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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DJIA 1929-2016 Review With Cycle, SC and GSC Degree Commentary

 

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Looking back in chart history is the only way to find better fitting wave counts,  as we will never find them looking into the future or by only making cosmetic changes. This is also an exercise in figuring out what type of corrections we may expect for a Cycle degree correction, followed by a Supercycle degree correction, which SC degree wave (III) may not complete until 2029 or so.  The 1929 to 1932 correction was not a wave (III)-(IV) in Supercycle degree, but was a wave 1-2 in SC degree. This makes the 1932 bottom the start of wave zero in Cycle degree which may just be coming to an end in 2016.

If 1929 ended with a zigzag, then SC degree wave (IV)  has a slim chance of being a zigzag as well.  It could develop a flat or a triangle.  Cycle degree wave II could work as a type of running zigzag, making our Cycle degree wave IV a potential flat. As long as they alternate,  is the most important thing to look for.  All this makes Cycle degree wave three as the extended wave, which at the same time makes SC degree wave (III) and Grand Supercycle degree wave ((III)) also extended. In the stock market any wave three should be the extended wave and the wave count above does exactly that. 

From the 60’s to the early 80’s we had a 1-2, 1-2, and another 1-2 wave structure, and it was the last Minor degree wave that did all the heavy lifting as it became the extended wave at that time. The 1987 crash was a Minor degree crash, not a Primary degree crash, that  I saw many wave analysts use.  

I deliberately did not fill in anything from 1942 to 2016 so somebody can use it and fill in all the blanks for practice. There are only two wave structures where Minor degree is needed to be counted, but all the rest will be Primary and Intermediate degree runs.

I use the EWP as one giant Impulse which started around 8000 BC or 10,000 years ago, as that was the start of the early spread of agriculture. Until farming became more commercial city states could not grow, but after that time period they sure started to grow in size. 

 

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This is a chart I made where it shows the spread of agriculture products to different parts of the world, which coincided with the end of the last ice age.  There is no need for any wave patterns during any ice age, as any tribes were in caves trying to stay warm. The last thing on their minds was commerce!  Global warming is what advances mankind and the ability to feed billions of people, is because of the higher CO2 content in our atmosphere.  

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DJIA 2015-2016 Review

 

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This is a line type chart which can show a completely different wave count. I switch between the two types I use, to get a different perspective as.  If the 2009 to 2015 top is a diagonal, then this should produce another potential zigzag type wave for the 5th wave in Intermediate degree.  August the 15th was the last high, about 2 months ago. This market has been struggling to break out, so I have to look for an alternate with the perspective that Cycle degree has found a home.

Yeah, right, we know that may only be a fleeting moment, and if we are wrong in the short term we know the markets will obliterate or trash this early wave position.  I did not start blogging to show pretty charts or give you mindless trade setups, but my mission is to find the real top for Cycle degree wave III and try to catch some big turnings along the way. 

This big DJIA chart has been struggling, so we could be over in the bearish zone, and not just a corrective zone. Bear markets are just corrections, and the size of this correction will shock many.  How deep will a Cycle degree 4th wave bottom take us?  Many just think we are going to get a basic 20% correction, and then this market will head to the moon again.

Good luck with the 20%, as a Cycle degree bottom may take us to the 7000-8000 price level, (basic flat)before any real bottom may show. That is only after a huge shocking bear rally gets in our way.  Any “B” wave in Primary degree could  rally extremely hard before it gets ready to die again. 

Remember, that markets have built a huge power base since 2000 so this base could hold for the next hundred years. 

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September, 26, 2016 DJIA Daily Chart Review

 

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The DJIA has declined alright, but the Russell 2000 and the Nasdaq have not really confirmed the SP500 and the Dow as I would like. On top of that the DJIA has already opened up a big gap to the downside. This means that the DJIA has to rally to close this gap again.  The VIX has confirmed a gap as it jumped higher as well. A gap in the VIX and a gap in the DJIA makes me suspicious as to the length of this potential decline. Since I’m still working a potential “B” wave top, this “B” wave top can be in an ending diagonal as well. 

This party may not be over as they blame the Deutsche Bank for many of the problems. As long as they come up with a reason, it is irrelevant if this reason has anything remotely to do with the markets decline. 

It may all be to do with the elections, but from my perspective, this market will eventually crash regardless of which presidential runner gets into power this November.  When President Kennedy was assassinated the markets barely even blinked, before their bull market ended.

Getting caught up in the fundamental BS will distort all our thinking away from reading charts and gauging the bearish mood.  Listening to the bears in 2009 completely left the majority out of the markets, (as always)  just before a Mother Of All Bull markets was ready to get going.  It is not safe to keep an oblivious bullish outlook at this time as we could collapse into a 4th wave correction. It is the 5th wave that still may come which could soar in an insane move, which will surprise everyone when it happens. Hopefully we can avoid all the big surprise moves before they happen, as that is the name of the game, with Elliott Wave Counting.     

 

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E-Mini DJIA 2007-2016 Daily And Weekley Chart Reviews

 

It may sound boring or crazy that I look back in time, and review my wave counts, as many times as I do. I have done this thousands of times before and will keep doing it until I can not longer tweak the wave positions. This is the only way I have ever found any better fitting wave positions and off line I review charts many more times than what I ever post. Any wave counts I produce off line are done with pen and paper first, and many are scanned into my computer as a record. 

All it takes is one little critical wave position to be labeled to early, (wrong place) and the entire wave is then based on a wave count that will crumble with little difficulty. It has been my goal to find all the 5 waves in Cycle degree, because without those points all other higher degree wave positions are irrelevant. All forecasts based on those high degree wave positions, will never work, as they spent years trying to find the wave 2 top in Primary degree.  This is far too slow of a reaction for our world today, as we have to forecast before the crowd moves not after they move.

We also need time for an early warning so an investor can take time to accumulate positions. Lower degree levels provide the sensitivity and warnings that any higher wave position can’t do.   

Higher degree wave positions are all built on a smaller degree base, and without them we get calls like the 2009 call, that markets are going to go much lower.  All the wave counts back in late 2009 had the DJIA, as an end of a wave 1 in Primary degree. This was the most extreme long term bearish wave count I have ever seen. Who in their right mind would take any long position when there were still 4 waves down to go? Only in the short term, could traders catch that 2009 bottom, leaving the majority high and dry again. This will never change, as the contrarians know all too well.   

Every contrarian, I trusted at that time was turning bullish and were giving indicators that hinted that the recovery would be much bigger than anyone imagined. Even Warren Buffet was extremely bullish in late 2008, but the Elliott Wave Analysts were saying that he was wrong at that time.

Look back in time to the 2009 bottom and ask yourself, “Do I want to miss another bull market like that?” The answer should be “NO”. 2009 was also a wake up call, because stock insiders were buying their stocks at a horrendous pace. Kaplan was extremely bullish and originally coined the phrase, “The Biggest Bull Market Since The Depression”.  

For those that think extremely high degree levels is the way to go, then I can update you and say that I also track the Supercycle degree wave 3. Yes, I’m tracking SC degree wave 3, not SC degree wave 4 which is still so far into the future, that it needs no real discussion time this early.  If we are lucky SC degree wave 3 may top out closer to the 2029 time period than any time now.  

 

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I look at the 2009 to present bull market, as a diagonal wave structure, not as some big bearish rally, which would send the Dow back to the 1970’s price level. Not in mine, or my readers life spans will that happen!  The reason why, is that we need to confirm Cycle degree wave 3 first.

We also need to figure out what 3 patterns are more likely to correct any Cycle degree wave 3, and still give us time to bottom when the solar cycle does in the 2021 time period. 

Never underestimate the power of the return of the next solar cycle, as all bearish thoughts and wave counts will get wiped out at that time. Economic cycles are born at the bottom of solar cycles, so when the majority,  are super bearish at that time, they will get left in the dust again.  

I believe my wave 3 in Intermediate degree is still good at the 2015 peak, and what has followed after that, is still part of a correction.  The real Cycle degree wave 3 top is still in our future.  So the real challenge is to figure out where we are in this correction. 

It is far easier to figure out the EW counts when we use a very well drawn idealized chart.  Technically there are only 3 core simple corrective patterns that I use, and I think I can rule out a triangle and a zigzag this early in the game.  The only difference between this wave 3 top and a Cycle degree wave 3 top, is 3 degrees in total. Once I looked at the little wave reaction last week, I also review the entire wave count since the 2015 peak. It can take just a small wave change, which then allows us to see a very different correction.  The daily chart below shows the changes in greater detail.

  

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I take this chart, and blow it up on my iMac and stare at it for a long time, then I print it out and stare at it some more. I have always said that we need to “see” the wave counts first,  before we can count them out. Wave counting is a secondary act of mathematically trying to confirm what we are seeing. 

Even RN, Elliott had to “see” the wave patterns first, before he could write down what he saw. 

Since the 2015 peak, we have a great bunch of waves, that if they are not sorted out, will never produce a long term viable wave count in the future. 

I mentioned that in the next decline I would take a 3 wave sequence or a 5 wave sequence, but the above wave count, will need a five 5 wave sequence to confirm. I see that, what we have is a potential expanded “B” wave in Minor degree, and also an expanded flat in Minute degree inside the “B” wave bottom. These two patterns tell me, that this market should go below the three bottoms of 2015 and early 2016. 

I was not happy with the run from the early 2016 bottom, as the “C” wave just did not reach far enough. As it now stands it fits much better.  The markets can crash further than the base you see above, but this pattern also tells me that this market can roar and take out all major tops one more time.  Do you want to miss yet another big bullish phase if forecasts are for the DOW to fall to 1000? 

If and when this DOW is getting near 15,000 we may have to dream up a DOW 21,000 forecast. 

 

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DJIA Cash Daily Chart, Crash Review

 

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Friday saw some great downside action in all the markets. It ended the day with a near vertical drop and a long spike. Ok, this is fine as “A and C” waves in a diagonal can act like this.  A bit more evidence would be nice, but the potential “E” wave could be in play. Now we have a major top trend line, which shows twin Head and Shoulder patterns.  Markets will swing from one trend line to the next trend line, and in this case it just produced a top. The DJIA should swing south again heading towards those 3 bottom spikes.

There could be a 400 point range, so no single price forecast will work.  A strong counter rally may also show up, so there may be lots of action to come. Any counter rally will confuse all the newest trend chasers, and any fast counter rally that does not reflect a good impulse, could be a bearish rally so catching a “falling knife” at this point is far too early. 

The VIX also shot up, with HDGE starting to crank up as well.  Commercials were net long the VIX by a very healthy margin, so it was inevitable that the VIX bears would get into a trap. 

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DJIA Daily Chart Bull Market Review

 

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I have mentioned it many times that this DJIA pattern can fit a triangle very well. With a triangle we could be heading to a “D” wave top. What I show is more like an expanded pattern and since the February 2016 bottom we have been in a “C” wave bull market.  Either way and big decline should find a bottom before it cranks up one more time. 

The pattern of any decline will be critical to understand as with this wave count, we need 5 waves down in Minute degree.  These 5 waves would have to be pretty small, for them to fit into a “C” wave crash.   Waves of the same degree do change their physical sizes all the time, which fools many wave counters.  This market could still fool around, and not give us a clear sign that a top has completed.  

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DJIA Cash Chart Review And The 15 Month Countdown to Oct 2017!

 

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At this time it is still a bit early to explore other wave counts other than a potential triangle.  My other wave count would be an ending diagonal, which the 1st wave may already be formed. An ending diagonal is a fantastic sign that something will  reverse and that would help in giving us a better location. The SP500 and the DJIA have two different peaks, with the DOW is lagging well behind. Even the Nasdaq pushed to record highs with the exact same pattern.

We can only go month to month, as many trends reverse at these times.

This may be a long addition to this post, but my countdown needs explaining. I follow the 100 year cycle, where I just look back 100 years from any present year. This would put us back in the 1916 time period. 100 years is sufficient for history or financial history to repeat itself at least once. There are many smaller cycles that are active as well like the 10, 20, 30, and 6o year cycles.  

For now it is the 30 year cycle that this 15 month count down will finish. This means we have 15 months until the 30 year anniversary date of the 1987 crash.  We are watching early as the 13 month countdown would be the important one. 2007 to 2017 gives us a 10 year cycle, and 2007 would be a 20 year cycle from the 1987 crash. Years ending with a 7, is a bad luck number in the markets, as those years can bring turmoil that the public will not expect.

Jesse Colombo  at the  Bubble Bubble does a good job in talking about the 1987 crash. A 22% crash in one day just barely makes the bear market description. As soon as that bear market was hit it was over, and stocks really  got going with a record 5th wave extension, ending in 2000.   

HDGE and the VIX have also seen record lows, which shows that there is extreme complacency in the markets. 

When the bears see this then they know it is the perfect time to attack! Bears always strike from above, and they do it when the bullish herd is busy feasting on profits.  No herd can dominate forever, as sooner or later every bullish top gets saturated and very crowded. As soon as the bulls look up and at each other, asking who will be the greatest fool?, chances are good they are that greatest fool already! 

There are only so many exits and lifeboats on the DJIA Titanic, so when the music stops few will escape unharmed. 

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DJIA Daily Cash Chart Review

 

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On July, 20, 2016 the DJIA made another record high before it started to cave in.  Any 5th wave can still play out, but maybe the employment report could put a bearish tone to stocks. Bearish news in a bearish decline can send the decline down much further.  The speed that many of the rallies went up may be a prevue what a 5th wave may produce after a triangle has played out.  Anywhere around the 15,500 price level would work for a 4th wave bottom, but after that I would need to do another review.

Just like the other dips, they started slow and then ended in a vertical implosion. That’s what happens when there is some type of a “C” wave decline involved.  Now we also have twin Heads, which can be very bearish, at least in the short term.  Even when the DJIA reaches the potential 4th wave bottom, it will be creating another H&S pattern, or another twin H&S pattern.  

I still have too many options (alternates) but this triangle is the best I have at this time. The summer can create a real slow market, with some wild moves thrown in.  I will be a bit surprised if this takes less than a month to play out, as stocks could be down as the presidential election unfolds.  Everybody is trying to gang up on Trump to get rid of him, or discredit him so he doesn’t get any votes. Get rid of Trump, Hillary, gets in and stocks soar! 

This is just a personal opinion, but I’m sure there will be some surprises along the way. 

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DJIA Cycle Degree Review: Which Cycle Degree Peak Do You Want To Follow?

 

DJIA-Cycle-Degree-July-18-2016

 

The EWP is an idealized mathematical problem before it ever becomes a wave identification problem. It is much easier to figure out where the wave structures are supposed to go next, if we know what degree and position we came from.  Since about 2000, there must be 10’s of thousands of wave analysts all working on the same problem, day in and day out. We are all trying to break that secret code, much like the British code breakers did in WWII, trying to crack the German Enigma machines. I call it the “Elliott Wave Enigma”.

Above I show 4 locations where the Cycle degree wave 3 has been placed at one time or another. The first one should be back closer to the 1960’s peak, then another in 2000, 2007 and now another peak in the future.  You can move them all up by one degree, and then ask the exact same question again.  Only one location can be the right location, and only one Cycle degree wave 3 peak leads to Cycle degree wave 5.  Every large degree has 3 specific corrective patterns that can develop, once you lay all three out, and count all the idealized wave requirements, they then need to play out and get confirmed by counting them out. Wave counting is the secondary act,  as you need to “see” the patterns before you can count them. 

Now if you think keeping the degrees separated and in sequence is hogwash, then you are fooling yourself, because each degree can mean the difference of 61% (. 618) or more. I use a Fibonacci (. 618) or a rounded 60% as a calculation between each degree level. Being two degrees out can give us price forecasts that can make a 2.618% or (216%) difference. A drop  from DOW 8000 to DOW 5000 would be about a 60% drop, so you can see how far off we can be with our forecasts. 

If we don’t get the right degree in the right location, then all our forecasts can be constantly out by 60% or more. Any major market low that may come next, could have a bottom that is so far removed from what people think is going to happen, that they will be ill prepared to enter into a bullish position at any bottom. 

It will be something to see when in the future, if the DJIA crashes very deep. Let’s say The DJIA crashes to the 8000 price level, and all the insiders were already buying like crazy, Warren Buffet is screaming, “Buy stocks”, yet all the wave counters are screaming for a “DJIA 1000” price level. They still would be searching for that illusive 5 waves down in Primary degree. 

The EWP blue book has brainwashed us into believing that all markets are always in an impulse pattern, and as soon as it goes up any other choppy pattern is an instant bear market rally. The 2009 to 2016 rally is a good example, as large degree wave counters have identified it as a big bear market rally. I tried that trick already and will never stick with a large wave count when it can’t be confirmed by anyone. A big herd of wave analysts does not confirm any wave count, as the majority is always wrong at any extreme.

Elliottwave5.com is the “Gateway” to Cycle degree wave analysis, and my personal goal is to find the real location of wave 3 in Cycle degree, because without it we will never “see” Cycle degree wave 5.

I value all members and the time they may have to follow any wave count, and it is one of the main reasons I stress that this blog is geared towards finding the Cycle degree locations first.  The wave analyst sites out today are a dime a dozen, and the more complex the wave counts, the more followers they seem to have.  

                                                                              

As of July, 16, 2016 I have reduced all of the membership prices, to reflect a basic “flat” rate, this way everybody pays the same amount, and the choice you have is the time period that works best for your budget. 

The membership fees will now work out to be about $7.50 USD per month, which is cheaper than a Netflix subscription. 

 

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DJIA 2008-2016 Wave Count Review.

 

DJY00-June-13-2016

 

This is the cash chart for the DJIA and I try and review back as far as I have to, to look for alternate wave counts. In this case my 2007 peak is still a hold but from there on all hell breaks loose as we crash into the 2008-2009 bottom. Of course, nobody knew what the real bottom would be  as the majority of wave counters were at a wave 1 bottom in Primary degree.

 This made no sense, but the lack of other ideas, I also looked for wave 2 in Primary degree. Two or three key things were present in late 2008-March 2009, which basically is a clear give away, and that is insider buying. 

The fact that everybody was still bearish was another reason. Warren Buffett also screamed “buy stocks”  in late 2008. 

The bottom of 2009 also included an ending diagonal, which happens at the tips of “C” waves. 

It was not until 2013 I started to switch and focus on all my Cycle degree sequences as without them,  any higher degree wave count has no base to count from, until all 5 waves in Cycle degree are found.  If we accept the possibility that those first waves up is just a small degree zigzag. This is where my “A” wave in intermediate degree ended and a wild expanded “B” wave with a running flat, for the 2011 bottom.

From the 2011 bottom the waves fell into disarray with many waves over lapping, and just plainly not acting to their script.  

Since this 2011 bottom is the start of a “C” wave, then expect wild 5 wave sequences in Minor degree.  In late 2014 we had a crash bottom, which could be part of the triangle I see. Aren’t we supposed to get a big thrust after a triangle 4th wave correction? Yes, but the book only gives us guidelines, which does not help if we are in a big bearish rally.

The short version is that a spike past the 18,500 price level would do it, and it would help create another spot for the “B” wave in Primary degree. 

At present markets are bearish looking, which the VIX reflects very well. The VIX touched 21 today, but a correction is due.  

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Mini DJIA Intraday Review

 

YMM16-June-10-2016

 

There is always a  chance that this market decline is just another fake. We will only know how high the next spike will go,  before another reversal hits the markets. At this time I can only get this June pattern into an ending diagonal as a 4th wave has already dipped into the first wave.  It would be crazy if we were at another potential first wave, and stocks roared up again. This may continue until the US elections, declare a new president, and the markets anticipate that he or she,  will be one of worst presidents they have voted in.  With the markets declining for the first 4 years of the new presidency. This is just a wild scenario and may never happen, but we will find out in early 2017 after February sometime.  

 

 

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DJIA 2007-2016 Review

 

YMMY16-May-21-2016

 

At this time I am not compelled to change my Cycle degree top, for the 2007 peak.  After 2007 we had a wild and crazy crash down, which many have called the worst since the 1929 crash. I see the 2008-2009 crash as a 3 wave crash not as a 5 wave decline.  This is very important to understand as it completely rules out certain wave counts for the future.

  I spent a lot of time trying to confirm or eliminate the potential of a diagonal 5th wave from 2009 to 2015, but this is getting much harder to do. I think we would have seen a more dramatic and impressive blow off, and not this boring sideways stuff that has been happening for the last year. 

 Our recent decline is choppy enough to classify it as a diagonal wave structure, or as a corrective wave.  If there is any life left in this party, then a blast up can still happen, and my wave count could switch into a big triangle “B” wave rally in Primary degree.  This may require another look for an “E” wave count, which can be very small in its final days. 

Since May 2015 we have had a pretty good roll over pattern, but we need some strong evidence to be convinced that the big move is here already.  If we have crossed the wave 2 peak, then this market has to perform on its way down, otherwise we have to go back to the drawing boards and keep any alternate wave counts alive.

If anything, this can be a big expanded “B” wave top, but only a single one, as the rally from 2009 to 2015 makes for a bad zigzag at best.  The only way to get zigzags back to back is with another potential big triangle.  Even then we could be looking at a running triangle which would be very bullish in the long run.  

Any expanded “B” wave top in any degree is a very bullish pattern once it has completely played out. This may not happen until the DJIA hits the 6,000 price level. (5999) will do. 🙂  Looking far ahead and talking about it early can get people thinking that it will happen tomorrow, but this is always the furthest from the facts, and besides you will have little time to react to take advantage of it. There are always tons of buy orders above any present price, and in a freakish reversal, those bears will scramble to get out, and in that process they will instantly turn into bulls.  

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