Friday, December 18, 2015

WTI Major Support

Been awhile since the last post, $11 ago in fact, but WTI is finally at major support that could well prove an important and long term pivot point, marking the end of this collapse.

The 2009 low was variously recorded as 32.50 to 33.20 depending on your charting service. So within 5% of historic support. And $147.27 x .234= 34.46



Note the repeated positive divergence on the RSI. Also significant drop in Open Interest.
Looks like 5 down to me.
Upside?
A modest .382 retrace of 114 to 34.50 targets $65
BUT and it sounds crazy BUT an ABC down complete would open up the possibility of new highs over 148...I know I know I'm going now.

Wednesday, October 21, 2015

Key Support Test for Dec WTI

Dec WTI  under 44.30 doesn't leave many happy longs.

Looks like only 2 days worth of buying done under that level.


Tuesday, October 20, 2015

SP Mini Elliott Count

click to enlarge


Birds of a Feather

Sometimes these patterns are just staring you right in the face.

SP mini nearest 3 month 
click to enlarge

SP Mini nearest 3 yr.
Please note that the above chart ends in mid August 2015, to emphasis the similarities of the patterns
between the charts. Of course most (but not all) will remember what occurred in the last half of August.

SP Mini 5 Day
click to enlarge

SP Mini 1 Yr.
Again please note that the 1 yr chart above ends in mid August to emphasis the similarities between the patterns.


Sunday, October 18, 2015

Crude Resumes Downtrend

Short and medium term risk is to the downside. The recent little bounce looks very corrective with an "abc" structure retracing a modest Fib .382 of the 1st leg down; as suggested in the last post.

click to enlarge

Could it continue to chop to the upside? Sure, but it has already caused significant technical damage on the downside by overlapping the $47 level highs. Confirmation will be overlapping  $44.
Expect more of the same and new lows likely to boot.
However ....I love WTI under $38. Like at $36 which would be .81 retrace of 9.75 to 148 , scale down to $32.56 which is a straight 78% off $148.


Tuesday, October 13, 2015

WTI Update

The Crude pulled back to the .61 retrace at 46.60 which was looked for in the recent Oct 9 post.
 So far the move down looks like 5 waves rather than an abc. That definitely suggests a number of possibilities.

1) It's a resumption of the preceding primary trend and there will be new lows to come after a 2 wave back up or

2) It's an A wave down and there will be at least another C wave down following whatever bounce the B up delivers (could retrace the entire A move down btw).

3) Any short term upside play should be viewed cautiously, and the bears will fade it heavily.


click to enlarge
Keeping a close eye on this bounce for indication of the bulls vs bears conviction. Short term could be good for a buck.

Still love WTI long term. See preceding posts.


Monday, October 12, 2015

China; Deadest Of Dead Cats

Tonights import/export numbers from China provoked me into looking at that little market mover again the formerly impressive Shanghai Comp
Not too impressive....

click to enlarge

Barely rates the description of bounce, dead cat or otherwise.
So check out my preceding posts on the Shanghai Comp, particularly July 7 

In any case the big problem for the world is the overall Elliott Wave count on this market which
still has a high likely hood of tremendous downside risk.

click to enlarge

The "B" wave on this 15 year chart is a classic abc zig zag structure in Elliott Wave theory, retracing a Fibonacci  .78 of the A leg down. 
The "C" wave down measured targets are;
C=A at 718 
C=.78 of A at 1700
C=.618 of A at 2422
Entire History of Comp
click to enlarge
Note the lows on this very long term chart are overlapping the preceding highs, suggesting an abc structure history.





Friday, October 9, 2015

WTI Early Resistance @ Fibonacci .62

The latest leg up in WTI from the $44 low on Oct 2 hit Fibonacci .62 resistance here. Is it ready to resume the down trend?
At the moment it sure looks that way short term. But there are some long term reasons for being very cautious about that bandwagon.  See Why I Love WTI from Sept.26. As pointed out there, "risk is massively to the upside" and it s still true. Of all the potential counts $51 was the closest target.

Nearby
click to enlarge
(I love it when the termination points of the waves are hitting actual fibonacci numbers; it makes doing the numbers in my head on the run really easy. )
c = .62 of a @ todays highs
also the entirety of the abc is 13.17
Do we get an X wave followed by another abc up? Or are new lows in store?

A test of the break out might be expected around the 50% or even .62 retrace.
Medium term I'm neutral, BUT longer term I still love WTI.




Wednesday, October 7, 2015

Why SP 500 and Nat Gas Look Alike

It kept popping up over the summer, " this chart reminds me of the natty".  What could the SP500 / equities generally,  have in common with the Natural Gas chart structure? Could be an ABC structure and what I think of as a symmetrical or Rorschach look.

 Nat Gas 25 yr. Chart

 SP500 5 yr
click to enlarge
The SP500 is a little asymmetrical at the moment but so was the Natty at different points. 
The main takeaway is the strong potential for an abc structure for equities over the long term as we go forward into the bear market of (likely) Grand SuperCycle Degree. 
Pls see The Equities Problem from April 2
SP500 3 mo. Chart




Saturday, September 26, 2015

Why I Hate Bonds

In 1984 I worked at E.F. Hutton as part of the Commercial Energy Desk with Vonderhiede and Zimmerman. I attended a lecture by an old school CTA named David Johnson who was a brilliant, and highly successful technical analyst and trader, with a large team next door to ours.  It was on rates.

He described an unusual sloping head and shoulders pattern that was breaking the neckline, signaling a long term decline in rates and all that implied. Boy was he right.

click to enlarge
While I am not a big head and shoulders person, it is hard NOT to remember what a key tell that turned out to be on one of the major pivots of all time.

Now take a look at these 10 yr. charts....you tell me.
25 yr.chart

 click to enlarge

5 yr.chart
 click to enlarge

1 yr chart
click to enlarge






Why I Love WTI

Practicing Elliott Wave asks that we respond to the evidence while keeping an open mind that market patterns are evolutionary and subjective interpretation easily sees what it wants.
  3 yr. chart
click to enlarge
It is easy for me to see 5 waves down. While not on the chart , there was significant RSI positive divergence at the low, with the low reading corresponding to the termination of 3.

Context; 5 of C?
5 yr chart

More Context

25 yr.chart

click to enlarge
My primary count is that we are still working out the consolidation of the $114 initial -A-wave drop.
The alt count is the more bullish obviously.

In either case the risk is massively to the upside.

Shorter term risk is still to the upside.

Support is generally $43ish, with the .618 retrace around $42.25 so 2 or 3 bucks...meanwhile even if you view this pop as corrective with lower lows to come, "c=a" @ nearly $55. 

How to reconcile a bullish crude view with being a bear on equities and bonds is my problem.

Thursday, September 24, 2015

The Big Bear

Here comes the bear market and it's a Griz. Really?
 Most define a bear mkt as a 20% decline lasting 2 mo.s or more. I believe the Dow is leading the way (see OH OH Equities from Aug.12, and Monday Morning Indu Blues from July 27)  
and that will continue as it breaches the -20% mark at 14,680. Not that much below the Aug.24 low of 15,370.

click to enlarge
 
And of course, whether counting the high from May 19 or July 20, it's been 2 months.
So the naming of the bear is coming up fast and it will likely be accompanied by the "moment of recognition".
 You might think that the 'moment"was in late Aug. but I believe most are hoping that was an anomaly to do with China and thin August markets. Head in the sand, relying on the Fed to fix it, averaging down.

The case for why NOT to average down, and why getting liquid is crucial.

The high of 2015 was the end of a Elliott Grand Super Cycle Bull that lasted 119 years.
That Elliott count is explained in the April 2 post The Equities Problem .

In it I close with,  "Of course once the 5th of a 5th is complete, whether 2120 or 2300 , the ensuing collapse will be dramatic and sustained. A retreat to the previous 2009 lows would represent a much more significant pull back than seen before both in terms of percent and real dollars, and pullbacks to the 4th wave of lesser degree are quite common. "

Thats ASSUMING the 4th of a lesser degree is 6600, it could well be  600 from 1974.


 

Note the time the corrections take relative to the preceding bull of similar degree.
Roughly 35%...or 41 years in the case of a 119 year run up.

Whats a potential worst case scenario: pullback to 4th of lesser degree at 600 Dow, and lasting decades. That s why getting liquid is crucial.



.

Tuesday, September 22, 2015

SP STILL Only - 9% ...It's Not Too Late.

Just a Reminder.

At - 9% from their highs;

Crude = $134.50
Gold= $1730
Natural Gas = $14.37
Ford = $37

See Sep 9 post and Aug 28 post's
 Still Own Equities?  It's Not Too Late.

Friday, September 18, 2015

Trend Resumes

It was sell the news, and a VIX in the teens was the gift tell.

 click to enlarge
 Note that the 2 wave lasted 23 calender days as did the 4 wave. Equality in time suggests they are of similar degree.

Wave 4 DOES retrace a significantly greater percent of wave 3 than common and some are labeling it a 2nd wave. 

A common Elliott 5th wave measured target is 5=.618 of wave 1 thru 3 or 1856.
Seems kinda modest under the circumstances if it 's making new lows by only 10 points.

Neither wave 1 or 3 extended, so the next leg down could extend, whether a 5 or (3) wave.
Typical extensions are 1.6 x, 2 x, or 3x the preceding wave or 

1.6x =1643
2x= 1548
3x= 1312

Looks like a lot but a relatively modest 20% correction is 1625 and a .382 retrace of 666 to 2032 is 1574.



Thursday, September 17, 2015

Fed Impotence or Guile

Does anybody really think that the structural and demographic drags now present in both the emerging markets and developed markets are going away anytime in the next 5 / 10 years? Overcapacity in everything except cutting edge coders. And I give that 3 years; see www.udacity.com

In any case if the fed does NOT raise, it is basically an admission of impotence since it cannot CUT rates, which would be the action taken if they had room to cut, there is no doubt in my mind.

An institution SO dependent on the illusion of power will HATE to reveal the truth; it is POWERLESS to achieve it's stated goals.

It is possible it has achieved it's UNSTATED goals of transferring vast quantities of wealth to the banks, the people that run them, and that control the fed. So thats been a resounding success.

However politically the jig is about up: See Greece, Spain, Australia, UK, Bernie and the Donald.

If they do raise and the market tanks they have a CRISES to respond to and can acquire more power.

What do you think?

Wednesday, September 9, 2015

SP Classic Fib Points Updated

Ouch I hate it when that happens.
Turns out NOT to be a triangle 4th wave for the SP 500, but a zig zag 4th.
However, this too is presenting classic Fibonacci targets as per the last post;  now it's the .618 retrace of the 3rd wave at 1999 AND at that point the c= .618 of a, 100 pt.s up from the 1899 b wave low  of Sep 1.

 click to enlarge

 And just to repeat Still Own Equities?  It's Not Too Late.




Tuesday, September 8, 2015

SP 500 - Classic Fibonacci Points

When panic and confusion reign Fibonacci points often are the only guidepost. In the end human emotions (as reflected in the mirror of the market) can somehow be measured and forecast by these ratios. Despite state interference.
click to enlarge
Sure looks like a 4th wave.
C=.38 of A
To be expected. The weird thing is the actual fibonacci "NUMBERS" being present. Why that should show up (not the first time either) and what relevance it has, except as fibonacci ratios, I'm not sure.
Dumb Algo's maybe.



Sunday, September 6, 2015

China Gamma

Weekend reading worth investing in; 
If we don’t understand both sides of China’s balance sheet, we understand neither

UH OH ... Michael Pettis explains in the above,

The longer the miracle, the greater the tendency. That’s because in periods of rapid growth, riskier institutions do well. Soon balance sheets across the economy incorporate similar types of risk.
…Over time, this means the entire financial system is built around the same set of optimistic expectations. But when growth slows, balance sheets that did well during expansionary phases will now systematically fall short of expectations, and their disappointing performance will further reinforce the economic deceleration. This is when it suddenly becomes costlier to refinance the gap, and the practice of mismatching assets and liabilities causes debt, not profits, to rise.
 
Thing is China is NOT unique, just take a look at the recent leveraging of US corporations to fund share buy backs. For starters.




Friday, September 4, 2015

Euro Holiday Over

Back to work and school and the Euro is about to get schooled. There is a clear set up for taking out the 104 handle.


Euro 5 Day
click to enlarge
Pretty easy to identify the corrective look of Thu afternoons weak rally. It is structured in an abc and 
cannot even achieve a 50% retrace. Now it is overlapping the previous highs of "a". 
So lower looks highly likely.
Euro 6 mo.

click to enlarge
The recent move off 117 in the above chart, has overlapped the highs of the structure up, as highlighted. That strongly suggests that the structure up is complete and taking out the 108 level will confirm that.
Euro 5 yr
click to enlarge
If the recent abc up from 104 is complete new lows are likely with 98/96 the first fib target zone. 
Who's next?

















Friday, August 28, 2015

Still Own Equities? It's Not too Late.

This morning the SP 500 is roughly 7% under it's highs. An excellent exit opportunity. Just for comparisons sake at 7% under the highs WTI crude was at $137.64,  Natural Gas $14.58, and Gold $1785
Global Markets have unanimously signaled either trend breakdowns or dug deeper into their bear markets See Bovespa -35% from it's highs. International fundamental metrics are generally very negative or deteriorating; from unemployment to trade to GDP to Capital flows. A very different environment from 2014.
The bounce since the dramatic sell off  into Monday lows is nominally significant, but it is merely to be expected when a market moves that fast, and relatively no big deal in percent terms.
SP
 INDU
 RUS

Note that the INDU and RUS 2000 have a .62 retrace and 50% respectively. Exactly what one would expect.

 Pls see previous 2 posts. From Global Markets Trap Beachgoers
" the 2007 bear mkt lasted 474 days, the 2000 bear lasted 930 days, the 1973 selloff lasted 639 days."
 

Tuesday, August 25, 2015

Last 2 Yr.s of SP 500 Gains Lost

The very rapid move through long standing support has trapped the market with the old support now the so very solid resistance. Additionally the last year of sideways ranging reduced average performance and weights the cost basis of the last year nearer what is now the high.

ES Nearby Weekly
click to enlarge

If you are a regular monthly investor you are now losing money on the last 2 years of your investing.
$1 invested monthly SP 500 since Aug 2013 = $25 cost basis.
As of last settle final value of portfolio = $23.16
 SP 500 level required to break even = 2021

Presumably that goes for corporate stock buyback programs too.






Monday, August 24, 2015

Global Markets Trap Beachgoers

Oh Shit! Lets face it when you come off the beach to discover ALL your positions are like negativo and that bonus is now not only looking tiiiney but the actual assets might be called, only one thing to do: CALL UBER (at least somebody is going to benefit).

                                       Actually, that s my neighbor getting me off island.


But here s the thing; are there any shorts to step in and buy, or after being systematically destroyed over the last  6 years by the algos and the fed, the short side is really just a minimal hedge position and actually will get added to. I think the latter. Spec Put longs may do some profit taking on the vol blow out, but how much of that is out there?

I m not even going to put up a chart. But please see my Aug 12 post OH OH Equities.

Just a little reminder; We are now 4 days into this; the 2007 bear mkt lasted 474 days, the 2000 bear lasted 930 days, the 1973 selloff lasted 639 days.

 



Wednesday, August 19, 2015

Shanghai Comp Update



Checking in from Vinalhaven Me. this morning to find China once again in the news.

Their style of market intervention is so transparent it is more honest really than our western version of same. However all equally in vain unfortunately for most.

Pls see http://www.crudewire.com/2015/07/china-shanghai-comp-50-retrace.html?m=1

"The "C" wave down measured targets are;
C=A at 718
C=.78 of A at 170
C=.618 of A at 2422"

And from here the recent consolidation   (or if you prefer goverment intervention) of the Shanghai Composite looks about done.
New lows under 3530 ought to confirm it.






Wednesday, August 12, 2015

OH OH Equities

August.  Spending some well deserved time with the family out on the Island? After all we've been range trading for 9 months, and everything suggests it will continue  at least for a couple more weeks right? I'm heading to Maine myself Friday.
Sept SP
as of yesterday
click to enlarge
Looking good right? Maybe it IS a consolidation pattern and breaks high, after all there's the Fed Put.

Of course things can sneak up on you. Here's this mornings look at the nearby INDU;

click to enlarge
Thank you China for giving the market the excuse it needed to finally roll over. A Head and shoulders neckline break, last night's " death cross" of the 50/200 dmv, and continued turmoil in the overnight markets should result in downside acceleration today trapping all the longs since Feb.


From an Elliott Wave perspective, the pattern above has been an ongoing (if slow) exercise in open mindedness. The SP high on the nearby contract was achieved May 19, while the Sep contract hit highs July 20, 2 months later! Not an easy market to sell. 

The move down from July 20 has a very back and forth pattern that may actually turn out to be better counted as abc's than impulse waves of 5. Would that be unusual for long term bear market of historical Grand Super Cycle Degree? Maybe unusual not impossible. 
If that is the case, anybody waiting for an obvious blow off top followed by a clear accelerating impulse wave gap down type pivot, is now pretty uncomfortable.

I suppose if you were a Junior trader at the PPT you would try to defend the lows at 2034/2040.

Tuesday, August 4, 2015

Crude: Catch the Knife

I love it when the senior executives of  the Majors declare bear markets for ever. WTI is oversold both intrinsically and relatively.

click to enlarge
Some charting packages have the RSI reading positive divergence.

take a look at the                                          3:2:1 Crack
click to enlarge

I can clearly find 5 waves down in the first chart . Even if you think its going to 40 or even  32 
a retrace here is easy to imagine and 50% would bring it up yo the 4th wave of lesser degree around 53.


Thursday, July 30, 2015

Crude Bounce

Is this bounce a dead cat, or is it sustainable?
Do equities crater in China, does the USD continue it's move up? These are the factors.
CLU15 Contract
 click to enlarge

CL Nearby
 click to enlarge
It does look like a potential 5 waves down. It IS oversold. But there is no real positive divergence on the RSI, something good to have in place for a pivot.
 So far no evidence of impulse wave up structure, it looks more like an abc corrective structure. 

However the short term can evolve and there is a .78 retrace on the above nearby chart.
Jack be nimble.





Monday, July 27, 2015

Monday Morning Indu Blues

Leading the way in the US, the INDU is about to make new lows for the last 6 mo.s, since Feb 3 to be precise, as it takes out 17,354.
 Is it any surprise really? The worlds 3rd biggest equities market, China, has been essentially non functioning for the last 3 weeks.

click to enlarge

SP
click to enlarge
Trailing the Dow , doesn't 1968 look like it's just begging to be tested?