Friday, May 29, 2015

Chopped Stocks = STFR

In Elliott Wave Theory and elsewhere, after the terminal pivot and a new first primary wave is in, the corrective 2nd wave is characterized by a deep retrace, with the consensus opinion being that the former trend is reasserting itself.
Not.
 Right now the Dow is indicating that we are in a "suckers rally" by putting in a lower low (though other indices are still stronger looking).

Note the "b" wave lower low, with an abc subwave structure, suggesting it is all part of a larger corrective move to be labeled eventually a 2 .

Will have to wait and see how the other indices resolve the move but it is highly unlikely to be as an explosive new high.

Sell the friggin rally.


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Thursday, May 21, 2015

Epic Pivot Will Follow Greatest Bull in History

Stocks have reached a measured target for the completion of the wedge or diagonal triangle 5th wave (pls see previous post).
 I wrote about the significance of the price point we surpassed Tuesday in the Nov. 9, 2014 post, Greatest Bull Market in History - Almost! stating,
  "The SP 500 will have gained as much from the lows of 2009, as it did form the lows of 1975 to the highs of 2000, or 1465 pts, when it reaches 2131." The SP500 has achieved the greatest uninterrupted bull run in history by 2 points!
Note the deterioration in the strength of the move below.
Weekly
 click to enlarge
Where do you decide to get out of long term core equities? Do you wait for a a greater than 10% move down? That 's not an uncommon number but its a long way down from here.

Weekly
 
click to enlarge
That 10% pull back would of course put the market at new lows for the year.
 Daily
 click to enlarge

The earliest confirmation that I will use for the end of the wedge/ diagonal triangle 5th wave, will be
overlap of the leg labeled "a" in the below chart. Note that it is also around the .382 retrace and in the area of the 4th of lesser degree on the last subwave count up of "c". 



 It is always difficult to know how to take advantage of these kinds of epic turns and really new, opportunities. Unfortunately, there is a high probability of the top here being of VERY large degree Elliott significance ie Grand Super Cycle. Being early in positioning for an extended, potentially generational move , will be important as trading from the short side is dangerous  and access to capital will become difficult...possibly impossible, despite precautions.

Wednesday, May 13, 2015

Danger Will Robinson-Stocks in Final Wave Up

And so the final leg of the 5th wave of the diagonal triangle equities have been climbing, is underway and the high probability termination point is 2136 to 2145.
 Daily
 click to enlarge
The 3rd wave is 53% of the 1st wave, and if the 5th wave is similarly 50% of 3 it targets 2139.
The rally up from 4, an "a" carried 54 points, so c=a at 2135. 
Pls see previous posts April 4, April 30,  May4.

Tuesday, May 12, 2015

WTI hits Target as Products/ Seasonality Weigh

The recent sharp rally of nearly 50% has achieved measured targets AND is now encountering a seasonal drag from the products. The cracks are wide, and of course there is no lack of supply. In fact supply is breaking records every week. Great report by Howard Weil on refining fundamentals as of May 6 here.

Seasonal trends in gasoline are very regular and prices on average top out in May.
Unleaded Daily
click to enlarge
Note the RSI negative divergence and trendline test. On the June contract its a c=a;



Heating Oil not very different on the charts; c=a the common corrective targeting measure.
Weekly
 click to enlarge

Daily

The last leg up on the WTI chart does not count easily. There is no clear 5 wave count in the structure; too many overlaps of wave 1, and 3rd waves that are too small. There is little in the way of fibonacci relationships between the sub waves. We are left with a possiblity of a triple abc x structure.
That could change with another new high but for that the bulls need $55 to hold.

There is a potential Fibonacci relationship in the following structure; c=2x a
The above count conforms to my early call for the 43.58 low Jan 30 bottom as the actual termination of the preceding leg down .

Given the drag of products and seasonality this looks like a very high probability short.
Downside targets are 42.50, 40 and 32.


Tuesday, May 5, 2015

China Shanghai Comp

A plausible Elliott Wave count on the Shanghai Comp;
 Weekly

click to enlarge

 as might be expected, it's looking a little overcooked.
 How close to crisp is it in the short term?

 click to enlarge
This is the most negative possible wave count I could come up with. It is not unusual to have an extension show up in the 5th wave position as it is consistent with speculative frenzy. It is possible it is a 3 however, and there will be a series of higher  highs to complete the count up, but given the RSI negative divergence and MACD, it's very likely most of the way there.

Todays  4% drop is not what momo players want to see.
Note the daily chart above is not updated to include today.

Real support is a long way down at 3050, and I would imagine short term, the bulls need it to stay north of 4000.

Why do we care? China craps out crude craps out.





Monday, May 4, 2015

Stocks Wedge Higher

Looks like we are waiting for another iteration of the abc wedging structure to complete itself. If the   collapse to follow wasn't going to be so catastrophic you could fall asleep here. Kinda of like watching the mouse run over the sleeping lions nose.
Get outside and go for a run ...

click to enlarge 
The above is my current count on the wedge with a target zone for the final abc up to complete the diagonal fifth wave.
The .618 of wave 1 added to wave 2 targets 2144 and .382 of 1 thru 3 added to last weeks low produces 2147. Of course, even 2125 would do it, or it could even fail immediately, though that is less likely. 

Breathe.