Wednesday, August 31, 2016
I always like to remind readers that a very high majority of my postings, are made fresh everyday. Once reason I do this is to always get in a good habit of reviewing the past, as without the past, we have nothing to wave count with, or at least anything that makes sense. This Midcap index has a fascinating pattern as it is so close to being a perfect impulse that it is a joy to work with.
If we start at the 2000 peak, and then the markets crashed produced a flat that even included an expanded pattern. Then from late 2002 the bull market until the 2007 peak, formed a very good impulse as well. That 2007 peak ended up with a wave 3 in Primary degree followed by another flat type crash.
Now at the bottom of 2009, this chart hit another ending triangle, before it started to soar up again. From the 2009 bottom to our present top is a pattern that does not follow the basic impulse script, but I think it follows the Diagonal5 script very well at this time.
I have tried every other bearish rally wave count, and they just kept falling apart and therefore should have been abandoned a long time ago. For the last 16 years not a single SC or GSC degree pattern has been confirmed. Not a single set of 5 waves down in Primary degree has ever happened. There was never any room for an additional 5 waves down in Intermediate degree after the 2009 bottom.
If only all the wave counting experts were screaming bullish warnings at the bottom of 2009, we would have some rich wave counters around. I figured we would get about an 80% recovery, but this proved out to be way too conservative.
So where does that leave us now as the markets wobble at major highs? The potential for the markets to be at a close "D" wave top, is just too hard to ignore. Until that triangle is confirmed or fully discredited, the potential for wave three in Cycle degree is still ahead of us. We could swing widely right to 2017 when the 30 year 1987 anniversary date is due. Years ending with a 7, are bad luck numbers, not good luck, as the markets can take a big beating in those years.
Sunday, August 14, 2016
Last week the markets were pretty slow as many traders are gone for holidays or other reasons. The DJIA has only moved up in small increments which is usally a sign of a slowing market. In the markets, "looks" are always deceiving, especially when it comes to any wave counts we can produce.
When wave analysts declare a wave count position that "looks" clear, then chances are good this will not be the right wave count. I have worked the 2009 to 2015 run using every trick in the book. Sooner or later we run out of options, and when that happens, we have to completely redo every wave peak as far back as necessary to find out what went wrong.
Every major wave analysts had the 2009-2015 bull market as a huge bear market rally, and they were waiting for the "big one" to come. Obviously the big one hasn't arrived, which should be a lesson for all of us, that our wave counts are dramatically off track.
If a wave count did not prepare you for the 2009 bottom, and the following bull market, then what good is this type of wave analysis? Now we are on the opposite side of the game, as we try to see if a real top is going to happen.
It is futile for me to work the same wave count as all the rest, because then I'm just following the herd as well. If the wave count I have, has any validity to it, then the wave positions in 2007 and the 2009 bottom will never be needed to get changed anymore. If a wave count does not work any better in 1-2 months, then chuck it and find a better fitting pattern.
So if the 2009-2015 bull market is not a big bear market rally, then what can it be? The answer lies in how well we use the diagonal wave pattern, especially the diagonal 5th wave. I have switched back and forth several times and now the diagonal makes a very good fit. What degree this diagonal wave is, must be kept in sequence to what happen in early 2009. We should get 5 diagonal waves up, but uncertainty as to where the 4th wave is, still remains.
My trend lines will fool us, as the markets are between two channel line extremes, and it seems like it is rolling over. Rolling over can mean many things as 4th wave corrections look like they are rolling over.
All the wave counting I do is based on finding the real 5 waves in Cycle degree, as without them we don't have a base to work with. If Cycle degree wave 3 is still ahead of us then we can look at the three simple core patterns, that may unfold in the next 4-5 years.
My two favorite corrective patterns
for Cycle degree wave 4, is a zigzag or a flat. Once we calculate out all the required wave counts for these two, then we know all the idealized wave structures we should get. Any Cycle degree wave 3 peak I want, will last forever as no higher degree can exist without finding the Cycle degree base first.
The market gyrations has more to do with anticipating a winner in the US elections, as stocks hit world record highs. Any "E" wave decline I may get will have a bottom to it, so until that is cleared up, we have to keep our short term options open.
Wednesday, July 27, 2016
I will occasionally post something on this blog, but only some bigger wave counts. I am sure you have heard all the bearish ranting going on, regarding the oil's summer decline. We were expecting it, and now we have to find a bottom that will hold. Any wave 2 will do that, but a wild guess at a support price level will not.
Diagonal waves don't have your normal impulse retracements, as a short free fall can turn quickly and soar the other way. When the mainstream media is this bearish this early, then a rally or a complete reversal should still be in the cards. Short term we can still have some downside left, but longer term I expect WTI crude oil to double or even triple from todays price levels.
Not until we get close to a gold/oil ratio below 17:1 will we get close to a major top. In the last few days the gold/oil ratio has been around 29:1
Sunday, July 17, 2016
In the last several months I have been very busy with posting and maintenance on my new site,
ElliottWave5.Com | The Gateway To Cycle Degree Elliott Wave Analysis.
When I looked at some of my stats I saw that the majority of visitors to my new site came from a direct link from Elliottwave 5.0 "Reboot". I consider this free blog as a Gateway to Elliottwave5. I will be doing some posting here, but with no set times or frequencies. I will try and post something every month or so, but in general there may only be scattered postings to keep the free readers entertained and informed from time to time.
We still get 100-200 pages read per day on this blog, so that is a huge drop from 1000 or so pages read per day. This was all expected as the initial rush to the new site at EW5 has now settled down.
About 2 new members sign up every day to get their month free access to all my work. During the week I also try and post 2-3 times per day, so there is always a fresh wave count going up during the week.
As of July, 16, 2016 many of the membership fees have been reduced to a flat rate for everyone. What differs between the plans is the amount of time you can buy at once.
This now works better for different budgets, and works out to about $7.50 USD per month.
Like a Netfix subscription, just cheaper. You can sign on with a $15 two month membership, so this effectively doubles your time that you would have had to pay for this entry level membership.
My theme for the new blog is that it is a "Gateway" which means all my work is done using Cycle degree (or lower) wave analysis. I started switching to this lower degree in mid 2013. I have not had to switch back up one higher degree again, and so far nothing that the markets have done for the last three years, has changed my mind. This is the longest time that I have ever stayed in a certain degree, and I view that as a very good sign. Now we just have to figure out where the home is for the real Cycle degree wave three. Did a Cycle degree wave 3 top finish behind us in time, or is it still to come in the next few years or so?
My work is dedicated to finding the real home for Cycle degree wave 3, so if you're expecting fancy trade setups, or some impressive SC and GSC degree wave counting gymnastics, you will not find them on the new blog.
All the wave analysts in the world follow a certain degree, but that degree must also get confirmed in some way or another. The best way to confirm any count is when a 5 wave sequence develops and see what degree this 5 wave impulse really is. Every degree correction has a specific idealized wave count that we should have, and to draw them out is still the best way to visualize them.
The cutoff is the degree of any 5 waves, that the markets can throw at us. Five waves down in Intermediate degree would be my maximum that I can have after any Cycle degree wave 3 top, so when wave analysts start looking for 5 waves down in Primary degree, I know they are working in a SC, GSC or higher degree level.
The majority of all expert wave analysts today are using at least a wave count, 1-2 degrees higher than what I work with, but they "ALL" need the same Cycle degree tops like I do. In a very blunt, and simple statement, "we will never find the highest degree levels if we don't find all the lower degree levels first". It is strictly a mathematical and sequential thing, so the changing of a degree is not something you should do without any thought or any review.
All the problems with high degree wave counting is that it produces the herd mentality. The SC degree herd and the GSC degree herd have for 16 years, been chasing a degree and wave pattern that they must have, yet these 5 waves going down, have never happened since the 1930s bear market.
This is a pretty impressive wave count targeting such a rare wave and degree, in well over 80 some years.
Elliott wave is easier to figure out, if we use well drawn idealized charts, as I always say, that you have to "see" the waves before you can count them. Wave counting is just a secondary act of confirming what we think we see.
What is worse today than it ever was is that expert wave counters make no distinction between an impulse 5 wave move and a diagonal 5 wave move. They are two different weave structures and they should never be labeled with he same sequence. The Diagonal5 like I like to call them, can happen in any 5th wave in any degree, so the Diagoanl5 work like a location beacon. Since this summer I started to look at the markets with a diagonal perspective, and all I can say is they are everywhere.
They are so numerous, but yet the book only dedicates a small section to diagonal waves.
I leave you with an idealized Diagoanl5 decline, with 5 waves in Minor degree. They are both the same and if you want to entertain yourself, try duplicating it on the empty template on the right, after you print it out. Of course that may sound simple enough, but can you do it without any mistakes the first time you try?
Wednesday, April 27, 2016
My postings on Elliott Wave 5.0 "Reboot" are going to quit today, so hopefully you will join me at the new website.
This is the cash chart for the Russell 2000 and I still have not found any Cycle degree, wave three
top. The implosion into the 2016 bottom is a very well formed impulse wave, but I have to explore it as a potential expanded pattern bottom.
What that means is that if the expanded pattern is true, then at least the Russell 2000 can hit another new record top, closer to the 1300 price level. We are also approaching the previous 4th wave peak, which is a perfect place to turn and then head back south.
I do not want to completely throw out the wave two
option, but it could be a wave two in Intermediate degree. If that declined, then 720 would be a 61% correction, which may not be deep enough to play out all 5 waves. We know we are not going to get 5 waves down in Primary degree as that would take the Russell 2000 well below zero, and that will never happen.
Tuesday, April 26, 2016
This will be my last gold posting on this blog as I will be switching to our new site by May 1st or
So far gold has made another bullish looking advance, but this is not a pure impulse, but can only fit into a potential diagonal wave structure. Since the beginning of April, 2016 the gold waves have not been the happy bullish waves, we would expect in a true impulse wave structure, but the patterns have been fighting upward all the time.
This is not good in the long run as all these bullish looking waves will eventually all get retraced. $1208 is the low to beat, but hopefully we will see one more high for this gold bullish phase.
Constantly posting a gold price where it will stop means very little as the pattern is far more important. How it acts or behaves on its journey up is critical to understand as investors can get caught thinking we are in a secular gold market. This I don't think is the case at this time.
Above all, we want to milk and bullish run to the max, even if it was a fake. Fake money can be turned into real cash when you sell.
As always, we want to max out the bullish run with any Elliott Wave Count, but it can be much harder to tell if these fake runs are much shorter. This is especially true for gold stocks.
Gold stock insiders flooded the gold market with buying in mid 2013 which was very well broadcasted at that time.
Hopefully we will get the same signals if and when they start to sell. Steven Jon Kaplan may broadcast it as he is one of the few contrarians that track this kind of data. True Contrarian
I want to let all readers know that Elliott Wave 5.0 Will be changing its name and moving to this new site by May 1st or sooner. All readers to the new site will get a free month while we are in transition. My postings to this blog will slow down with my commentary reduced as well.
Here we go again as the markets seem to be starting into another impulse type move. If this is the case, then the DJIA can breakout with yet another new high and there even could be a possibility of creating a new bull market extreme.
Since I have what looks like a small degree correction, but if a newer high is lethargic or very slow in coming, then we could end with another "C" wave peak followed by another crash.
Monday, April 25, 2016
I would like to inform all my readers that by May, 1, 2016 I will no longer be posting on this blog.
All new posts will start in May on our new web site.
ElliottWave5.Com | The Ultimate
All readers that sign in on the new blog will get a free month until they have to decide if they like to use a paid membership structure.
All those that have donated already will get a free year membership at the new web site.
The US dollar has been very frustrating to count out, but I will give it a chance to see if it still is going to hit close to my 92 price level with a 4th wave bottom. My "D" wave rally should still see a complete retracement so we have to see if that will still happen.
Commercial traders are still net short on the US dollar, which is still bearish. It is when they switch to a wide net long position that gold may see some real problems. Gold has been having difficulty in maintaining a bullish phase, so this could be a problem.
We know that all wave counts are only temporary unless they are perfect. Having a perfect wave count is a myth and an illusion on the part of any wave counter. I
show the wave 3 in Cycle degree at a top in 2015, but my correction fits better into a small flat than a zigzag.
A flat leading into a bigger flat is very rare if not impossible, so my wave three would be like Humpty Dumpty ready to fall off the wall. This would also make the 2011 bottom
as the start of a massive 5th wave extension which we know was a stock mania move. A stock mania move has stocks and the US dollar roar, as gold and commodities generally crash.
Stock mania's have happened many times in market history and they will happen again and again.
We have to spot these moves before they are ready to happen as right now this stock mania is hibernating.
If and when the Cycle degree is actually finished then we would need a Primary degree flat, or a Primary degree zigzag to complete the 4th wave bottom. I don't think some Cycle degree triangle is in the cards as the solar cycle will kill that very quickly. After all the Roaring 2020's will change all that.
As long as there is the slimmest chance that a Cycle degree 5th wave has "not" completed then there is no chance of a SC or GSC degree wave count to infect us! Markets must travel in sequence to the degree not in random fashion.
In the future, I will reduce my
intraday postings on weekends and Mondays, but use that time to review some of the bigger wave counts.
Here we go with another
intraday look as this market seems to still be in an impulse heading down.
I have to start with very small degree levels as my highest level I am showing right now is Micro degree and my smallest is Miniscule degree.
I have what looks like a perfect expanded flat that formed as the "C"
wave also pushed a bit higher playing its part as well. Of course, all this is great, but I know price action can change so fast that at any time this wave count could fall apart. As I post the market has shot back up so we could be at another "ABC" instead of a wave 1-2
I have scratched my head, looking at the big picture and I have not come up with a good wave count for the top.
Sunday, April 24, 2016
Obama has killed off so much of the coal industry, now we are faced with a shortage of coal. Nobody has ever talked about coal being in a glut but when coal mines are shutting down or rendered to dirty we are going to get distortions in the supply and demand picture.
This ETF is not about coal prices but about the producers as the coal prices are pretty stable.
KOL came to a screeching halt exactly on the $5 Fibonacci number. You can't get and closer to that as $5 can also be a major price point when inverse stock splits can occur. That fear may no longer be an issue as the KOL price has gained over 61% from its low. ($8.66) is also very close to another Fibonacci number.
We would have to go back to 2009 when we get close to a potential $13 Fibonacci number. KOL would have to break out of my two small trend lines to do that. I think that would be no problem for KOL but we may need to get a correction to blast past that top trend line.
At the very top trend line, we have a potential $30-$34 price level, but we may be dreaming when we look that far ahead.
So far the starting impulse looks pretty good, but we have to watch for a correction that is far too large or far too ugly to fit into a good developing impulse.
It can take years to develop a good wave count and I would have to get data from another site to create a more detailed wave count.
Friday, April 22, 2016
This US dollar rally is still well short of the top trend line, but it does not have to hit it and impress us. Sooner or later it has to head back down as since the April, 12th bottom the rallies have not been great looking impulse waves. Another decline should be in the cards which should push gold back up stopping the gold crash dead in its tracks.
That is the optimistic view, but in the long run I think the US dollar has to rally strongly one more time, breaking out to all time new record highs. In the meantime, we want to milk the US dollar decline as much as possible for all the smart contrarians make their gold investments climb much further.
Even though the US dollar decline is unclear when it will stop, I don't think it is on a secular crash at this time. The biggest decline in the US dollar has far too many diagonal waves on it so this is not a good think in the longer term.
Gold crashed in price to roughly where I expected, even though it traveled a bit further. Gold did not break any major rules just yet so gold should rally one more time if we had an "ABC" crash.
Diagonal 5th waves can blast upward dramatically in relation to the other waves so we have to be ready for anything at this point. The gold traders would be trying to catch another falling knife and you would have to put your stop below the longest wick in today's downside. I can not give you a price for this as many charts and anything Forex related are at completely different price levels.
Hopefully this bottom will hold as it would have to hold Sundays opening as well.
Usually the rallies are never this large if a world oil glut is going to get worse. Besides the wave structures are far too impulsive at this time as well. It is when we get a serious correction is when we have another look. So far the gold/oil ratio is still confirming an extremely low oil price when we use gold as money.
I believe the bottom in early 2016 could be a "D" wave bottom in intermediate degree and that we are working slowly towards an "E" wave top in Intermediate degree. This also could mean that the "E" wave top will also be a "B" wave top in Primary degree, which the brother "A" wave ended in 1986. This makes 2016 close to a 30 year time period with a few more years to go before another major top may appear.
This eventually calls for WTI oil to exceed $115 again and even create a double top close to that $147 price level. This may seem like oil is in a secular bullish move but all it is doing is finishing a potential triangle "B" wave. What will follow the "B" wave should not be just a guess, but we would need 5 waves down in Intermediate degree. This would complete a 4th wave bottom in Cycle degree.
Also, what price destruction we will get once this "B" wave top has completed should also not be just a guess, as it would have to crash below all my letters since the 1980 peak. This should be close to the $10 price level. This may all happen before the next solar cycle bottom, which still can be 4-5 years away.
Of course we will also be in another world oil glut, and panic will dominate the oil market once again.
At this time I believe crude oil can be in one single SC degree pattern before we run out or simply lose interest due to other means of transportation being developed. This single SC degree wave
zero started in 1859! Any single impulse wave structure can be started with a wave zero and my stock Cycle degree wave zero started in 1932.
A few days ago, the markets have reached a top and have now proceeded on a trip south. As much as many may want to say that the patterns are the same as the DJIA, the fact is there are always little differences that can show us a completely different wave count.
This wave pattern has crashed through my parallel trend line which can work as an expanded pattern.
Poking through the trend line is also a warning that another wave pattern may be in play.
This would still need to rally and match a potential small triple top just under the 2090 price levels.
Of course the wave 3 bottom could be an "A" wave bottom, followed by a very steep "C" wave decline. I have seen many impulse waves start out and then fall apart very quickly so I don't create the hype machine calling for the "big one" or that the wave count, "is clear". The wave counts are never clear because when they are clear they are fooling us. Are the waves, clear in SC or GSC degree? No 5 waves in Primary degree have ever developed since the 2000 peak, so any SC or GSC degree wave count is a mythical dragon that the most popular Elliott Wave counting sites are all trying to slay.
I'm only trying to slay the Cycle degree dragon and that is still a myth for now.
So far this market decline can fit into an impulse, but it still may have the 5th wave waiting to get completed. Only a true impulse can keep compounding as the waves can build in a 1-2, 1-2 fashion.
We may still need more downside before the first important wave 1-2 set has shown itself and it usually takes a minimum of three sets in wave 3 to be properly extended. Any
5th, 1-2 set would just about be impossible to see and therefore impossible to count.
As soon as this does not happen then chances are we would just be in a correction and we would have to look for the correction to end, and then even push to newer highs. Any other pattern can also be in play so at the beginning of any reversal the impulse can fall apart very quickly.
The sooner we realize that the impulse is no longer working the better. One option is we get a 5 wave impulse type wave structure heading down, which would be 5 waves in Minute degree and basically end up looking like a big crash with everyone screaming it's over and the bear market is here.
Of course, as soon as they do that chances are good the markets will stop falling and then really roar and retrace the entire crash and even push to new record highs once again.
Markets will never do what the public thinks it should keep doing as if they did, everybody would be rich, as the 99% could join the 1% very quickly. We know that, that will never happen.
Thursday, April 21, 2016
The price spike came within a few dollars of breaking my wave count and that is too close for my liking. The bullish patterns that gold has been making may not be finished just yet as it all can be part of a diagonal wave count. We have to look for a diagonal 4th wave correction and my bottom trend line would be the boundary that another 4th wave could stop at. The diagonal 5th wave should then cross to new highs past $1282 or so.
As of 2016 I draw all my trend lines in parallel to each other, and many times they all have the same angle with many different degree sizes. Yes gold gave us a nice spike which can be the end of a trend, but a correction will mean gold is also not finished. Any choppy bullish moves are not good signs of a healthy bullish phase, so we have to be prepared for dramatic moves that may be impossible to pick up before hand because they can happen during the night or when I am busy with other things.
I will not have time to cover other assets today, but will try and cover a few more tonight.
Wednesday, April 20, 2016
The WTI bull market keeps on pushing higher, totally ignoring all the BS (bearish sentiment) of the past several months. World oil glut? What world oil glut? Supply destruction has been going on with more to come and the inability or unwillingness of many nations to increase production.
Many crude oil carriers are going around the tip of Africa as it is cheaper to burn fuel than pay the fees going through the Suez Canal.
We can see how far fundamentals have been lagging the oil price. Since I have no bullish sentiment report, I rely on the gold/oil ratio to help give us a clue if oil is being overbought. The ratio stands at just a bit over 29:1 which is still very cheap when compared to gold. Once we hit 20:1 or less, then we should wake up and start looking for a substantial correction.
Right now WTI oil has the most bullish wave count I can find, but we have to see if it can be maintained. After all, the summer season will be here soon and then the demand picture can change dramatically.
My "D" wave bottom in Intermediate degree is still in force. What we had from the 2008 peak was one mother big zigzag crash which some are calling a mythical "X" wave. Any use of WXYZ waves is like telling the readers I have no clue where I am and I don't know if it is a flat or a zigzag.
Using WXYZ waves hide patterns more than they ever help and this is the major reason why I have never used WXYZ waves. I have made it pretty clear my disdain for the use of WXYZ waves as the EWP needs to be simplified and not made more complex like in the little blue book.
My version of
is all based on wave two as the base wave count, not the 4th wave as a base wave count. This is drawn in detail with an idealized 1-2, 1-2, 1-2 and 1-2, base wave counts. EWP
It is only the commodities that may see 5th wave extensions, but with stocks we should always look for the wave 3 to be the longest wave structure.
Since crude oil basically was born in 1859, there may only be one big 5 waves in SC degree before it runs out, or nobody cares anymore. Electric cars will still take decades to make an impact on oil as they need to generate some serious amounts of electricity to run all these new electric cars.
Gold has finally made a dramatic move to the downside but this can still be a fake move as the drop was at a very steep angle. Since the beginning of April the moves the gold market has made sure can fit into an ending type move as so many waves overlap each other. Starting in April, I had a 7 wave count, which still needs to be completely retraced, but with no time limit.
It may take another month to do, especially if we get one more gold pop to the upside. This can travel to a new high, but it must not break the $1270+ price level. Trying to catch a falling knife must be accompanied by a stop, mental or otherwise, as we are dealing with
intraday price moves that are extremely hard to play.
The markets keep pushing higher above and beyond all expectations. What else is new as I see it as the job of the markets to keep as many people confused or trapped in one direction as much as possible. Especially all the Elliott Wave counters as we constantly review or update wave counts that have failed or will fail.
This SP500 has gone too high to where any expanded pattern is no longer viable, but another 5th wave is. If the 4th wave has already completed with a flat or a triangle, then there is still a chance that we are just coming up to a potential wave one in Minor degree. We are only a few points away from breaking new record highs and even if they do not do this, we are left with double and triple tops that will take many years to sort out.
Which wave count belongs to the bullish cycle and which belongs to a new trend is not determined by new highs.
The line I have at the 1920 price level is only the 61% retracement level of the net move from the February bottom to now. Even that has no meaning as 40 or 50% could work just as well. If a wave 2 decline is in the cards then, it may still take another 5-8 months or so to play out the remainder waves 3-4-5. Then it would be the job of the next president to screw up the economy again.
In the long run the markets are going to head into another large degree bear market, but at this time they are having a real problem in figuring out when they are going to do it.
The Canadian dollar has been on a tear and at this time no really good correction has happened. Even the bullish phase does not look like your average clean impulse waves so I remain skeptical, as to how long this can keep going without a good correction.
Commercials are already in a net short position so that is also not a very promising sign. Mind you the commercials can be in a net short position for a very long time before anything can happen. They need to build a much bigger net short position before it becomes a real problem.
Way back in March the sentiment hit a low of 6%, but I no longer get that report so I am in the dark as to how high it may have become. Either way there is more upside to come, but a correction sure would be nice. The media has talked about the 80 cent level, which means that the bulls are starting to shine under a spotlight. When the media focus too much in one direction, then that direction is in
Tuesday, April 19, 2016
From November 2015 HDGE roared, but in a corrective fashion as I count 7 waves for that bullish phase. This is now as good as completely retraced as I'm sure we are just dealing with pennies.
Even the present decline has many overlapping waves which are not impulse waves, but can be diagonal waves. Can HDGE go much lower? Sure, it can, but then we are looking at a potential inverse stock split if it does. If and when we get closer to $5 we could be a setup for an inverse stock split but it's not always a certainty.
There are gaps in this decline and I am confident the markets will take another hit which would send HDGE north one more time.
Silver is trying to soar to the moon, but we know this will never happen as much as some gold bulls may like to dream about. The $200 or $300 silver price is a figment of the Austrian economists imagination as they are extremely biased to gold and silver. For silver to keep soaring we need impulse waves to form, but when we look back to the start of the silver bullish phase, we have one ugly type pattern that will not fit into an impulse.
So the entire silver
run at this time, has a very high chance of being just another fake bull market. Even the beginning of April the run did not produce impulse waves, but started with 3 wave structure.
This is another clue that this run is a fake. This does not mean we should not play bear market rallies but we have to know this going into it, or figure it out very fast after it has started. There still can be some upside left, but at a minimum a correction is due. The bears attack from the top down, which always surprises the bulls, because it happens when they least expect it.
We could be at another bigger degree "A" wave, but even then we need a big correction for that to happen.
I was expecting a rally, but not quite as tall as what is happening. We do have a very vertical move which can fit into a "C" wave very well. I still think there is a bit more upside, but I sure do not want this wave count to break out to a newer high at this time.
Back at the start of the April bull run, I counted out 7 waves which I have labeled. 7 waves are corrective wave counts and that group of waves must still get retraced. I give no time limit in which this can happen as we can also be traveling up an "E" wave of a triangle. (4th wave rally)
The US dollar has headed further south as well, but US dollar counter rally corrections can always kick the enthusiasm out of the gold market.
This is the Mini Cash chart with my standard 500 custom bars. In February this chart hit a bottom and then turned like there was a desperate need to own stocks. It acted like a rocket leaving the launch pad, but rockets do have a habit of blowing up as well.
In this case many different things can still happen and if we get a sharp decline this could just mean a potential expanded pattern was in play and one more leg up would then happen. Either way a correction should be due as this chart is also different from the DJIA. If any 4th wave triangle has already completed, then we are not nearly tall and long enough to fill out the "thrust" of the 5th wave.
We would be lucky to just come up to a wave 1 right now. This rally has several big gaps below so I am confident in the long run that the January, February lows will get retraced.
We have three spikes, at the 1820-1800 price, so we can expect very stiff support at those price levels.
This chart does not
trade, but just tracks the cash index. It is also what they call a daily type chart and I'm using my standard 500 bars.
From the start of January this index charged up, in what I can fit into an impulse at this point. Of course, there still could be a small expanded pattern in action where it may act like this party is over, but it would rise from the dust and roar to life one more time.
If the 4th wave triangle was over then this bullish cycle is still not nearly big and long enough to be the "thrust", that follows any 4th wave triangle. At this point I could take it as a "D" wave top, but then a deep 3
wave crash would have to follow soon.
Even if this chart travels to new record highs, it can still be a "D" wave as a triangle has a tendency to do that. There are only small impulse waves that we can count out as all the rest are more like diagonal or 3 wave patterns. We need good looking impulse waves so the markets can compound and build distance, when they don't happen we have to look for corrections instead.
Monday, April 18, 2016
I thought I would have another look at the patterns I am working from the 2007 top. The 2007 to 2009 pattern was a 3 wave crash as it also contained an ending triangle. It did not end with 5 waves. Anyone that is still calling this big crash a 5 wave impulse is forcing the wave count.
I fully understand that most wave counters also call the market from the 2009 bottom to now as a big bear market correction which has only one path. That path must hit a new world market low well below 2009 levels. I am sure this will not happen even though many Austrian economists and doom and gloom analyst are calling for it to do exactly that. Their favorite words are, "it's going to be much worse than 2009"!
EWI is calling for massive deflation, but who knows what deflation or inflation actually is? Printing money will not cause inflation as this printed money has to get out into the normal economy. Imagine if you had a very good laser printer at home and printed crisp $100 bills 24/7 and stored them in your closet. Would this cause inflation? No, it would not cause inflation until that money came out of the closet, and circulated in the real economy.
Besides, money is being destroyed on a regular basis as well, which we have witnessed in the oil crash so far. Massive amounts of gold stock value also went up in smoke since 2011.
I think from the 2009 bottom has been far too long to be a bear market rally, but there still are many options in which way this can go, without hitting a new record high this time.
If we crash down to new lows, but only cross the bottom trend line, then we could be at a 4th wave base and then another bullish phase would commence. Triangles would create trusts that can boggle our minds. Our present rally is not very impressive at all, compared to what a 5th wave thrust can do.
I quit using any trend lines that are not parallel as all other types of trend lines show forced wave counts.
Here we go again as the markets are pushing to new highs. Of course, this destroys my old "B" wave, wave count back in early April. We are about 20 points away from hitting a new record high with the Mini SP500 which may get us closer to a Cycle degree wave three
Once new record highs have been achieved, then we need to do a detailed review effort to see if a 5th wave in intermediate degree still fits. Many are now chasing a wave 2 top in Intermediate degree, which is impossible with the amount of overlapping waves we have had. SC and GSC degree wave counters have fed us a line of BS for over 15 years, yet not a single required wave pattern has been confirmed. Do you know what this one single wave count is that the SC and GSC degree wave counters must get "before" solar cycle #25 shows its face in 2020-2021? It's 5 waves down in Primary Degree!
My wave count of a diagonal 5th wave is still alive as 5th waves rarely produce perfectly clean impulse waves. A 4th wave crash is a technical breakdown of fundamentals and only good stock pickers or index buyers make any money traveling up the 5th wave.
So far it looks like gasoline is still on and upward path with corrections thrown in to confuse us. Gasoline did break to new highs, but it is also on a different path than WTI oil is as gasoline never even came close to hitting new record lows. RBOB also contains a huge gap under which we can only see on the weekly or daily charts.
I believe we are still in a"C" wave bull market in Minute degree, but we are still far from sea wave one in Minute degree. Besides being in a potential triangle we have to wait and see if gasoline breaks out another leg up.
The Mini DJIA crashed down, creating a huge gap at the same time, which now already has been closed off. Just goes to show how violent and fast things can change in the
Not much to show on Mondays, but I am sure the action will pick up later in the week. I have to assume that another small correction is in progress and then still another leg up will happen. As far as I can see we are still about 250-300 points away from a record top. This can also be a false top if we were to adjust for inflation. I have counted many adjust for inflation charts and they are all different depending on what year of US dollar we use. Besides that we would never see when stock mania does kick in like it did in 1996 or recently in 2011.
The entire wave counting community is basically trying to confirm SC and GSC degree wave counts, but have never succeeded, in the last 15 years.
In the meantime, stocks can push higher as gold declines which tells us that stock mania is still present.
Sunday, April 17, 2016
The US dollar seems to have made a downward move that looks like a correction so we should at least get one more move up before we can expect another potential peak. When that happens then we will be in a situation where the US dollar can also keep right on compounding impulse waves.
The entire US dollar decline is diagonal in nature, so all those wave structures can also be completely retraced. Until all this gets confirmed we have some tough US dollar calls ahead of us. At this time I still have a "C" wave bullish phase to complete which I have as an expanded pattern. Until this move shows its true intentions, we will not know for sure. Usually the moves last month to month, so all this could take until the end of April to play out.
Back in 2002 the RUT hit a bottom from which a very good impulse was born, followed by a diagonal 5th wave, ending near mid 2007, with a wave 3 in Primary degree. Then the 2007-2009 crash happened, which many have forced into a five wave impulse. I refuse to force a wave count like that anymore, as it gives us a false and very subjective picture, and besides, if it was a 5 wave decline, chances are good the markets would never have gone this high again.
I take it as a 3 wave crash with an ending diagonal stuck on the end of it. This leaves us with another
move that, I fully understand is a very ugly impulse wave, but which can be a diagonal 5th wave, soaring up to the 2015 top as my Cycle degree wave 3 top. I could not label that Cycle degree as there is no room with this chart. I don't think 5th waves are pretty impulse waves, but more the ugly kind as the 4th wave crash usually destroys the best fundamentals and the 5th wave struggles. You have to be a good stock picker in the 5th wave.
The next part sure looks like I can fit it into an impulse so we will try it to see if another 5 waves down in Intermediate degree will happen. If we get a Cycle degree 4th wave correction with a zigzag or a flat is still up for debate, but we could get a leading
zigzag all the same. Even now we could still see an "ABC" before a wave 2 ends so we have to be open to the variables that can still happen.
Can we crash with a 5 wave decline in Intermediate degree? Sure, I am open to that, but then we are in an expanded top for 2015 and expanded declines are very bullish, in the longer term. Besides that we would end up with a triple bottom with only 350 points to go before we hit zero.
SC and GSC degree wave counters are working double expanded patterns which I think are impossible for them to happen as they never line up like that.
I think it will be the Russell 2000 that will point to a bottom long before the DJIA and SP500 will, as the RUT does not have all that much room to fall. In other words the RUT will never get anywhere near the 1970s peaks, but you can bet all SC and GSC degree wave counters will be pushing for it.
Also by the time that happens, we will be up against another solar cycle, which are Elliott Wave Count Terminators! The next solar cycle (#25, 2020-2021) will completely destroy any foolish SC and GSC degree bearish wave count they can dream up, just like it did in 2008-2009.
Friday, April 15, 2016
This will be my last posting today and gold is always a good one to do even though some wave counts remain foggy
at the best of times. So far this bullish phase still looks corrective as we started out with overlapping waves in less than a day.
Unless I am missing a bigger picture gold should resume its trend down. As far as I can see there still should be some upside left for a few more days, but eventually it should turn south one more time.
The 4th wave top which I have at the Subminuette degree top came from a 7 wave run, which are corrective waves and 7 wave structures always get retraced. This would still give us a target of below $1210.
The entire structure can still work as a triangle so all is not lost just yet, but I do expect more downside to come.
In the past I have only shown the degree list I use to those that have donated some monies to this blog. The degree list is critical in understanding any wave count from any wave analyst, well just about. Many makeup their own little color degree stacks, but then they smear the entire chart with crap where the color scheme makes no sense at all. In other words, I read it as baffling us with bullshit so they can always be right.
To use this list, the numbers are "always" corrected by letters starting with one degree lower. Any jump away from staying in sequence can force a wave count that is nowhere near reality, and next thing you know we are in a higher degree that has never been confirmed.
Crude oil has seen some of the worst forced wave counts created by a throw-over and throw-under trend lines. To get away from forcing wave counts I only use a parallel set of trend lines.
One of the last wave counts I saw put out by EWI has a very bullish move to it with some mythical "Y" wave. The news I read is that the world oil glut is slowly dissipating as many of the fears have not materialized. Supply destruction, and Irans inability to push higher production due to may countries not wanting to do business with Iran as many sanctions are still in place.
I could go on and on but there is nothing new to what the wave pattern is not telling us, already.
It looks like a correction has finally started, but it now is a test to see how deep it will correct again. Crude oil did not break to a newer high which eventually it must do to keep the bull market alive.
I am looking at a potential wave one top as 5th waves can extend dramatically. Hopefully there is not a
triangle building here, as that would take crude oil very deep with an "E" wave bottom.
There will be no more postings this Friday afternoon, but will update a few on the weekend.