Thursday, August 14, 2014

S&P- NOW it's a Sell

Equities are getting the looked for bounce after the initial move down off the highs. The low of 1902 was of course, a 50% retrace of the previous 3 month leg up. This sharp correction up of the last several days is, so far, exactly what you would look for in a "2" wave....a sharp "abc" structure that takes back a good deal of the "1" down, with most participants assuming it is a resumption of the up trend.
WSJ 8/14/14 .... " U.S. stocks rose on Thursday, extending the Dow's march back into positive territory for the year."

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This is potentially an important selling opp, and of course if the top is in, THE important selling opp. But even if there IS more upside to come, there is a high likely hood of at least one more leg down to give an "abc" type structure to what the bulls hope will turn out to be merely a correction down.
The 1953 high today is where the "c" = .618 of the "a". 
Unfortunately the "2" can be strong so a .82 retrace has to be allowed for. 
Of course "3" waves typically are the most significant moves and mark recognition by the market that the trend has changed.

These markets are so very different structurally from 5 yr.s ago when we made the low, that I've wondered whether "Elliott" is still a useful method. It certainly was useful then.

Monday, August 11, 2014

Natural Gas - Seasonal AND Elliott Support

 Gotta love it when Natural gets both Seasonal support AND Elliot support. These two factors are aligning now, and the fall seasonal rally has proven to be the big buying opportunity of the year over and over again.

The 23 yr. avg of spot prices has the seasonal low in mid Aug, followed by a significant rally exceeding 100% into mid Nov.

The major utilities and industrial users are well aware of the seasonal opportunity that presents itself in late summer, and with last winter's record low storage fresh in mind, they will be risking their jobs to miss it. 
EIA Storage
Storage still hasn't recovered. Praying for El Nino by now. Check out the last few years buying opps present at mid Aug.
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Perhaps as important, if not more important than the seasonal trend, is the fact of a .618 retrace from the highs having been put in.  This retrace looks like a simple "abc" down, nearly c=a, and is the most significant retrace since the 2012 low of 1.90 in terms of outright price.

If the low is in and it represents a correction to the preceding $4.60 move off the low of 1.90, than a retest of the highs at 6.50 would be a minimum expectation.
If the next move up is equal to the last, it targets $8.32.

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A short term pull back, not below 3.75 would be an entry opportunity, with 4.30, the 50% retrace of the last leg down, providing resistance the bears don't want to see taken out.

The implication here is for a seasonally powered move with a both a fundamental and technically supported target that is very high.

Tuesday, August 5, 2014

S&P- Not A Sale

The SP is now nearing support around the 1902 level and has had a decent flush in what was probably a "3" last Fri. This sell off then, is the tail end of the initial move off the highs. It is even conceivable it's a buy opp. 

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A bounce of 50% or 62% from the lows may present another sell opp especially if it is seen as an abc up. The 1950 area. But here it is looking oversold...all textbook btw and unfortunately bodes very poorly for the long run. Likely top is in.