Wednesday, September 5, 2012

Charts 9-05: Let's take the low road

I've gone ahead and adopted Daneric's alt count for this final leg of the rally, but I am looking first for a moderate decline into next week's exciting news.  I'm proposing that the triangle on the indexes right now is b of 4, with c of 4 down coming into next week.  1388-1390 is about the .382 retrace of the W3 wave.

The spike end of the rally will probably kick off 9/12 with an approval of the ESM by the German Constitutional Court, after which, it really won't matter whether the Fed announces QE3 or not.  ESM will be enough to perk up the Euro and the broader indexes.

So my alt is now that we head up immediately to 1440.  But I think we first head a bit lower.

The fast-crash model I suggested is of course not happening -- it should have started by now -- but I can certainly see us top soon and begin a series of declines that build into larger waves into 2013.  This will culminate in a full-on crash from about the 1200 SPX level to lows well below March 2009, in Fall of 2013.  There will be plenty of action between now and then.

With Three Peaks and a Domed House as our guide, I'm looking for the first leg down off the top to target SPX 1260.  It just so happens that the rally trendline up from 666 intersects with 1260 right on December FOMC, which makes for a nice target.  I'll post this chart tomorrow.

If we get to 1260 well before then, say, in November, then December FOMC could be a top instead, and this thing is going to move very fast.  If it's a bottom, then we can speculate for now that we may see a new Administration in the White House this fall, and they will find some way to stall the EOY fiscal cliff.  This could be continuing resolutions or Gramm-Rudman XVI or some other clever play for time, possibly involving Fed intervention as well (December FOMC) to calm the waters in the bond markets.

If December FOMC is a top, fedgov drops the ball on this and we have a minor crash in late December.

As far as apocalyptic scenarios go, I don't see this stuff happening until C down is complete and the economy is in ruins.  No one is going to cut off Food Stamps as an austerity measure, it's much more likely that they will lose their purchasing power overnight as the result of a [petro]dollar crisis.  

Then, yes, we probably have a 3,000 mile wide Yugoslavia on our hands.  Make sure you have a farm with fruit trees and some geese by then, OK?

Completing 4, then 5
Nice old Modern Library edition of The Pit


christiangustafson said...

The pop in the overnight /ES means that the thick blue line scenario -- rallying to 1440 from right now into next week -- is still very much alive.

We're in a nasty place on the chart right now. The move overnight could be a headfake north off the triangle, or it could be the final 5th we have been waiting to see here.

The poor trapped UVXY longs, are set up for the reverse-split, and a 40-handle move up in the SPX, right in the breadbasket. Ouch.

christiangustafson said...

Impressive! The high road it is then.

Let's tag that top Bollinger on the weekly!

Rajeev Shah said...

So Christian is the scenario of FOMC making the top on now?

christiangustafson said...

Yeah, looks like it. New highs!

In my post last night, preferring the "low road" down to the 1390 area, it really should have occurred to me that a break from a triangle would have much more force than that, and so was much more likely to take us UP instead. I won't make that mistake again.

The lower pink trendline may still be useful after a top. The minor wave 1 may target it, for point 24 on the 3PDH.

Rajeev Shah said...

So ECB turned out to be the trigger to break the triangle successfully.
Taking the low road via 1390 - would that have made wave 4 long time wise, in relation to other waves. Is there any concept of time that can be applied in using eliott waves? Thnx

hettygreen said...

Thanks. Enjoy your commentary even though I'm not a trader and no longer playing at the casino. Funny thing but (so far) oil hasn't got with the everything's wonderful program.

sooner said...

Nice call on the Rally!!

christiangustafson said...

Yeah, Sooner, sorta ... hey, at least I was not short today.

I thought we would get one last touch of the pink line before launching north, was waiting for that to put on a short-term long. So I missed today's move. Beats getting 28 handles the hard way.

I'll make the case for 1440 tonight.