Tag Archives: DJIA

DJIA Daily Chart Update: Are The Bears Back In Control?

This DJIA chart has not produced any new record highs in well over 4 months and it even has a lower wave 2 then the SP500 has. I treat this low as a running zigzag as they do happen. I stay away from calling anything “truncated” but a low wave 2 means that the market is more bearish than the majority think. The big clue that the last few months is a bearish rally, is the very fact that the rally produced an extremely choppy pattern. This tells me the rally is going against a larger trend, which would be down.

The Cycle degree wave 3 peak is still holding and hopefully it will not be knocked off, as I want my Cycle degree sequences to last for the rest of stock market history.  Eventually, we will get a major stock market bottom that will be another fantastic buying opportunity. Of course the majority will never get it, as they will be ill prepared in what to do when it does hit a major low again.  Wave 3 can produce declines that will stun the majority like dear caught in the headlights. In this case its more like the “bulls” are caught in the headlights as the bears return to shred this bull market psychology once more.

Recently one of my DJIA posts has been published in Market Forum and this is the link to it. This is all very good exposure and I thank the author for posting it.

When this market goes down, many other asset classes will also get dragged down,  just like what happen in 2008. Needless to say I’m bearish until such a time a counter rally is going to be big enough, to force players to reverse their positions.  I’m sure that in the future we will get price forecasts claiming that the DJIA  is going to 5000, 3000 or even 1000.

When all the analysts are in concensus, then this is when the markets will turn and go in the opposite direction. When the DJIA 5000 price forecasts are broadcast far and wide, then it’s a pretty safe bet to call for DJIA to hit 45,000. Mind you it may take until 2029 to play out.

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DJIA 1977-2018 Review

Chances are very good that you could search the entire Internet for a wave count that dosen’t have a bunch of indicators on it. Wave analysts use smoke and mirror to baffle us with bullshit.  The problem with modern high degree wave counting is that they miss too many bull markets.  The main reason that the majority of wave counting experts are in SC or GSC degree is because they do not look for wave extensions. If we go back to 1977 I show three sets of wave 2 bottoms each one, being one degree lower in sequence. This produced a massive extension until the 2000 peak.

I was still a GSC degree wave counter in 2000 which forced me to flip numbers and letters around like I flip hamburgers on a grill. Every time we lay down a number or letter we are also moving forwards or backwards in time.  Imagine how much time difference there is between an Intermediate degree wave 3 in 2000 and a GSC degree wave 3 for the same peak. With a difference of 4 degree levels we could be early by 100 years or more.

They are calling the 2009 bear market the,”Great Recession”, This is milder sounding than the “Great Depression”. Depressions happen in large degree wave 2 crashes, but most of them happened in times where there were no safety nets. Today the government can just auto deposit funds to the poor and negate or buffer any depression. When we look at the DOW at the 1932 low, you would never know that a depression existed at all. Markets crashed into the 1932 bottom after which the stock market produced a 5 year bull market.  At that time it was the Smoot-Hawley Tariff Act of March, 13, 1930 that killed the markets. Does this sound familiar with the trade wars going on in 2018? We might get the “Great Recession 2.0” but we should not get a depression, at the next Cycle degree wave 4 bottom. By the time they do call it a “Depression” it will be over, and Cycle degree wave 5 will be underway. This is when 5 waves up in Primary degree will be very important to understand, and what that 5 wave sequence will terminate at.

We are still years away from any major corrective bottom as solar cycle #24 has to end first. Many of market crashes have happened just a year or so before the next solar cycle started, so this could take us until 2021 to realize.

Every bull market comes to an end so if they think markets can stay  in a permanent high they we are making a big mistake. Investors just love to buy high, as they sure hate stocks when they are at major lows. This will never change as human emotions take over and all logic reasoning is thrown out the window.

The Gold/Dow ratio is at 19.5:1 with 17:1 already being expensive.  In May 2018 this ratio was 18.63:1 so the DOW got a bit more expensive since then.

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Mini DJIA Intraday Gyrations Review

Next month we will be starting out the 4th month of this so called correction.  Many are still calling to buy on the dips because this market is going to the moon. Oh Really? We’ve heard all that before.   All those that have the “Buy on The Dip” mentality have no clue how big the “Big Dip” will actually be.

The bulls are all looking for a support price which also tells me that they have little understanding about how big the dip will be. There is only one dip I want to see and that is the “dip” that starts a new bull market.  Another 8 year bull market to be exact.  The way this bear market has started, still leaves too many wave patterns unanswered.   Sure, we also have a declining trend line, but the test will be if that top down trend line will hold. We may need all of May before we find out, because so far the market is doing a good job in fooling most of the wave analysts.

Elliott Wave analysts travel in herds just like any real world animals do. Three main groups come to mind. The Supercycle degree herd and then the Grand Supercycle degree herd. Of course  the most popular wave counting group is the GSC degree group, which are very easy to identify. Both groups do leave many of their 5th waves “Uncapped”. Any uncapped 5th wave sends a clear signal to the readers that they have no clue where they really are with no concept of Wave 1-2, 1-2, base counting.  Every, 5th wave we will ever run into, in the future must be capped, by “one” higher degree. Otherwise the wave count is incomplete and the Elliott Wave sequence is broken. In my Cycle degree world you can’t leave a single 5th wave uncapped, ever!

I plan on posting a page that will explain the 1- 2 wave, base counting. I have gone back to 1500 CE,  (Little Ice Age) and have labelled 7 “sets” of 1-2 wave bottoms already. 1500 CE is my base for the Submillennium Degree wave 2 position.

In the short term this market could keep going sideways, and the next thing you know, we will be at a “B” wave top in Intermediate degree!  If that happened then, the “B” wave top paints a picture of the rest of the bear market.  We are at a critical point as all support must crumble, if the bigger bearish trend is already in effect!

There are still too many options at this stage of the game, but I have confidence that it can get it sorted out, as the starting waves to many bear markets, can always be very fuzzy.

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DJIA Index Update

This is the DJIA index, which does not move during the night sessions, but only moves during the day. Todays decline does not match the Mini DJIA, but it sure is forming waves that are  better to count out.  The commercial traders are net short the DJIA but not to anything I would consider extreme.  If commercials are net short the DJIA then this does not give us confidence in thinking that some super bull market is about to take off!

Ultimately, this February rally should get completely retraced, then we may have more analysts turn bearish.  Sure, we may not hear about the fundamentals that are causing this decline, but I’m sure the media will find the reasons and then they will all sound like parrots  regurgitating the fundamentals why this market has trashed.  Any, 10%, 20%, 30%, 40%, 50% or even a 60% correction may not complete a Cycle degree correction.  Price is sure not going to help, as we would need to see a very big corrective wave structure completing first. In my world, pattern dominates price any day of the year.

Death Cross

With this particular chart and settings, the “Death Cross” happened at the 25,500 price level, which is far too late to do much with it. I looked for other potential “Death Crosses” in other indices, but was hard pressed to find any that would show up reliably.  Any “Golden Cross” is very bullish but it too happens on the late side.

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DJIA Weekly Chart Melt-Up

The stories are rampant that experts agree about a potential stampeded into stocks, which some are calling for a 20% meltup! Hate to bring you the bad news, but the meltup has “already happened”. For the last two years, since my 4th wave bottom we’ve had a consistent meltup unparalleled in financial history. This is nothing really new as the herd of analysts always seemed to be late in recognizing major turnings as well. In this case it took them a full two years before they saw it as a meltup situation.

One day 2-3 years in the future, we could see the entire situation reverse when the market has already completed a meltdown. Our present market meltdown, is already 5 days old, but the entire 5th wave meltup will get retraced as the 5th wave meltup turns into a Cycle degree 4th wave meltdown. I’m sure that towards the end, we will see vertical moves to the downside which helps to confirm a “C” wave crash.

I drew out another Cycle degree flat and counted how may 5 wave sets and 3 wave sets I need in order to qualify a flat correction. My smallest degree level I will use is in Minor degree, and I would need 6 sets of 5 waves in Minor degree, with 5 sets of “A, B, Cs” in Minor degree. We only need one set of 5 waves in Intermediate degree, which will play out before the Cycle degree crash comes to an end.

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Record ETF Demand In Januaray From A DJIA perspective

Record ETF Demand In January | ETF.com

It just amazes me how the herd keeps jumping into markets at record highs.  They have done this at every record high since 2000 so it does not surprise me that they are doing it again. Due to the fact that since the 2009 bottom we had a “Big and Tall” bull market, many wave analysts have increased their wave degree accordingly. One analyst has the 2009 bottom as a SC degree wave 2 bottom.

Other popular wave analysts still have the potential for a wave 3-4 in Primary degree. Sorry folks, but 5th waves are always fundamental the weakest in the links, and they never last multiple generations. The majority of wave analysts are  still pushing, an 89 year old 5th wave extension.  From the last 2016 4th wave bottom this market shot straight up, with hardly any clear subdivisions. Vertical moves like this is a sign of an ending wave pattern,  not the start of something better to come.

Everything tells me we could be in a wave 3 in Cycle degree and that we are going to get a Cycle degree correction, with 3 waves in Primary degree. I’m going to keep my updates brief,  as I fight through this flue.

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DOW 30 1984-2018 Review

Since early 2016 we had a massive move to the upside where we can hardly make out any wave corrections. This is a classic 5th wave extension, which we’ve had before. From late 1987 to 2000 was nearly a 13 year Minor degree 5th wave extension which makes our present two year run look kind of mundane.

What is dramatically different between the two sets of 5th wave extensions is our present 5th wave in Intermediate degree is in a near vertical position which I have never counted out before even when we go back 200 years or so.  The difference in angles is dramatic, but wave analysts are ignoring this fact as many of them keep adding higher and higher degree levels.

From my 4th wave Intermediate degree bottom, we would still have 7 smaller degree levels that can come out of  hiding. After the wave 4 bottom in Minor degree, (2017) we still would have 6 hidden degree levels, that could come out. I had  to use the remaining 6 hidden degree levels, and during the last degree, we run out of visible 4th waves.

Elliott wave is much more than making simple mindless trade setups, as it is our perception what the Idealized pattern looks like that is the problem. Those pretty impulse waves they show us in the EWP don’t exist. You can search for them all your life and you will not find them. Why? Because all waves are never even.  Until we go back to 1929 and start a fresh wave count will we ever fix this problem of missing bull markets or even bear markets using the EWP.

Missing a bull market should never happen, and frankly the contrarians do a much better job of reading tops and bottoms. The short version is, when our wave counts, are still bearish after reports of insider buying are all over the news, (like 2008), then our wave counts will get trashed. This happened at ever major bottom of 2002 and 2008 leaving the wave counter with nothing but token positions, if that.

In the next few years, chances are good we could hear about DOW 5000, 3000 or even 1000, but don’t believe that as solar cycle #25 will certainly destroy those price forecasts.

I gave up on all high degree wave counting when I saw EWI still being bearish on gold when gold was at $1000.

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DJIA Monster 5th Wave Extension And Impending Bear Market.

 One of the main reasons I always review the big picture, is to check if the wave counts still fit in the big sequence I think I’m working in. From the 2009 bottom to our present top we have what I call “One move”, but it is subdivided into 5 waves in Intermediate degree.  The 2000 peak also ended with a wave 3 in Intermediate degree, but it was the 5th wave in Minor degree that extended at that time. 2002 ended with a wave 4 in Intermediate degree just like a 4th wave in Intermediate degree ended in early 2016.

Folks, it’s the last 5th wave that has dramatically extended, and to be honest, I have never counted or seen such a 5th wave extension anywhere in stock market history. It is a near vertical move that even the 5th wave from 1921-1929 couldn’t match. Due to the fact that our present 5th wave is vertical on weekly and monthly charts means that this rally cannot continue.

Investors are pouring record amounts of money into stocks

The bulls are enticing many to invest at record highs, and some of the recent money flows suggests huge inflows. Buying high and then selling low in a crash is what the general public loves to do, as investors have done this on every major peak since 2000. They call them investors, but investors should not be confused with “Smart Money”.

It’s all emotional money as investors chase a bull market. As long as it keeps going up, everybody is happy, but as soon as these buyers start to take a rest, this market could start on the “Big Dip”.  Besides the potential for a Cycle degree decline that can fall below 2011 lows, this present 5th wave will get completely retraced.  It’s all about smoke and mirrors as the consensus paints us a rosy picture of the future.

Every major peak in history, the talking heads painted us a rosy picture, but what followed had no rosy ending. In late 2008 investors were fleeing the stock market in record numbers, yet the market did the exact opposite thing as the biggest bull market since the depression unfolded. The bull market in 2009 unfolded with a very “big” push from the sun, as solar cycle #24 started.

No little 20% correction will do it, as it might be a 70% correction instead, depending where we count from and if we use a gross or net calculation.

In the bigger scope of things this is not going to end well, as the markets will put those emotional investors through a meat grinder.  Slice, Dice, Hack and Slash will chop all the stock bulls up and get them ready for the fridge.

There is no chance in hell that I will turn into a super stock bull, just because it hasn’t started its bear market yet. If the DOW reaches 7000 or so and the talking heads tell us the DOW is falling to 5000 or even 1000, then I will make a call for the DJIA to roar to 34,000 + by 2029.

From 2009 to present,  we’ve had a 400% run in the DJIA  chart,  so I’m pretty sure the DJIA could make a 500% run up into the  2029 time period.

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Solar Cycle #24 And DJIA 1975-2018 Elliott Wave Review

The sunspot number has now been updated to the December end of 2017. The majority couldn’t care less about any influences our sun has on the stock markets back here on earth. Many have researched this connection, as I have done for the last 20 years. Each black dot is a month end calculation of sunspot activity.

We had two major peaks in sunspot activity, one correlated well with the 2011 gold peak and the January 2014 peak coincided before my wave 3  in Intermediate degree ended.  The 2002-2008 sunspot count starting to decline, but the markets loved it at least until 2007.

It may still take a full 3 years until sc#24 ends, and when sc#25 starts from this 2021 time frame, then the markets should follow suite.  Many times the markets experience great upheaval just a year or so before the solar cycle hits a bottom. With the Fed change coming this February, there is usually some upheaval in the markets as well, especially if the markets have already crossed over to the bearish side.  In the end sc#24 produced the biggest bull market since the depression, lasting well over 8 years now.

In the next 2-3 years the stock bears can do a lot of damage, but once 2021 rolls around and the sunspot polarity has started to flip, then we had better look for a brand new bull market to start. If you think investors are any smarter today than what they were with the 2000 or 2007 peaks, then you are sadly mistaken. The average majority will never learn that the “majority” can’t win at this game of accumulating wealth.

The sad part about the solar cycles is that even the wave analysts ignore them, as in March of 2009 they still had very bearish wave counts still to be completed.  Yet the markets turned up in 2009 and never looked back as the bearish wave counting herd were caught in a bear trap. When we are caught in any type of a trap we are ill prepared for what comes next. The markets were already showing signs of an impending reversal in late 2008.

 

I just love to show readers the linear version of the DOW as the bullish phase from the 2016 bottom to our present top is one of the most vertical moves I have ever  tried to count. I show 2 sets of 5 wave sequences in Intermediate degree, with no other degree levels labeled. I use no other indicators or prices, and I spew out little or no fundamental reasoning when markets go up or down. Markets will always act in such a fashion to never let the majority win. Sure, during any bull market it is perceived that the majority are winning, but that is only wealth on paper. During a big bear market, all this paper wealth starts to disappear and years of bullish progress go up in smoke.

The first set of 5 waves in Intermediate degree,  are much bigger physical moves. The 2015-2016 bearish phase contained a much smaller intermediate degree 4th wave. There is nothing wrong with that as there is a one degree difference between the two 5 wave sets. There are 2 sets of wave 3 positions not labeled which is deliberate, so it will force any wave analysts to scratch this time, wondering what is supposed to be between the 2 sets of 5 waves.

This market has soared since the 2016 bottom, but it also shows next to no corrections from a monthly chart perspective.  This is a bad omen in the bigger scope of things, as the markets do correct back down to the previous 4th wave of one lesser degree.  The DOW 15,000 price level is a previous 4th wave alright, but it’s the previous 4th wave of a Primary degree that a Cycle degree has to correct down to.

In 2009 the markets went a bit lower than the previous 4th wave of one lesser degree, which has no real meaning or future implications at this time. Many 4th waves travel below previous 4th waves of one lesser degree. Besides the markets have a tendency to fool the majority of participants and so to piss off all the mega bears, the markets will “not”  go below the 2009 lows again.  They could  turn earlier than expected, and start to soar. You can thank solar cycle #25 for the next big bull market, as those investors that follow or believe in the “grand” or “super” theory will be left empty handed again.

I see this as a massive missed opportunity, which makes the Elliott Wave Principle very inefficient,  if we keep on missing major bull markets. As long as wave analysts are happy painting mindless numbers and letters on the charts, then they will never enjoy catching a 5 or 8 year bull moves when they do come.

Every failed wave count must be followed by a serious look at the “entire” wave structure. A minimum of two higher degree levels than the failed wave degree must be initiated instantly.  In 2009 Primary degree wave 1 failed so the “ENTIRE” 5 wave sequence in Supercycle degree must be counted again. Modern wave analysts have refused to do this as it’s just too much like work. If you spend your time looking at many other wave counts, virtually every wave position today is still spewing out SC and GSC degree wave counts.

For the last 5 years I have shifted to Cycle degree wave analysis. Until all 5 waves in Cycle degree are found and confirmed, “NO” SC or GSC degree wave counts can find a base.

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DJIA 2000-2017 Elliott Wave Bull Bear Market Reviews


The chart above is a stretched weekly chart which shows any vertical moves in a more dramatic fashion. The Elliott Wave Principle was observed using the DJIA charts and coincidentally the DJIA and the other indices all have similar patterns and wave counts. Always reviewing the largest degree levels is very important, as we have to make sure that it still fits into the larger picture that we think we are in. The reason why all these 3-4 sets of waves appear, is because we always have to look for wave 3 to be the longest or extended wave. Since 1932 any wave 3 has never been extended, but it’s always been the 5th wave that the experts extended. 5th wave extensions “never” travel across multiple generations as 5th waves are fundamentally very weak.

When the majority of expert wave analysts didn’t see the bull markets coming both times in 2002 and 2009, I knew this SC and GSC degree hype had “MAJOR” flaws in it.  As soon as any part of the largest degree level has failed, then the entire 5 wave sequence from its start, “MUST” be thrown out. Of course, this is too much like work, so the majority of wave analysts just makes a few cosmetic changes, and “bingo”, they end up with a new and improved,  wave pattern. Cosmetic wave counting doesn’t work, and if we just keep making pretty changes, we will miss every major bull market that will ever come in our future.

Just by not being prepared before any high degree bull market starts, makes the Elliott Wave Principle very inefficient and pretty useless. I was brainwashed with this GSC degree mania myself, and once I realized that the DJIA would not implode in 2011, I knew a major flaw was still present in all our wave counts. It’s pretty sad when expert wave analysts miss a bull market and leave 300% gains on the table.

Any person with a very healthy investing account can not afford to miss any bull market in their lives. It takes time to make the mental switch from a long bearish phase and then back to an impending long bullish phase. It takes time to accumulate strong ETF positions so we need lots of early warnings. Even Warren Buffet screamed how bullish he was back in 2008, and my favorite contrarian was turning very bullish as well. It wasn’t until March 2009 that any wave counts were ending, so wave analysts were close to 6 months out, in recognizing that a major bottom has arrived.

In late 2008 conventional conditions were already showing us that the 2008 financial crisis was coming to an end. Insiders buying their own shares back, is a clear sign that the bull market was coming to an end. Insiders don’t buy if the 2009 bottom was just a wave 1 in Primary degree. They already knew that the markets were  oversold on a massive scale, so it was a no-brainer for them to buy stocks. Even the VIX started peaking out in late 2008, which all helped to seal the coffin containing all the stock bears.

My top in 2000 was wave 3 in Intermediate degree with its start in 1982. Once the markets crashed in 2002, it was followed by a 5 year bull market that most wave analysts also missed. From this 1982 bottom it was exactly 20 years to the 2002 bottom, which is part of the 20 year cycle so prevalent in the markets.

Each peak progressively gets higher in degrees, but Supercycle wave 3 is still far away in time and price. SC degree wave 3, never mind GSC degree wave 3, may not end until the 2029 time period.  Not until “All” 5 waves in Cycle degree are found and confirmed, can we progress into any SC degree world.

The 2009-2017 bull market was a very choppy bull market, further confusing us into believing it was just another bearish rally. It wasn’t until the DJIA was past the 2007 peak did wave experts look for alternates.

Hindsight has to be turned into foresight, and I have been very specific with the wave counts that we need to confirm a Cycle degree bear market. This is so we can catch any major errors as soon as possible. When I’m wrong, I’ll be wrong in spectacular fashion.  Short term, wave counts are always foggy to say the least, but we want to get the biggest degree as close as we can, well before any real bottom is in.

When the markets are pointing up, and the majority are all guessing how far that this bull market still has to go, I have already painted the picture for when the markets point down again. Bull market tops are the breeding grounds for bear markets, and the reason this is so, is because there’s “nobody” left to get in.

The bullish preachers are preaching to the crowd that has been converted for months already. All we need is for the, “Greatest Fool” to  crawl out of his cave and he will be left holding the bag of falling asset prices.

Buy Low, Sell High  is a very important PDF to understand, which combined with the beautiful color PDF chart below, makes a powerful case for contrarian thinking.  ‎www.longwavegroup.com/market/charts/_pdf/Anatomy_of_A_BullandBear_Market_with_Money_Flow_0930.pdf

Like Rick Rule says, ” you’re either a contrarian, or you become a victim”.

If you have progressed, or lucky to have a strong net worth and you would like to enhance the contrarian point of view, then I strongly suggest that you subscribe to  Steven Jon Kaplans True Contrarian Newsletter.  

 

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DJIA 1929-2017 Linear Chart Cycle Degree Review

I love to show the DJIA in a linear chart as it shows the last year or so as a near vertical move. This move was what they called the Trump Bump and a few other names. The majority, though the bull market was over as the markets plunged in reaction to Donald Trump being elected as president. I was one of the few that didn’t fall for that and sure enough the stock market reversed its losses and proceeded to soar.

It soared higher with a constant barrage of new record highs being broken, and it still may not be finished as I post. 22,773 seems to be the present record high.

1929 to 1932 was a major bear market, producing a depression during that time. From some of the worst fundamentals in stock market history, the markets turned and charged up for many decades with many crashes and corrections along the way. Crashes, corrections and bear markets are going to continue to happen if my single idealized wave pattern is true. These bull market phases since the 2000 peak  are the results of extended wave 3s that have been happening since the 1932 bottom. If our wave count is wrong for 1929-1932 then all the cosmetic wave counting in the world will not find us a better fit.

Yes 5th waves extend, but 5th waves also tend to be the shortest waves most of the time.   Since the 1932 bottom I use no 4th waves in SC degree or 4th waves in Cycle degree in the 70s bear market. The EWP clearly says that wave 3s are never the shortest wave, yet the majority of all expert wave analysts in the world, are based on 5th wave extensions.  Extending 5th waves and never looking for the alternative wave 3 extensions will always force the wave counts into a much higher degree. The next thing we know is that 2000 becomes a SC or even GSC  wave 3. Any wave 4 in any degree has a very specific simple idealized wave structure, that must get confirmed.

Of course I followed along and used to count everything in GSC and then in SC degree, yet none of the waves required never materialized. When that fails, it’s not a failure of the EWP, but it is a failure of humans to think objectively and sequentially. Most people are biased in some shape or form and wave analysts are no different. It took me until 2013 before I dumped all SC and GCS degree thinking. I use an idealized wave structure to tell me what I’m supposed to be looking for, and try not to practice cosmetic wave counting.

Markets never make it that easy where the wave count is so clear. If they were, we would have many wave counting billionaires in the world today. Yet when you look at the contrarians today most of them will never be caught dead drawing out a bunch of numbers and letters.

I’m anticipating a Cycle degree stock market correction, which the majority will call a bear market by the time it shows itself. A big bear market is just a correction in an ongoing bigger bull market, which from my perspective, is the SC and GSC degree levels. Both degree levels are already in extended waves.

There are three main price hurdles that this impending wave 4 needs to retrace in the next 3-4 years. One of them is the complete retracement of the Trump Rally, and then as a bare minimum, the markets must dip well into the 2007 peaks in all indices, not just the DOW.

With the DJIA this would be well below the 14,000 price level. The last hurdle to cross would be a complete retracement of the stock mania that started in 2011. That would take us below the DJIA 10,000 price level. Once the Trump Rally is completely retraced, then we will be left with a single long spike to the upside for many years to come.

Our present tall skinny looking 5th wave is the opposite of the long skinny spike to the downside that ended in early 2009. From a bear spike in 2009 to a bull spike in 8 years or so, is a nice Fibonacci round number. Many markets move in Fibonacci years, but the underlining driving force of the markets is the solar cycle.

At this time, many experts are still expecting for stock prices to “melt-up” so to speak. This is very standard bullish talk at the peak of any bull market. At the extreme, wave positions cannot be in sympathy with the bullish herd, as the waves always act the opposite of popular opinion.  Investors love to buy high as they feel safe amongst millions of others doing the same thing.

In reality insiders have sold in May 2017, and in the long run retail investors will be left holding a portfolio of worthless paper, again.

What amazes me many times, is how short of a memory investors really have, as they have learned nothing in the last 17 years. It is mathematically impossible for the majority to win at this investing game, as they are always too early or too late when making a decision. Seasoned contrarians know this very well, and have perfected the art of buying low and selling high to the emotional investors.

As scary as it sounds, I watched more 1929 documentaries and there is not much difference as investors were extremely bullish in 1928 as well.

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September, 1, 2017 DJIA E-Mini Intraday Bullish Update

The DJIA has now gone further than anticipated but is still well below the August peak. The DJIA could be crazy enough to breakout to another new record high, but that could still be many days away from happening. If and when it does break out, then this pattern would fit into another diagonal 5th wave zigzag.

The VIX has also plunged as complacency returns to the stock markets. When complacency rules then, it is also a setup for another bear attack!  There will be no rest for the bulls when they constantly get attacked by the bearish crowd, but that still may not kill the bull market in the short term.

The only money left in the markets comes from the bullish herd that is chasing this bullish phase. As long as it keeps going up they will ride this bandwagon, and  fundamentals be dammed.

I read that they are changing the way they calculate the DJIA  this week, which will be interesting to see if we can notice it on the futures charts.  They do this every few years or so, so it may never even be noticed.   Even when they take out or include new stocks in the DOW, the pattern hardly ever changes from what I have noticed. Harvey has wrecked havoc in Texas and I hope that things will get better as hurricane season dwindles and disappears. 

Hurricane Irma is on the way, but it is slow going as well. I get my information form the National Hurricane Center, which you can track hurricanes from their starting points. The National Hurricane Center gives all interested parties  the equal chance to see a hurricane coming 3-5 days in advance.

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September, 1, 2017 Notice

In recent days it seems I may be losing all my free access to the futures charts. This will throw a major crimp in my style of wave counting, as I have to search for an alternate site. I may be able to work around it for now, but I see the writing on the wall where I will lose access to charts that I have used for close to a decade. Many sites have too many settings that can be a nightmare to learn, set up and simplify. I may switch to Barcharts.com which Insidefutures are affiliated with. 

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E-Mini DJIA Intraday Bullish Review: Gap Closed!

Stocks have made a wild reversal which I hoped it would, but the DJIA is still shy of breaking out past my “A” wave peak in Minuette degree. I made some adjustments where I now have 5 waves from the August record high. I have applied the Cycle degree wave 3 as a top, but I stress that it may not hold in the short term.  We are just off record highs that barely show up on the daily charts never mind the weekly charts and monthly charts. A Minor degree in this scale is still far too high of a degree level to look for.

If we are heading up to a potential wave 2 peak, then the next decline, should be another zigzag. It is the “B” wave that does not have to be zigzag, but I always like to see the zigzags in waves 1,3 and 5.  Any 5th wave can be a diagonal and I think it is important that diagonals are identified. From the 2009 bottom to our present 2017 top is a diagonal 5th wave or a bad impulse. If this 8 year bull market was a fake or just a big “B” wave, then it would not have been as smooth as it was. A “B” wave bull market would have far more violent moves than we know what to do with, and besides bear market rallies have never lasted this long.

In the long run if we don’t get the right degree and the right number, we will never catch a major bottom when it is staring us in the face.

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Mini DJIA Intraday Crash Review

The DJIA has performed a nice swan dive worthy of an Olympic Gold medal. The only thing wrong with it, is that it’s too small. I started my wave degree with a Micro wave one, but will adjust once we approach any wave 1 in Minor degree. With a Cycle degree decline containing a 3 wave flat, then the first wave could be a zigzag or a single 5-3-5 pattern. The markets will do everything in their power to give as a far more complex wave structure than what is drawn in the EWP book.

Many of the  high degree wave analysts may be starting off with 5 waves in Primary degree. When you do see any wave counts start with  5 waves in Primary degree, then you will instantly know that they think they are in SC, or GSC degree. Since the 2000 top, there was “never” a single wave count, where any 5 waves in Primary degree has ever developed. They tried it from the 2000 peak and then again from the 2007 peak, and in both tries they failed miserably. Nobody will ever convince me that any SC or GSC degree top has ever been reached anywhere after the 2000 peak. 

If we are really lucky, then maybe by 2029, we could see the end of SC degree wave 3 followed 100 years later with the GSC degree wave 3 top!  Of course majority of  the world experts have assured us of unprecedented man made climate change destruction, so if the expert group thinkers are right, then the end of the world will be, at the GSC degree wave three top in 2129.

I will be fertilizing the ground 6 feet below, long before that so only wave analysts that haven’t even be born yet, will experience it. 😯

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DJIA Weekly Chart 2009-2017 Review: Time To Get Into The Stock Market?

A third of millennials think now is the time to jump into the market – MarketWatch

Since the 2009 bottom as the majority were exiting from stocks as fast as they could, insider buying reports were flooding the internet. Insider buying was a very important key contrarian indicator that the market crash was coming to an end. Insiders don’t buy their own stocks on a whim, and they never buy as a short term trade. Once they buy, they can hold onto them for many years before they think their company’s share price is out of line with reality. In late 2008 and early 2009, the majority of all experts were still looking, for the markets to go much lower.

Many expert Elliott Wave analyst, were still calling for DOW 1000 as the majority all had the 2009 bottom as a wave 1 in Primary degree. What this meant was that all wave counting experts were in sympathy with the majority of investors.

In hindsight, the wave 1 in Primary degree failed, as the market charged higher. Nobody was screaming in late 2008 and 2009, that a major bull market was on the way. My favorite contrarian sure called it correctly in late 2008, as Steven Jon Kpalan coined the phrase, “Biggest stock market rally since the depression” was on its way.  This was in direct contradiction to all the bearish wave counts produced by expert wave analysts of the day.

The 2009 bottom was not a failure of the Elliott Wave Principle, it was the failure of analyst not going back in history to double check our work.

When we use too high of a degree we become very insensitive to the markets, as we are always waiting for the next big move lower.

This morning the DOW peaked at about 22,055 but it does not mean it can’t still go a bit higher. We will have to wait until next week before we can become more certain. One thing we do have at this record top is a wild and choppy pattern, that works best as a diagonal wave structure. In 5th waves is where we find the diagonal waves, but we need to know what freaking degree this entire movie has been. Five waves up in Intermediate degree would finish off this bull market, and we should expect a Cycle degree wave 4, bear market.

At this time I’m looking for a Cycle degree flat that must divide into 3 sets of waves. (3-3-5)

I made this chart a day ago to show readers where we are after an 8 year bull market. I kept the wave count as a simple impulse, but in reality it is a diagonal 5th wave. From the 2016 bottom stocks charged up in a near vertical move that can never be maintained, yet many think this is a good time to get into the stock market. What? You got to be kidding, after an 8 year run, and leaving a 338% gain on the table many see it as the place to be?

I cannot stress it enough that when we ignore past history, we are doomed to repeat it. Since when does buying in at the peak of a major bull market, sound like a good investment strategy?  That may work if you live on Mars, but it will not work on earth. I use 3 simple corrective patterns from an idealized wave count to figure out how deep a Cycle degree 4th wave could go. I’m pretty sure we will hear about DOW 5000, 3000 and even DOW 1000 forecasts in a few years time, but is this reality? 

The 2007-2009 crash was reality and it retraced the entire previous 4th wave of one lesser degree. The same move now would put the DOW right back down to 6500, and even a bit more if it wants to. Markets have a bad habit of always making moves that the majority do not expect. The markets could fall just short of the 2009 lows in a Cycle degree crash. 

The first thing that has to happen is the 4th wave in Intermediate degree must get retraced at the 15,000 price level. 15,000 would just barely get the bears warmed up as it would be just like a bee sting in the big scope of things. There may be temporary support at 15,000, but ultimately the markets will have to fall below any 2011 lows at the 10,000 price level. This would retrace the entire “Stock Maina”  bullish phase, which I have talked many times.

When this starts to get close in a few years time, the markets will already be in a massive oversold condition, but the real bottom would still be 2000-3000 points away.

A massive bubble can only be seen with long term charts and I like to display them in linear style to show how insane this market really is. Markets may look insane to the season contrarian, but to the majority buying high is normal behavior. 

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Mini DJIA, Another Intraday Record High

This morning the E-Mini DJIA recorded another new record high, topping at 21,640. After the spike, the DJIA started to back off in a violent reversal. This is the type of a violent move I like to see happen when a run ends, but we need the peak to hold before I’m completely convinced, that another major peak has finished. 

This DJIA needs to break below 21,440 to be a bit more convincing, which may take the rest of this week to play out.  Another small wave 2 rally may be in progress, which should not soar to new highs again.   The VIX also declined to another record low, which closed off a very big gap that formed on its last spike up.  The SP500 also followed through establishing another new record high, near the 2478 price level.

The Gold/Dow ratio moved above 17:1 again, which means it takes over 17 ounces of gold to buy just one unit of the DJIA. (Very expensive) The ratio has gone above 17:1 several times before and it seems to have great difficulty getting past this number. This ratio is a big reversal from when it only took a bit more than 7 ounces to buy one unit of the DOW.   

We have about 4 trading days left before the end of the month, so in the short term anything can still happen. Longer term this market is going down, with a Cycle degree correction, which will eventually be called a bear market by the majority.   With a potential correction being a Cycle degree,  I’m sure we will see a recession. How severe this recession will get is unknown at this time, but any recession will end with the start of the next solar cycle. 

I’m a firm believer in cycles as nothing has ever travelled in a straight, long trend line. Even light can bend, and it certainly can travel at different wavelengths.  We are about 3 months away from the 30 year anniversary date of the 1987 stock market crash, and I like to think something obvious will happen close to this time frame.   Of course markets will always disappoint the majority when they least expect it, so the 30 year time period may be a real dud. 

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DJIA, 1970-2017 Primary Degree Elliott Wave Count Review

I started with a bigger time chart of the VIX and have arrows pointing to many of the peaks where important turnings have occurred. Many times, turnings start to show well before the crowd realizes it, especially when solar cycle #23 ended in late 2008.  When one solar cycle ends the next one starts, so by early 2009, solar cycle #24 had already turned the corner.

 All stock markets that I cover, also found their bottoms in early 2009, after which they started a massive bull market. This was inversely reflected in the VIX as it started to crash.

I couldn’t resist drawing in the wedge as they can forecast a potential reversal that will surprise many. Also, the stock  market bull run would keep right on going, if the VIX is not at record lows. 

The last weeks COT report also confirmed, that the commercial traders are net long with their VIX bullish positions by a margin well over 2-1. Commercials added 9,930 long contracts, but at the same time they removed, 17,305 short contracts. This is a huge swing, which I expect to see happen when a reversal is getting closer.    

When we look at the wave patterns in the VIX we can’t see those pretty impulse waves that Elliott Wave analysts love to make. From my perspective the VIX wave structure is all about diagonal waves, which can produce any of the overlapping, choppy waves that it can throw at us. 

Without first looking at the VIX, the DOW chart below will make little sense. There is an inverse relationship that the contrarians understand, but the majority ignored the VIX just like all the expert wave analysts did. 

Starting back in 1970 was not a Cycle degree 4th wave triangle, as 5th waves do not extend like this.  With stocks, we should always look for wave 3 to extend and occasionally the 5th wave extends, but in the case of the DOW, it extended in Minor degree.  When something extends, it is the smaller degrees that come out of hiding, and just because they look big and tall, does not mean they are huge degree levels as well. 

The two parallel lines show that the 5th wave never even came close to touching the top trend line again, as the DOW  started to roll over and away during the 2002-2007 bull market.  It’s just another example how trend lines can screw us up before they ever help us.  Besides, it’s not rocket science as even just a quick glance we can see the bullish trend.  It still may take the rest of this month to get a better picture if a major top is starting to hold, as this market sure wants to move in knee-jerk violent moves. 

When we look at many of the expert wave analysts, stock market charts, we see that the majority believe that we are in a SC or GSC degree type of a market. This can only happen when we count everything from the 1932 bottom as a 4th wave base in SC degree. I believe that a multi generational 5th wave can never extend like this, and through multiple solar cycles as well.

From the 2009 bottom to our present top is  just “One” move, but it subdivides into a sequence of 5 waves. I don’t ever recall counting out any 8 year bear market rally before, besides a real bear market rally would’ve produced far more extreme swings than what we actually observed happening in the real world. 

Insiders or smart money has left this market back in May 2017, so the only people remaining in this game are the emotional traders, investors and cheerleaders.  I’m sure you have heard the expression, ” Elvis Has Left The Building”, well this is a shining example, when smart money has already, “Left The Market”.  Only the fans remain, cheering for another encore!  

The odds are still extremely high that a Cycle degree wave 3 may still be in the process of completing, after which we should see a big correction that the majority will call a stock bear market. This entire process can still take years, but the start of solar cycle #25 will kill any bear market already in progress.

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E-Mini DOW 30 Intraday Rally And Crash Review

We are still dealing with diagonal wave structures, and at this time it sure looks like another inverted zigzag has completed. Now we have another mean looking spike to the downside, which should take out the short term support  for wave 1.  I start with very small degree levels, and in this case wave 2 in Micro degree has already ended.

To confirm this particular move the DJIA should travel to newer lows, but unless some real wild little diagonal moves up, are still in effect, we can have a bullish reaction, breakout to new record highs.

At the 21,220 price level the DOW could produce a H&S type setup, which could be bullish in the short term, but would be a bearish setup at a bigger scale.

On a Cycle degree scale this market is going down, and once the emotional day traders find out they are not making any gains, then they will sell. The only reason they are in this market because it was going up. They love to buy high, as they shun anything that is pointing down. Insiders (smart money) are long gone out of this market, as a big group of insiders increased their pace of selling in May.

We are coming up with dual July holiday dates next week, so there will be reduced postings during that time.

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DJIA Intraday: Market Top Review

This DJIA chart is in bar type, but when I switch to line type we can see a huge difference in wave patterns.  How deep or how high the chart has gone  can change dramatically when  switching  between the two.  The Bar type is great for seeing all the spikes and gaps, but in the case above the intraday chart has been stretched which allows us to look back a bit further in time. 

The wave analysts that force these waves into impulse waves don’t understand that there are two types. With diagonal waves, we have zigzags linked together and the intervening correction acts like glue in holding the zigzag together.   You sure can’t call them “WXY” waves as we have to sort out what the flats are.  Any double flat is rare if not impossible to find. Sometimes the 5th wave ends up which contains a type of pattern, something that reminds me of an elbow joint. 

By this chart the DJIA saw a peak over two months ago, followed by a run down that still has not broken to new record highs. After the diagonal 5 waves down, the DJIA blasted upward, which may or may not be finished as I post.   Another three wave blast did not carry the DJIA to a new record high, so technically this pushes the DJIA over to the bearish side of the markets. 

For now I have to keep the degree levels pretty small as from daily and weekly chart perspectives, these moves hardly show up.   We need more evidence that this market has had enough, but all the exhaustion gaps sure give us a clue. 

The mid April rally alone contained two big gaps which makes it look like it is suspended in mid air, like a magician levitation trick. These are not signs of a stable market, as the public is brainwashed to stay in the markets.  Any crash that may come, will wipe out all the paper gains, and investors that were brilliant during the bull run, will leave all those paper gains on the table. The majority cannot win money from the majority, as it is mathematically impossible to achieve.

What type of correction, we are going to get is open for debate, but you can leave out any idea of a cycle degree triangle. I think triangles are pretty rare even in 4th wave positions, as we haven’t had one in 100 years. The mid 1900’s fits into a diagonal 5th wave in Primary degree before you will ever force it into a triangle.   

At this point, even SC and GSC degree 4th wave corrections may not develop any triangles as they may just alternate between flats and zigzag corrections.

Stephen Hawking, the world famous physicist, says we have 100 years to get off this planet, for mankind to survive the coming of the end of the world. 

Ask yourself, At what wave count will this happen at?  To get to GSC degree, we still need 5 waves up in Cycle degree, after our present Cycle degree 5th wave is found. 

 

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Mini DJIA Intraday Top Review

 

I thought I would post this again, so we can see the Cycle degree perspective that we are dealing with. This vertical 5th wave cannot be maintained, as this bull market is getting old and worn out. Day in and day out, we get the hype from the majority of experts that think the DOW is now going to 30,000.  Good luck with that, because a big bear market is coming, but exactly when that will start, is still a best guess at this time. 

 

 

This is just a brief report, but the DJIA saw the last high on February the 15th. This high has managed to hold at this time, and if another record high were to come then this little bullish phase should break another record high. What can screw this scenario, is that we still have a longer correction to go. Diagonal moves can look like corrections at any time, which makes it more difficult. 

All it takes are waves even smaller than these, and we could be over on the bear market side. This is when any bad news can crush the markets, as bull market tops are the breeding grounds of bear markets. I will admit that this 2016-2017 bullish phase has been very frustrating, compared to a few other bear markets, but that is what diagonal waves are designed to do.

 There will be no updates Friday morning, but I will get a few in later in the day and on Saturday. 

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DJIA Special 1970-2017 Linear Chart Review: The Spike To Die For!

 

Every once in awhile, or close to any major top, I like to look at the charts with a linear chart setting. Doing this can give us a much different perspective.  We can see the major spike that has formed during 2016-2017, which looks about as vertical as we can get.  A spike this straight and this long is not going to last, no matter what the fundamental hype is that they are throwing at us in February 2017.

The warning that I always pay attention to is, “fundamentals will always tell you the wrong things at the extremes”, which is a quote from EWI.  Any extreme can still push for even more of an extreme, but sooner or later this huge market spike will implode, as this momentum will never last. Stock bulls dominate the markets, as they have shredded the stock bears, which are now sitting in the freezer waiting for barbecue days!  🙂 

This chart also shows how the majority is happy buying at extremely high prices, which goes against all contrarian principles.

At the 2009 bottom the majority of wave experts did not see the bull market coming, as they were still waiting for DOW 1000. Over and over I have witnessed expert wave analysts miss one bull market after another, and I blame this all on being trapped in a much too high of a degree.  I know, as I spent well over a decade chasing SC and GSC degree wave counts and high degrees are far too insensitive to the bearish mood of the investors.  

As I have mentioned, I look at the markets from a Cycle degree perspective, and until all 5 Cycle degree positions are found, we can never hope to enter any SC degree world. 

This bull market is getting far too old, and when it blows we should expect a Cycle degree correction, subdivided by three waves in Primary degree.  

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DJIA Index 1982-2017 Review

 

 

Looking back in chart history is where we will always find the best fitting wave positions. You will never find them by drawing  pretty wave structures pointing into the future.  If the past wave degree is still out of wack, then we will still miss every bull market that will ever come down the pike. 

Back in the 70’s they all though they were in a huge Cycle degree bear market and there was no hope for a bull market to materialize. Yet a bull market took off and hardly looked back charging up to the 2000 peak. All the wave experts started their GSC degree wave count heading down, which failed miserably just a few years later.  It failed so bad that they missed an entire 5 year bull market, waiting for wave 2 in Primary degree to finish.   Did they conduct a complete review of GSC degree?

No, they just tried the same old wave count again from 2007 to 2009.  During the 2008-2009 decline insiders were buying their own companies, and all the major contrarians were bullish towards the stock markets.  Yet the wave analysts missed all this as they were still chasing that illusive wave 2 top in Primary degree. In other words, in 2009 they believed the worst was still to come.

The market proved them wrong again, leaving them unprepared for a bull market, that many new would come.  Will this happen again?   I’m sure it will, as it will happen over and over again at every major turning you can imagine. 

The critical wave structure that is the most important one is 5 waves in Primary degree.  If you think you have 5 waves in Primary degree pointing down, then, you have already been in SC or GSC degree already for years, but if 5 waves in Primary degree run up, then you are only finishing a Cycle degree move, and you are nowhere near any SC or GSC degree wave position.  

From my Cycle degree perspective, we could still be a decade or more away from and SC degree peak, never mind any GSC degree peak.  If we are lucky we may hit SC degree wave 3 peak sometime in 2029.  We are getting close or soon could be at a Cycle degree wave 3 top, and sure am not looking for another silly 5 waves down in Primary degree. Any bear market in stocks has to finish by 2021 or so because we will then be faced with a new solar cycle #25.  The exact same setup as what happened in 2008-2009, which can produce yet another 5 or 8 year bull market. We may get a zigzag or a flat, as a triangle would not have enough time to finish by the time SC#24 hits bottom.  

Finding where the Primary degree “A” wave may turn at will be the tricky part, which can be somewhere around the 10,000-12,000 price levels.  Cycle degree wave 4 should take the entire Donald Trump 4 year term to play out, so we should be in for one wild ride.

All stock indices I cover should also terminate at a cycle degree top this year, so it’s not just about one index. 

Longer term I’m very bearish and until the market starts to confirm this, anything can still happen on a short term basis.  

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E-Mini DJIA Intraday Rocket Ride Review

 

 

On the cash charts the DJIA has surpassed the 20,000 by a good healthy margin. This is the March 2017 contract month, which trades during off hours.  I figured we would get another move up, but the move has gone much further than expected. 

Due to the fact that all the waves have been extremely choppy, gives us little choice but to work it all as diagonal pattern. Since December 2016 the sideways pattern fits into a triangle with a good bottom base line.  The explosive rally that followed would have to be another diagonal 5th wave ending with a potential “C” wave bullish phase.  Fast moves like this, with fast spikes to the upside are typical in the dying days of this stock market, but exactly when it is going to die is always debatable. 

This could just antagonize us right to the end of the month, but I’m sure it is part of the Cycle degree wave III blow-off. Right now all the peaks are cleared up again, which helps to make it easier to count from once this bullish phase starts to turn again. 

The VIX has also plunged to a new record low of about $10.60 which shows how complacent investors really are. In reality the market is being set up for another bear attack, as bull market tops are the breeding grounds for bear markets.  Fast moves up, can produce fast moves back down, so be prepared for a reversal that may happen by the end of the month. 

Another major reason why this market moved so fast is all the stop loss buy orders created by the short playing bears. At the same time, all the stock  bulls are piling on the “sell” orders, below present price levels.

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DJIA Record Top Review And A Potential 2017 Surprise!

 

 

When I had a better chance to look over the charts on Friday, I got very suspicious that the gyrations we had on the last trading day of 2016, may have been another fake start to a bear market.  Another 4th wave correction always postpones any decline, and does frustrate any attempt in calling a big top completed. 

We know, we are in a 5th wave in Intermediate degree, which is not an impulse, but a 3 wave zigzag.  These are very common in any diagonal, and the leading 5 waves and trailing 5 waves are always different from each other. They are or can be very different in physical size as well.  In this case a big 5 wave, alternates with a small set of 5 waves.  We have what I can call a “C” wave bull market, and I’m sure nobody wants to miss a bullish phase like that knowingly.  Brexit, was a complete surprise to the majority, just like the great Trump stock rotation was also a surprise.   With a DJ consensus forecast of 20,000 not been achieved, there is a good chance that it can happen within the first month of 2017.   I call it consensus forecasting because all the Wall Street talking heads are using the same set of numbers. How can this be?  It happens all the time, but what they will never tell you is what will happen,  after their brilliant forecast is achieved.  First, they have no clue, and second they don’t want to step out of their comfort zone safe inside the herd! 

You will never hear a forecast that may say, “DOW 20,000 will happen, but then as soon as this milestone is achieved the DOW will crash 10,000 points”.  Wall Street had no clue  what price level the DJ would go to in early 2009,  They were still arguing how low it would go never mind buying into an extremely oversold condition. 

Contrarians know that these types of forecasts are nothing but a pile of crap, as the top insiders in the world were buying their own shares in 2009.   The majority of the wealthy people in the world achieved their success with contrarian instincts, they sure don’t chase the emotional investors, and you will never find them drawing numbers and letters on their charts. 

From early 2009 to early 2017 we would be looking close to an 8 year bull market, which is a Fibonacci number. 

Of course, if the big bearish phase has already started, we should never see another new bullish top in 2017. 

I wish all my members a great 2017  New Year, as this month you have also pulled out all the stops in the amount of pages being read.  Since I started blogging all records have been broken, as we will end December 2016 with well over 25,000 pages being read. 

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E-Mini DJIA Record High Gyrations Review

 

 

This morning the DJIA flirted with another major top, but it depends on what contract we may be using as some say we were 20 points away.  There is a very good chance that for this December run, we are fighting through an ending diagonal, in a 5th wave position.  It sure is not your impulse wave and this time I took the time to show a bit more detail.  I always count with my finger and my eyes when these small wave patterns occur, as it is silly to count them out if we don’t know where.  Sure, I can label many more points, but will not help in recognizing we we may have. 

The only thing that matters is if we do get this extra little leg up, otherwise the party could be over. When this may happen, is always unsure, but we will hear about it when the markets slump. The markets would need to decline well below my Minuette degree 4th wave bottom.  This would also give us a final high for the DJIA in 2016 and the DJIA would have a difficult time of breaking a new record high again. 

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DOW 30 Mini Intraday, Trump Bump Top Review

 

 

As we can obviously  read, the market experts are just frothing at the bit to see the DOW hit 20,000 and higher.  Anybody can forecast 20,000 when we are just a few points away on the futures charts I use charts.  At the peak, I have a mouse over  price peak of  19,944, still 66 points away from hitting 20,000. Ok, lets say that for any reason that the DOW does hit this much anticipated milestone, then what?  They have no idea where the DOW will go to, after this mythical number actually does get hit.

My bet is that it will go the opposite way than what the majority think at this time. Nobody is expecting a big bear market, but I’m sure that is exactly what they are going to get.  Many trillions will evaporate, and worse yet, is when they try to buy on price dips.  If we were at a 1929 type of a peak and looked back would you be buying on the dips?  If we don’t learn anything from hindsight then we have a  serious problem.

A few days ago, gold has been pointing down on the daily chart, and inversely stocks and the US dollar have been pointing up!  This is a three way move that has happened many times in history, and getting the major turnings is when the contrarians in this world build their wealth.  To fully understand this you have to wave your arms around to visually display this 3 way action. I visited my contrarian friend the other day and he waved his hands around, and then repeated the same thing. He moved his arms around with clarity, and we both had a good laugh about it. 

I see this top as a potential wave three in Cycle degree, which used to be stuck back in the 60’s and 70’s. 

My wave count extends wave three like it it says to do in the book, so the 1960-1970’s, were three sets of 1-2, 1-2, 1-2 wave counts, which allowed the 1980’s bull market to burst upward to unimaginable heights. 

Besides, if Cycle degree wave 4 was back in the 70’s, we would get a diagonal 5th wave.  

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E-Mini DJIA Daily Chart Stock Mania Review

 

 

Sooner or later all trends must end, and this chart will be no exception. The big question is when? In a blow-off like this you just have to wait it out,  as any reversal will happen when we least expect it to. This long stringy leg up, has no base to fall back on to, so when it pops it can fall very quickly, leaving behind a spike that we will see for the next 100 years, or longer. That is if no further spiking occurs. 

The pattern from the 2016 low can work as a 5th wave, but since our entire bull market has been a diagonal we should not expect the perfect impulse like that which is laid out for us in the EWP book. Waves are never even as two of them can be extended. 

What could happen is, that this market does turn, but then stops at the bottom trend line, before it cranks up again. I think this market will do amazing things just to fool us, so it is always a good idea to be ready with alternates.  We are at record highs, which can’t be denied, so we either have a big expanded flat or only the 5th wave in Intermediate degree.

I’m sure market participants are all caught up with this bull market, but buying into a near vertical market is just asking for trouble.  

 

 

Here is a little test you can take. Check off all the lines you have read about and agree with, using a green pen. If you get 80% or more, chances are good we will be at a major top sooner or later.  You will fail if you check anything on the left column! 😛 

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Mirror, Mirror On The Wall, Who’s The Greatest Fool Of Us All?

 

 I thought I would review the big DJIA wave count first, so we have a good idea where we may be, and then we can figure out where the markets may be heading to next. Again, Wall Street claimed that the DOW broke a new record high today, and this may be the case, but the Nasdaq and the Russell 2000 sure don’t care, as they have seen their peaks some time ago. Many have claimed that we are in some type of huge stock rotation that some are calling the, “Trump Rotation” or the “Great Rotation”. Folks, this wording is nothing but a pure display of “Stock Mania”. Just as good of a stock mania, like we had in 2000! The, “Great stock rotation” started in 2011, just about 5 years ago, and the herd just figured it out that another leg is coming. Investors have been jumping on this bandwagon for a few weeks, all in the hopes of finding another sucker or fool to buy an asset class that is extremely expensive already?  Who is the lucky group that still finds value to keep buying this insane market. Sooner or later the “Greatest Fool” shows up, and I sure hope it is not any one of my readers. 

Not a single sane contrarian would be caught dead, jumping on this bull market wagon ride, as they have heard this bull shit many times before. Of course if you believe in the sort of wave count that tries to impress us, by forecasting a trip to the moon, then I’m sure the markets will head the opposite way. Year end profit taking can start at any time, as bull market tops are the breeding grounds for bear markets. 

You can have the most pristine economic fundamental news come out, but if that news does not propel the markets higher and higher, then this is a sign that a bull market is coming to an end. 

 

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Either way, this market is due to end, or it must give us another correction! The problem is, how deep of a correction can we expect?  I can only look up and down the core 5 waves and three of them are corrections. 2015 was already a correction, which is a warning sign that the markets do give us, at times.  For this to all continue, then the markets cannot dip below 2015 price levels. 

I’m looking for a Cycle degree correction that may take the next 3-4 years to play out. A Primary degree may be the most likely pattern at this time, with a high chance that we may even get a zigzag bear market. We already had an expanded top in 2015, so another one back to back, may be low down the list.  A triangle would take far to long to play out, as this has to finish around the time solar cycle #25 starts? 

I hope to review as many wave counts as I can, but it will still take me some time to get done. My late 2008 iMac is toast, so I had to lease a newer model to get posting again. I still need work to get a better feel of my new system, but I love it. 

November 2016 saw a real explosion of pages being read, which was a very pleasant surprise. A record 19,500 pages were read, which is the highest since this blog was started about May 2016.   Thanks again to all the readers that made it happen. 🙂

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DJIA, DIA ETF 2008-2016 Bull Trap Review

 

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This is another look at the markets from an ETF perspective, which is not as wild as the futures charts are, and can give us a slightly different wave count in the short term. The correction we have had since the 2015 peaks can be the 4th wave correction in Intermediate degree, and our recent vertical spike can be the blow off.  This means that wave three in Cycle degree may have a permanent home soon.

As usual, the majority will never see the bottom when it arrives like in 2009, and the majority will never see a major top when it arrives as well.  Of course the professional wave counters did not see the 2009-2016 bull market coming, as they were all chasing a wave two rally in Primary degree. I was doing the same thing, but the big bearish rally failed every time.

The DOW should have stopped in mid 2010 and turned with a vengeance, but wave analysts ignored all those indicators. 

I was still chasing the markets under SC and GSC degree as well, but started to realize that the higher degrees were not working.  This is the main reason why I started switching to lower and lower degree levels, and ended up in Cycle degree.

One thing is certain, and that is that there is no chance of ever going into a SC degree wave count, until “All” and I mean “All”,  5 waves in Cycle degree are found and confirmed. This is not something I dreamed up, but it is a sequential mathematically requirement.  The wave counting in 2009 was not a failure of the EWP, but it was a human failure and cosmetic wave counting.  The only way to find better fitting wave counts is to look into the past and recheck it as many times as we have to, to find a better fitting wave count. I have reworked the 1929 to 2000 so many times, I can just about do it blindfolded. Change just one little peak, and the entire last 87 years or, so has to be recalculated each time. My entire goal is to locate and confirm all Cycle degree positions, and it is the main reason I call this blog the “Gateway To Cycle Degree Elliott Wave Analysis”  

In the long run, wave followers left a gain of about 280% on the table because they were afraid that the worst was still to come. Before the 2009 bottom, stock insiders (contrarians),  we’re buying in late 2008 on a massive scale, which was very common knowledge at that time.  Insiders do not buy on a whim and they sure do not sell a few weeks later like the day traders or wave traders do.  They can stay holding their positions for many years.  

In 2010 I had a bearish warning, which was followed by a “flash crash”,  soon after, but it also produced another bottom before the DAI charged up again. 

In the long run the bull market was not choppy enough, or not wild enough to call it a big bear market rally anymore. Besides the 2007-2009 crash was a zigzag. Any crash that contains 3 waves, will eventually produce a new record high, which this DOW did do.  Not until the DOW created an upside breakout in 2013 did wave counts start to change. Of course they were all cosmetic wave count changes, and not structural changes.

Looking back in hindsight to that 2009 bottom, I’m sure no investor would want to miss a big bull market like that again.

Bull markets are breeding grounds for bear markets, so it is only a matter of time before it becomes obvious to the majority. 

The next big target wave position would be a Primary degree “A” wave bottom, which at this time I cannot give an accurate number, that will give us a support price level to target. DAI $120 or $100 would be one choice, but until the bears are out in full force, no bottom will hold for very long. 

It is very easy to say that the markets will crash below 2009 levels, but this does not need to happen with a Cycle degree 4th wave crash.  Even if it does, that still does not change any big degree level I may be working. 

The big bullish phase from 2009 to present is what I call the “Enhanced Diagonal Wave Counting Method”, which basically replaces the ending triangle. We can find these diagonal waves in any 5th wave and in any “C” wave as well. 

The emotional traders are running from gold stocks in record numbers, as cash is flowing out of the gold stock ETFs. This can be the best time for the gold markets to reverse and head much higher.  When money flows back into the gold stocks then chances are good another strong top will arrive. Steven Jon Kpalan posted a very good article explaining this.  

 

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DJIA 2000-2015 Review

 

The wave count below has its origins back in 1932, which was about 84 years ago. Those analysts that forget the past or have never even gone back to look for their own mistakes, will always get caught in some sort of a trap.  The 2009 crash bottom was one of the biggest Elliott Wave analyst traps I have ever witnessed.  Of course that 2002 bottom was another bearish bottom, which was also an Elliott Wave Analyst trap.  When wave analysts thought that 2009 was just a corrective bottom was a huge failure, as for many years after 2009, they were still looking for a bear rally top.

Of course, all the wave followers were also left in the dust, as the wave counts never got anybody ready to switch directions, leaving no time for investors to accumulate  ETFs at a major bottom.  At that bottom so many contrarians were screaming to buy stocks, yet the wave analysts ignored all this, as they were positive that the DOW was going to 1000!

That failure has nothing to do with the EWP, but it has everything thing to do with human emotions. Most wave counters at that time had wave positions, that were in sympathy with the herd. That alone was a clue that their wave counts were off this planet. Simple and easy to see wave counts rule the markets, but the thing is, simple wave counts are a trap. The markets are too smart, to allow a herd of wave analysts to be right,  and when we are wrong most existing wave positions just get a cosmetic makeover. They are then ready for another few months or years, baffling is with more mindless numbers and letters bull shit.

Everybody is killing each other trying to “beat the market”, but in reality the “market will beat them”  as the majority can never win playing this game.

Now we have another problem, where we are in or have already completed a major top. Nobody will sell as it is impossible to trust bearish wave positions.  Only when any panic starts will they get serious and start to sell out. The rest will all go down with the SS DJIA Titanic, or they will be running around trying to find a safe cabin to hide in. Good luck with that!

 

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For now I will work the wave patterns as if the wave 3 in Cycle degree has finished in 2015, and what has followed can be part of the first stage of an expanded flat.  From my perspective, if there is any doubt that an expanded pattern is in progress, then it must be explored until they are confirmed or trashed. I’m sure other analysts will be happy to give you support price levels, but support for what?  Since 2009 we have had at least a dozen major support bottoms. Will any one of them work this time around? When analysts give us support numbers, this instantly tells us that they think they are still in a bull market.

A 20% correction will do nothing, as that would amount to getting stung by a honey bee. Only multiple stings from killer bees, will get things warmed up.  I use no real Fiboncci retracement levels, except a few standard numbers as there are millions of combinations in progress at all times.  In the book we have about 5 retracement levels, but how high they can rally all depends on which wave pattern any rally is in.  When was the last time that we knew exactly what wave count we were in?  If we are looking at a potential Cycle degree crash, then this is when I call on the idealized wave patterns, and determine what I need from them.  At any turning I always ask myself, where am I?, What do I need to fill specific wave requirements and then determine roughly where we can bottom at. If I see an early start with an expanded pattern, then the choices are cut down to size, as flats are one of the main  patterns that can take an expanded pattern.

This pattern I do have must land at an “A” wave bottom in Primary degree, unless I’m still too early. This rules out a Cycle degree zigzag, and sure would put a Cycle degree triangle choice, last on my list. We would be looking at about a 4-5 year bear market ending closer to the 2021 time period. When a big bear market becomes more obvious to the majority and negativity rules, then a bottom should be getting close. Just after the solar cycle hits its bottom and the world is very bearish, then the majority will be in yet another major bear trap.  Every bearish Elliott Wave count at that time will get “terminated” or trashed again.  Having a wave count that is in sympathy with the crowd will never work, as the EWP is contrarian in nature, and should confirm the contrarian view of the world.  All the indicators that seasoned contrarians use, should be incorporated into the EWP as the little blue book does nothing to help us with that. 

I bet I can find more rich contrarians that never take or will never take EWP seriously, but  I sure cannot say that about any wave trading investor.

I will keep talking about contrarian thinking and below I inserted, a small but extremely important description of what contrarians are all about. 

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Buy Low, Sell High. These four simple words summarize millennia of financial truth. They are the pinnacle of wisdom of virtually infinite amounts of data and knowledge collectively gleaned on markets by humankind all throughout our history. They are the great “secret” of multiplying the assets to which we have been entrusted in the global marketplace. They impart a timeless truth so simple and profound that a child can understand it, yet from many sad historical episodes we know that most adults forget these words every few generations and get ensnared in a supercycle speculative mania.

In contrast to the legions of conventional investors galloping through the world markets, there is a relatively small group of investors known as contrarians. Contrarians are the black sheep who move “contrary” to the crowd and conventional market fashions. Contrarians seek to really literally implement the “buy low, sell high” market wisdom. Contrarians want to buy when investments are cheap from a fundamental perspective. Of course, usually the only time investments are fundamentally cheap is when most investors have totally deserted and rejected a fire- bombed sector of the market. It takes a great deal of courage to be buying when “conventional wisdom” says a particular sector or market is doomed.

Contrarians seek to sell when markets reach mania proportions. When the general investing public grows really excited and frenzied about a particular sector or market, chances are it is near its top and the contrarians have already sold, realizing massive profits.

Contrarians are often dedicated students of financial market history. They realize that “new eras” happen over and over and over again, seducing the naive to their doom. Contrarians also believe that markets are cyclical and no trend runs forever. Markets become loved and wanted, and they get overvalued. When fundamentals reach mania extreme levels, the markets are sold hard and they collapse. After the collapse, valuations are lower than normal as no one wants to jump back into the market in which many were just burned. Contrarians believe that the accumulated wisdom of all human, financial market experience in history is more relevant than the lofty claims and hype of any one particular era.

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