Tuesday, September 18, 2018

Zoom out - the 5th wave is the 'extended' wave

In a five-wave "impulse" wave sequence, the Elliott theory says one wave should "extend" to a multiple of φ or 1.618 times one of the shorter legs.

Usually it is the 3rd wave in the series that obviously extends, with the 1st wave initiating the series, and the 5th wave finishing up.  With the rally since the March 2009 lows, the 3rd wave, the leg from 1074 to 2134 on the S&P 500, is only a multiple of 1.5 times the first leg from 666 to 1370.

The 5th wave, which we are currently in, will reach the multiple of φ at 2950 SPX, not far away at all, and will fulfill a condition for the sequence to be "complete".  It may go further -- I project it out to 2970 in the current ending-diagonal structure we are tracing.

LOG charts, always.

SPX daily since 2009 lows

Monday, September 17, 2018

W4 wrapping up soon, then W5 up

The impulsive c of 4 wave should be swift and severe, but so far she looks weak and feeble, anemic, unsure of herself.

The W4 won't make it down to a .382 retrace at this rate.  More likely would be that W4 is a flat, and we find support on the lower daily Bollinger Band on Wednesday around 2862 SPX.

Then we can finish with W5 up to complete the ending-diagonal with a dive back to its origin at 2594.

SPX daily ending-diagonal

Tuesday, September 11, 2018

W4 in the E-D count needs another leg down

We still need the C-wave impulse of W4, into the 2830s.

Then a final (?) 5th wave up to the 2970s to complete the pattern, in the first days of October.

SPX ending-diagonal, hourly

IMO the equity markets will crash to the 2200 level into Election Day, a last-ditch effort to upset the electorate.

Tuesday, August 28, 2018

Higher then lower then higher

The channel is steeper than thought and has its origin at 2594 SPX in May.  The 1.382 fib extension of this pullback from the 2872 is 2980 SPX, a level we could reach at the beginning of October.

$IRX indicating the September hike.  Here's the steeper channel and updated count.

Strangely enough, everything still points towards the same target next March, when everyone will be begging the Fed to lay down some serious loose policy again. 

The Fed will oblige them, it will have no choice.

Wednesday, August 15, 2018

Five waves down

/ES is perky tonight on China trade delegation news, and I may be the only sane person who sees five clean waves off the top and a 50% retrace in the works.

... Millennials ...

IMO the big test comes at 2780 on the S&P, with an instant 200 pt free-fall when we fail it.

/ES hourly ending-diagonal count

Friday, August 10, 2018

Still so close to new highs

When we bounced off a channel support late in today's session, I noticed how we may still put in that so-far elusive new high on the S&P 500. 

And it may be by a single point, après quoi, le déluge.

S&P 500 hourly, ending-diagonal from the 2553 level

What's really bothering me is what may be shaping up to happen in the wake of the November elections.  I won't talk of it again until the waves leading up to it start falling into place, but I am already very worried for our nation.

Sunday, August 5, 2018

New ATHs this week ... and then?

S&P 500 suggesting 2890 by Wednesday.

Thursday and Friday we have PPI and CPI, expect them to come in scorching hot.

+50 bps in September?

SPX daily - linear scale

Monday, July 30, 2018

Check that, let's do 2750 this week

Just noticed that the move to 2848 on the SPX last week put in a higher RSI.  That's bad news for anyone looking for a final top, because we should see a higher high on the index with a lower RSI -- an important divergence at any significant top.

bad AAPL earns ahead

So we can instead expect a dive to 2750 on the S&P into Wednesday FOMC, a weakening position from the Fed, and one last moonshot into next week, finishing at a slight new ATH with the August New Moon.  A short, sharp 5th wave to new highs, Bollinger Band touches, the upper wedge trendline, and, importantly, divergences on the RSI with both the 2848 and 2872 highs.

2750 is also the perfect .382 retrace of what we can now see was the W3 in the sequence off the April lows.

S&P 500 sharp 5th to the New Moon

Then we can resume the planned trajectory, start breaking down supports in earnest, as we make our way back to firm support at 1810.

Saturday, July 28, 2018

Respect the harami! Let's visit the 200.

Thursday saw the inside-day harami candle on the SPX, a very important sign here.

Let's ease off the speed of the doom a little and propose one more bounce this week off the support at the 200 DMA, lower daily Bollinger band, and channel support at ~2699 on the S&P 500.  This can then retest and reject the old channel (8/8 or so) and finally crush the 200.

We can then complete a 5-wave impulse to the larger channel support -- the core channel of the rally -- into the end of August, giving us a wave two bounce up through September back to the 200 DMA, this time as resistance, precisely at the September 26 FOMC meeting and press conference.


Wednesday, July 25, 2018

2000 top redux

Go back and look at the top from 2000, daily candles on the S&P 500, with the spike high and the 5-wave move that failed to best it.  That's what we have seen now since the end of January. 

With a similar slope to the sell-off in early February, we're looking at a first low at 2445 SPX, two weeks from now.  There is channel support from the ancient trendline on the S&P through the lows at 1074 and 1810! 

From there we'll visit the 200 DMA as overhead resistance instead of support, and August should shape up to be something truly special.

I can't wait to see the QQQ back at $20 next year.  Oh, you thought these companies were worth something?

SPX completed 5 wave channel -- failed 5th

Saturday, July 7, 2018

Book thread -- what's on my shelves?

Summer reading time.  What's on my shelves?

I'm just crazy about this cool one-volume edition of Spengler printed by George Allen & Unwin in 1934, which I ordered from a bookshop in Brighton, UK.  How I love this press.

Oswald Spengler, The Decline of the West,
London: George Allen & Unwin, 1934

You should use a 500 million DM Weimar note as your bookmark when you read von Mises.

Ludwig von Mises, The Theory of Money and Credit,
New Haven: Yale UP, 4th printing, 1963

I'm reading this cover-to-cover at the moment.  Volume 2 has always been good for its tales of the camps and the White Sea Canal, but you really need to read all of Gulag to understand our enemies.  I found this at a thrift store on Mercer Island, WA, for $10.

Aleksandr I. Solzhenitsyn, The Gulag Archipelago,
New York: Harper & Row, 1974, 1st ed


Goethe, Works: Gottingen Edition, New York: W. I. Squire, 1901

und Schiller

Friedrich Schiller, Werke in vier bänden,
Hamburg: Hoffman und Campe, 1957

John Stuart Mill, Principles of Political Economy, New York: Appleton, 1868

Talcott Parsons, The Social System, Glencoe: The Free Press, 1951 1st printing

Devereux Bowly, Jr, The Poorhouse: Subsidized Housing in Chicago,
1985-1976, Carbondale: Southern Illinois UP, 1978

Arnold R. Hirsch, Making the Second Ghetto: Race & Housing in Chicago,
, London: Cambridge UP,, 1983

Count Eric Oxenstierna, The Norsemen, New York,
NY Graphic Society, 1965

Ending-diagonal 5th wave finishes up EOM July

It looks like we can close the gap on the S&P 500 right into the first US GDP release at EOM July.

If w4 of the ending-diagonal ended at ~2692 on the S&P, the minor w5 will equal the w1 and fill the chart gap up around 2856.  Then we can begin our trip back to real support at the 1810 level this fall.

S&P 500 daily


Adding an alt in case the larger W4 did indeed resolve as a triangle.  This would drag the ending-diagonal out for more time, taking it close to FOMC season in September!  Still looking at Q2 GDP as a minor turn, though, but 20 pts higher than the 1st chart.  We would also see new ATHs on the S&P.

S&P 500 alt count with larger W4 triangle

Wednesday, June 27, 2018

Crunch-time for the Ending-Diagonal

Need a big finish here with GDP, EOQ2, and the holiday break next week.

2823 on the S&P 500 mid-Tuesday would complete the E-D and the bounce since 2009.  IMO the ending-diagonal count still wants a dramatic C of 5.

SPX ending-diagonal

Thursday, June 21, 2018

W4 is in -- minor W5 up to go

It looks like W4 from the proposed ending-diagonal count completed at 2744 SPX today.  It doesn't look like we'll make it all the way down to the .382 at 2715. 

It retraced right to the .236 fib of the larger W3, and completed a very nice c of 4 impulse today.  Now there is a nice fib extension upward -- the 1.618 extension of this retrace -- pointing to the 2820 level right into the July 4 holiday.  /ES futures looking good now this evening.

SPX 06-21 ending-diagonal count

When this breaks down, we have channel support at 2430 or so at EOM July, followed by the August 1 FOMC (no hike) and a decent bounce.  The logical target of that bounce would be a retest and hard fail to retake the 200 DMA from underneath.

SPX path to 1810

The actual rate hike at the 9/26 meeting gives us the last leg down to firm support at 1810.  Then we can rally through Christmas, all the way to the mid-January Bradley turn date, before the real credit crisis makes landfall.

Tuesday, June 19, 2018

Ending-diagonal count: lower, then higher, then done

I'm counting the current mess as an ending-diagonal, which I think still has some room to go lower here over the next two days.  Has China responded to the latest tariff move?  When do we uncover the next corpse in their shadow banking system?  Who's the next corporate bond default?

We have a rising 50 DMA, which is also right around the 2715 level, where we would see a W1-W4 overlap on the ending-diagonal.  It would then bounce sharply, rallying to around 2820, closing a gap into the July 4 break.  I pray that we still celebrate Independence Day.

The problem with the New Moon 2791 high recently is that RSI made a similar extreme, suggesting that this move was the W3 in the series.

SPX daily 06-19

McHugh has quietly noticed we are in a new window for a Hindenburg Omen and subsequent crash.   Sssh!  Don't tell anyone.

Wednesday, June 6, 2018

S&P 500 going parabolic again?

It looks like the 5/29 Bradley turn marked an important local low.  It was on a Full Moon, which should have been clue that the turn would be a bottom.

Now it looks like the S&P 500 is going parabolic again.

Next week's FOMC happens to fall on a New Moon.  We're less than 4% away from making new all-time highs on the index -- we could easily make it there by mid-session next Wednesday.

An FOMC can give us a reversal without gaps.  The February decline left giant holes in the chart, as well as an excessive RSI.  This parabolic needs to make a marginal new high, fill the existing gaps, while putting in a lower, divergent RSI.

$IRX is only 10 bps from glory and another .25 hike, maybe the one to break the camel's back.

SPX daily 06-06

Tuesday, May 29, 2018

Bradley turn today

The last one was at the end of January.

The 340 pt dive in February was a warning -- this is how we decline now.


Bradley siderograph, 2018, Manfred Zimmel

Wednesday, April 4, 2018

The case for 3070 on the S&P 500

I think we are headed to 3070 on the S&P 500.  I think we are headed there this month.

Getting there will piss just about everybody off.

The bears will be squeezed, again and again as they reload their shorts.  Bulls and bubble types will watch this proceed as a true blow-off top, and miss the OTM index calls which return high multiples.

It will be a most hated end for the most hated rally (since the March 2009 lows).

Tonight the /ES broke out of the old bearish channel.  It looks done now.  The overall decline never became truly dangerous and impulsive, did it?  The 2553 W4 low was made right after the Full Moon this past weekend.

/ES breakout

So here's the case for 3070, a true blow-off move into the end of April.

1. It's a 1.618 fibonacci extension of the drop from 2872 to 2553

2. It is the target for a Big W pattern per Bulkowski.  The psychology of this is simple -- we grind our way back to 2872, squeeze anyone covering at the new high, and push unimaginably further north.

3. The blue dotted line, which is the overhead channel trendline on a LOG chart all the way back to the 2009 lows.  IMO we need to test and reject it one last time.

4. The January highs put in historic extremes on RSI for the SPX, indicative of the 3rd wave of the series.  IMO we just wrapped up W4, so now we get the 5th, with higher index values and lower RSI, the final divergence marking the final high.

I still have the pet theory that the next great window for the start of a real Bear market (via a 40% crash back to the 1810 level on the S&P) will be the first estimate of Q1 2018 GDP, due out at the end of the month.  A miss on this would torpedo any remaining illusions of growth and expansion and animal spirits still in play.  Any bounces will be sold mercilessly.


Sunday, March 25, 2018

It's not 1987 ... yet

We still have gas in the tank.  Quite fine with me.

It's going to take 2 things to kill this market dead:

1. Q1 earnings season badness.

2. The first estimate of  Q1 GDP due EOM April.  If this misses, markets crash and stay crashed, until the FOMC can regroup with a new QE in early November.  A weak GDP read upsets the entire recovery/growth/animal spirits narrative, and the Fed is not yet ready to do anything about it. 

But first we need to touch the dotted blue line one more time.  It has stopped every attempt in this eternal credit-expansion rally.  It's not all that far away, and we are setup well to visit it.

The slope of the recent declines since January point to ominous targets.  Let this run for a month, and we're back at the 1810 lows.  Let it run into the Fall, and we're at scary new market lows under March 2009.

The leverage is there, the crap debts are there, the big players (pension funds, 401ks, ETFs) are all ready to sell and keep selling, at this rate of decline, at the slope shown here.  

And crashes are three-wave ABC affairs. 

SPX touches the dotted blue line and dies

Tuesday, March 20, 2018

Do we need to touch this blue line on the S&P?

The dotted one, in the long-term chart.  Is that where we need to go?

SPX endless credit expansion

It would be about 3065 into April opex, crossing a more recent channel.  After tomorrow's hike, a dovish "3 hikes this year" consensus would get us moving higher to test this trendline.

SPX daily, rising channel into April

What fun out in the St. Patrick's Day parade here in Seattle.  One of these kids is mine.