adjust when it becomes necessary. I think we are still far away from any potential “A” wave that I need, but even then the “B” wave correction can hide itself. If we get a strong obvious correction, then we would know that we are at the half way point of the entire bullish phase. Right now I am looking for a potential 4th wave correction, but extensions can delay all that. We are also coming up to the end of the month when corrections or trend reversals can happen.
This is the Goldman Sachs commodities index and it gives us a general view where they are heading. They sure look like they favor the oil index as the wave counts are very similar to crude oil. We could be heading into a big correction with the lower limit being closer to the 310 price level.