Analyze This

Stocks closed just at or just below, a critical support trendline; the diagonal line defining the upward sloping wedge of the last 6 months.  click to enlarge  click to enlarge As discussed in the April 4 post The Equities Problem "the current 5th leg up can fail at any point. The diagonal wedge forming at the end of an extended move up...along with repeated negative divergence of the RSI over the last 2 years, presents a set up for a violent thrust down into a vacuum with few shorts left to cover in." The wedge can also be seen as a upward sloping head and shoulders. NASDAQ 100 Nearby   click to enlarge  It doesn't take a genius to draw a trendline ...or to see when it is penetrated.  Upward sloping wedges or diagonal 5th waves in this position, at the exhaustion stage of a  relentless and prolonged rally, are rare and extremely bearish. Unfortunately with every central bank and then some, at maximum easing, it's hard to imagine a

Well, it's been a long time coming . The Natural Gas has a 61.8 % move down from the $6.50 high at  2.48. As it happens there is also suggestion of basing at this point. Daily  click to enlarge Note the positive divergence on the RSI.  Weekly click to enlarge Note the positive divergence on the weekly RSI and upside crossover on the MACD. The 2015 downwards chart action can be described as a diagonal 5th wave.  Short and Medium term risk are decidedly to the upside for NGM with  potential to the downside limited to previous lows 2.47, 2.44 and at 1.90 and that would be a very slow grind from the looks of things.  Note the volatility of previous rallies, late Oct 2014 and mid Jan 2015. So medium term targets on an upside reversal can be easily measured to 3.35ish, a .38 retrace of the last leg and the gap. The 50% retrace comes in at 3.55. Longer term targets require an opinion on the structure of the move down from 6.50...if it is a 5 wave count tha

News from China over the weekend of PBOC easing reserve requirements for banks will not weaken the USD.  Paradoxically any ensuing $$ strength will further deflate the US economy, depressing  consumer activity. Too bad China . Of course there are other markets aren't there? Like Europe. USD click to enlarge

The overnight news from China re the March trade surplus crash ; had me take another look at the all important USD, since the Yuan is of course linked, and the IMF/ World Bank meets in Washington this week.  Weekly  click to enlarge  And... Daily click to enlarge I think the above is the correct count for this breakout, it may be an internal count is off by a degree but the triangle is clearly a 4, and a 5 will follow producing higher highs. Looks like a triangle breakout to the upside is underway. Note the Daily RSI has settled into neutral territory and NOT displaying any significant divergence, while the MACD is crossing back to the upside. The Elliott measuring rule for 5th waves is 5= .618 of 1through 3 or 109.46 or 5 =1 or 105.5 Either way decidedly taking out the 100 resistance. Weaker crude, exports, US earnings etc.    

The many arguments re equities overvalued state based on long term fundamental and technical metrics, the central banks capacity to continue support and at what eventual cost have been well recounted by now. As noted previously we are now officially in (or just completing) the greatest bull move in history, 1454 pt.s from the 666 low. So how is this thrust up explained from an Elliott perspective and what is the count? The great collapse into the 2009 low was clearly a five leg down, and so must be considered a C wave of IV, since it is not an A of an ABC. That seems kind of obvious to state now, but the move up from 2009 has never produced classic Elliott impulse waves that would be expected in a primary wave structure. Most technical analysts including myself viewed the move as corrective even as it exceeded the old highs. However, once the current move up exceeded 1.382 of the preceding move down, it could no longer qualify as an irregular B wave according to Elliott's pri