Showing posts from August, 2011

Back Up

Back Up; the power that is, after Ilene. Unfortunately the move up over the last week is merely another series of corrective abc's; the storm global markets are experiencing is not even close to over.  SP Active Mo. Daily click to enlarge Note RSI is no longer oversold.  The -4- has retraced 50% of the -3- wave.  SP Hourly  click to enlarge Minor negative divergence on the hourly RSI. Perfect c=a on the last structure up, call it "y of -4-", as the second series of abc's.  The thrust down that so looked like an impulse wave may be an X wave, or possibly an "a" wave an X wave if this is forced up again. Short term looks like more downside work to do, potentially the -5- of 3 of C the current count. Longer term this count will likely get moved down a degree, depending on whether there is an extension in the the 5 as previously discussed or not. That means it is going lower, the only question is how fast. Does it find support above 1000 or rip through?  Wee

What If

What if Bernanke announces what passes for Q E III tomorrow? No doubt we will get a short term blow off. The early 2009 intervention resulted in a 170% move, the Aug. 2010 Q E II announcement resulted in  62% increase in Crude Oil prices. My guess is we see much less reaction this time around, say 38% , resulting in a bounce to roughly 95 from the lows of 70.  That will not necessarily result in a change in the primary Elliott Wave count , that WTI is in a 3 of C down. If he doesn't announce anything substantive, higher energy prices will not be one of Obama's problems in 2012.

WTI and Brent

Active Mo. Hourly Following a choppy, overlapping move up to 89.19, WTI has had a clear impulse wave down off the highs, "i". This has now been corrected in a clear abc pattern up for a 50% retrace, "ii". So most likely we are seeing the beginning of the next leg down; " iii of  (5) of -3- of  3 of C" . Active Mo. Daily  click to enlarge On the Daily chart the recent move up had many characteristics of a corrective counter trend move,  a rough 50 % retrace of the preceding move down that ran into trouble around the 4th of lesser degree. Note that it DID NOT overlap the termination of  -1-  at the 89.61 low. It may be that the low labeled (3) of -3- will turn out to be simply the -3-, but for our intermediate term purpose it is  irrelevant. Both will be followed by lower lows as 5th waves are made to complete a count down. In fact, it may well be that the 5 waves we are seeing unfold to the downside, will end up being a sub wave of the C down, rathe

SP Resumes Move Down

I was scouting around the last day or two's headlines to come up with a catchy title that explained the cause of the collapse today, something along the lines of "Big Doins in Euroland and the SP", but really, it's everything isn't it?  The Philly Fed, employment, housing, deficits, PPI, consumer sentiment other words it's a 3 of C. From the Aug 8 post SP 500 " Wave C : Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond."  Active Mo. Daily click to enlarge Note the -4- does not exceed the 50% retrace point of the -3-.  The SP has likely completed the corrective -4- wave, and is resuming it's downtrend, beginning the -5- of 3 of C.  The move today has been accompanied by big down volume (78%) and breadth (89% declining

In case you were wondering

In today's NY Times; Euro-Area Economy Seen Almost Stalling  "Economic growth in the euro area fell more than expected in the three months through June, according to official figures released Tuesday, as growth in Germany came almost to a standstill." More than expected? Call it what it is ...More than hyped, or at least more than hoped. And I love this..." Analysts at Commerzbank said that a warm spring meant that construction projects in Germany had begun earlier than usual, subtracting some activity from the second quarter. Without that effect, growth for the quarter would have been 0.4 percent, they said." At least we know who's expectations were disappointed. Average New Irish Mortgage Drops Below 200,000 Euros DUBLIN (Reuters) - The average size of a new Irish home loan dropped below 200,000 euros (176,585.60 pounds) in the second quarter for the first time since official statistics began in 2005, data on Tuesday showed. I think the US

Whole Lotta Hedgin Goin On

As might be expected, a few spec longs liquidated positions last week, and not just in energy. As Bloomberg notes;  Funds Slash Commodity Bets by Most in 18 Months on Economic-Growth Concern "In the week ended Aug. 9, speculators cut their net-long positions in 18 commodities by 19 percent to 989,110 futures and options contracts". But check out the Open Interest in WTI;  From Reuters (very useful Graphics: CFTC Commodities ) These numbers include Aug. 4 and Aug. 5 activity, when WTI punched through important previous lows dating back to mid February. The O. I. figures also reflect the lows made Mon. Aug. 8. That low was the lowest low seen since late Sept. 2010, putting WTI down for the last 11 mo.s. Specs are back to where they started and it looks like the commercial hedgers picked up some longs particularly products.

WTI Rip Redux

Awesome job Spain France Italy etc. Banning of short selling works every time ; good for 1.5 cents on the Euro anyway. Looking at the WTI rip from yesterdays morning low, it could be that anticipation of the said ban has been good for 6 good ole USD's (2 over the overnight previous high) . Active Mo. Hourly click to enlarge So a slight re labeling adjustment of the (4). Clearly the move up is structured in abc's, and is a correction. Note the repeated negative divergence on the RSI. There is a cluster of resistance around 87.10   The 50% retrace of the (3) is at 87.20 Oh and I almost forgot,; the 4th wave high of lesser degree is right around there.

WTI Rips

WTI is making classic lower lows followed by corrective retracements, followed by lower lows. From the Aug. 8 Crude Oil Elliott Wave Count "The 3 wave can evolve and the labeling on the sub waves change rather easily. However, the most likely scenario, given the repeated series of 1,2's of lesser degree, will be for a repeated series of 4,5's of greater degree to complete a C wave down." Active Mo. Hourly click to enlarge Note the RSI extreme at the -iii- of iii of (3), and the positive divergence at the low - textbook. And so far this (4) has retraced .382 of the (3) . The iv had retraced 50% at it's highs. We should still have the (5), -4-, -5-, 4 and finally the 5, ahead of us, for a series of 3 lower lows. One method for targeting 5th waves is using .618 of the 1 thru 3. If the (4 ) is complete at  84.45, then (5) = .618 of (1) - (3) at 69.06. Active Mo. Daily click to enlarge There was some minor positive RSI divergence at the lows.  Note the 50 day/

SP 500

Since the Aug. 3 post,  Big Doin's in DC and the SP  that index has fallen roughly 100 SP points,  attaining the Head and Shoulders target mentioned there; " And regarding necks....the break measuring rule targets 1130.50...... Also from that post, " Most will agree that overlapping the "b" at 1002 will look like death. That is still a LONG way off, but an early tell that raises the odds of that happening, would be taking out the .618 retrace point, at 1144."  So far the SP has exceeded that 1144 point by 10 handles AND is now below both the 100 and 200 WEEK SMA.  Active Mo. Weekly click to enlarge Smells like a duck looks like a duck and walks like a's a 3rd wave of the C down. " Wave C : Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 tim

Crude Oil Elliott Wave Count

The current Elliott Wave count on WTI; Active Mo. Weekly click to enlarge I have simplified the labeling on the B wave obviously. Of particular note was the complex structure and the extended length of time it ran, lending support to the B wave labeling rather than a 2 wave labeling. The current move down is the beginning of C.  Active Mo. Daily  click to enlarge Note there is as yet no positive divergence on the RSI (though it is oversold).  There has been an overlap of the beginning point of the last leg up; the c of -C- of B. The move down has exceeded the .618 retrace of the -C- of B. There has been increasing volume. It is likely that WTI is in a -3- of 3 of C.   Active Mo. Hourly  click to enlarge  WTI did get the corrective bounce Friday cautioned about in that mornings 6:20 am post,  Elliott 3rd Waves and Crude Oil   "Caution; any corrective bounce even a modest one of .382 will be very painful given the extent of the move. And it is a Fri. in August." The 3 wa

Elliott 3rd Waves and Crude Oil

Smells like looks like walks is a 3rd wave of the C down. " Wave C : Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond." I will update the count on the charts later. Be sure to see post from June 16  Long Term Crude Oil Targets Worth reading in it's entirety but the short version is "The A = 114.60, so C will equal A at  23 cents. Now that seems a little unlikely ( the symmetry there is interesting though). The A wave came off 78% from the highs, so in percent terms C= A at 25.26 The C wave =  .78 of the A  at 25.41 The C = .76 of the A at  27.70 The C= .618 of A at 43.98. The above 43.98 = a 76% retrace of the 10 to 147 final move up in the previous structure as well. " Personally I like splitting the the difference between 25.26 and

WTI Trendline Takedown

Active Mo. Weekly click to enlarge Only one left standing. Active Mo. Daily  click to enlarge Of course the neckline measuring target is WAY down from here, like say, 72? (that s using the first one). If the current and last remaining support trendline is interpreted as a neckline it targets 63. That would be consistent with a 3 of 3 , from the July 29 post WTI "All in all, it leaves the count of 1, 2, -1-, -2-, intact as the most likely Elliott Wave count. Risk of an accelerating -3- of 3 down remains high."

Big Doin's in DC and the SP

On the macro front, events in DC of a partisan nature have very little effect on the big picture. The seasons come and go, the precipitation and temperature are of concern only to a few for only a very short period. The massive peak in credit and asset values in 2008 was the natural expression of a 70 year growth cycle ..the grand super cycle top in Elliott Wave terms. The subsequent contraction will last a little longer than 3 years. The above chart reflects a 7% pullback, while there have been a FEW 1 % and 2% pullbacks since 1955, this is clearly unique AND it is in spite of the huge expansion in Fed Gov. credit. Global efforts to reduce deficit spending will unquestionably speed the contraction up, but deficit cuts or no cuts, this Grand Super Cycle contraction is unfolding and it likely will be over a generation. A Little Shorter Term SP Active Mo. Daily 1130.50  click to enlarge Big head and and Shoulders neckline break and retest failure (so far). No positive divergence