Thursday, August 22, 2013

E-D update and a Special Guest Chart from Lunatic_Fringe

First, it looks like the Karl Denninger is in Jim Jones mode again.  Getting just a little cult-ish over there at the TickerForum.

We know how this ends.  Bottoms-up!

TickerForum keg stand

The good news is, I exchanged some email with my old pal Lunatic_Fringe today, and he not only sent me his current chart and count, but he gave me permission to post it up here.  So here it is.  Enjoy!

Lunatic_Fringe 8-22 SPX daily

Luna taught me a very simple and important rule, which he learned from a study of Glenn Neely -- that an impulse wave needs to have an unbroken trendline between waves 2 and 4.  If the wave 3 obstructs a trendline between these corners, then your count is off.

Sounds easy enough, right?  And yet, mainstream Elliottician Daneric violates it with his count tonight.  In fact, if you go back and look at all of his broken and busted counts over the years, his 1-2 1-2 and "leading diagonal" down calls, you will find many instances where his counts break this rule.  Which is why they failed.

I'm told it's not Elliott, it's Neely.  OK, fine.  But I believe it's correct.  And extremely useful.

Lunatic_Fringe is a specialist at fib extensions and identifying wave targets, so I was encouraged when he mentioned SPX 1736 as an area of interest to him.  For the "wave 3" of my ending-diagonal, I had suggested 1740.  So let's go!

I left all of my trendlines and channel crap I drew on 8/19 on the chart, unchanged.  Why?  Because the tape seems to have felt out my trendline to 1740 and is using is as support, so far, at any rate.

SPX 08-22

Bigger picture, now with moons!  You could subscribe to an expensive financial newsletter to find out when all of the lunar cycles are ... but I will share them with you for free!

SPX 08-22 ending-diagonal - with moons!

IIRC, the 2007 top was an ending-diagonal as well, but on a shorter timeline.  Let's have a look at her.

SPX 2007 market top

Looks like a bearish ending-diagonal wedge, followed by that elusive leading-diagonal Daneric has called for the last 10 bounces on the chart, until we made new highs.  OK, I'll leave him alone.

Now let's stretch the 2007 top and overlay it onto the current and projected tape:

2007 top morphed onto 2013 tape with October top

I guess I could have stretched this several ways -- like lining up waves 0 and 2, and letting the rest fall into place.  That would put the top well beyond October 8, so we'll keep an eye out for that.

I'll play with this some more, and see if it's at all useful.  If anything, it suggests that wave (iv) in the series might be very shallow, and not make it down to the lower trendline of the E-D.

Thanks again for the chart, Luna.


Unknown said...

Just a novice lurker who wants to say THANKS! for all you do/share. Followed you here from tickerforum. I'm glad you stay in touch with Lunatic Fringe:)


Permabear Doomster said...

Hmm...a lot to ponder over in that collection, not least the kool-aid reminder.

Weekly charts argue against another ramp,before further declines into the FOMC of sept'18.


Christian Gustafson said...

Thanks, MT! I hope that Deflation Land can be your source for inside information on the lunar cycles.

"Premium" members will also get leads on comets, eclipses, and cicada cycles in the Upper Midwest. Never be surprised again!

All I am doing is what Lunatic_Fringe always sought to know in his old TickerForum threads: Where the Heck Are We?

I go about it my way, and post my charts out here, looking for thoughtful folks like Permabear Doomster (in the London) for comments and suggestions. I love the vibe that PD has on his site.

If 3PDH has anything to say, things are going to get pretty hot soon, days of 40 VIX, severe bear-market turbulence.

Lukas Horacek said...

I like your analysis, makes a lot of sense. the only issue I have is with wave c of the expanded flat. if it is an expanded flat shouldn't it be a straight 5 wave count as opposed to abc?

Christian Gustafson said...

You could count it from 1709 as a 5-3-5 ABC.

I kinda liked making wave 1 a triplet.

Permabear Doomster said...

re: I love the vibe that PD has on his site.

Despite the name, I try desperately to remain as unbiased as possible. I've done okay so far this year, but autumn is coming..and that sure does bring out the 'doomer bear' in me.

I'm certainly open new highs, but not until after the FOMC of Sept'18.

If Mr Market can rally for more than 2-3 weeks, I'll be resigned to new highs..with a continued ramp into next spring.

I really am becoming rather polarised on where we are headed.

Either a decline to the low 1400s by late Nov...or ramp into spring 2014..with sp'2000+.

As many recognise...keep an eye on those bond yields.

At some unknown point - if reached, the equity market will snap.

3.25% is a given, but that is not too far up. What would probably spook the market is 3.5%..since then the mainstream will start talking about 4s..even 5s.

As for VIX 40s...well, its possible..I mean we saw 49s in autumn 2011.

Need a weekly VIX close in the low 20s.

Have a good weekend

sooner said...

That is awesome seeing something from Luna again! I'd love to see you Luna and Norseman all posting somewhere again!

Christian Gustafson said...

Deflation Land is happy to post guest charts and guest posts. I would even add others as blog authors, if they want to post periodically.

Bicycle said...

We are very close to breaking north out of Steve's Brent Oil triangle chart tonight, on the Syria news.

Either the President wusses out and we bounce around in that pattern for another few months... or...

this is it...

Bicycle said...


sooner said...

Can you post a link to the oil chart?

Bicycle said...

Christian Gustafson said...

All hail Steve Ludlum!

Someone buy the man some sushi!