On the preferred hourly chart, upwards movement has breached the base channel but remains below the invalidation point.
Summary: The trend is still down. Upwards movements are corrections against the trend. While price remains below 1,949.95 the preferred idea will see a huge third wave unfolding downwards, still to see an increase in momentum to a target at 1,655 in the mid term. A break above 1,949.95 would expect a Dead Cat Bounce is underway to last 5 or 8 days total and reach up to about 1,993.26. This has a slightly increased probability today, but it is still lower than the idea of a big third wave down. Look out for surprises in this market to be to the downside!
To see how each of the bull and bear wave counts fit within a larger time frame see the Grand Supercycle Analysis.
To see detail of the bull market from 2009 to the all time high on weekly charts, click here.
Last published monthly charts can be seen here.
If I was asked to pick a winner (which I am reluctant to do) I would say the bear wave count has a higher probability. It is better supported by regular technical analysis at the monthly chart level, it fits the Grand Supercycle analysis better, and it has overall the “right look”.
New updates to this analysis are in bold.
BULL ELLIOTT WAVE COUNT
DAILY CHART – COMBINATION OR FLAT
Click chart to enlarge.
This wave count is bullish at Super Cycle degree.
Cycle wave IV may not move into cycle wave I price territory below 1,370.58. If this bull wave count is invalidated by downwards movement, then the bear wave count shall be fully confirmed.
Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV should exhibit alternation in structure and maybe also alternation in depth. Cycle wave IV may be a flat, combination or triangle. The two daily charts look at these three possibilities.
Cycle wave IV may end within the price range of the fourth wave of one lesser degree. Because of the good Fibonacci ratio for primary wave 3 and the perfect subdivisions within it, I am confident that primary wave 4 has its range from 1,730 to 1,647.
If a zigzag is complete at the last major low as labelled, then cycle wave IV may be unfolding as a flat, combination or triangle.
Primary wave C should subdivide as a five and primary wave Y should begin with a zigzag downwards. This downwards movement is either intermediate waves (1)-(2)-(3) of an impulse for primary wave C or minor waves A-B-C of a zigzag for intermediate wave (A). Both these ideas need to see a five down complete towards the target, so at this stage there is no divergence in expectations regarding targets or direction.
Primary wave A or W lasted three months. Primary wave C or Y may be expected to also last about three months.
Within the new downwards wave of primary wave C or Y, a first and second wave, or A and B wave, is now complete. Intermediate wave (2) or minor wave B lasted a Fibonacci 13 days exactly. At 1,693 intermediate wave (3) would reach 4.236 the length of intermediate wave (1).
The middle may have passed a few days ago within intermediate wave (3), but this has a lower probability than the scenario presented with the bear wave count. This idea is presented to consider all possibilities.
It is possible that minute wave iii is a complete five wave impulse. This has a low probability and should only be used if it is confirmed with a new high above 1,949.45. There would be no Fibonacci ratio between minute waves i and iii.
Minute wave iv may not move into minute wave i price territory above 1,993.26.
Price is finding support about the lower cyan trend line which is drawn from the October 2014 lows to the August 2015 lows.
DAILY CHART – TRIANGLE
Click chart to enlarge.
Cycle wave IV may unfold as a shallow triangle. This would provide alternation with the 0.41 zigzag of cycle wave II.
The triangle may be either a regular contracting or regular barrier triangle. An expanding triangle would also be technically possible, but as they are the rarest of all Elliott wave structures I would only chart and consider it if it shows itself to be true. Prior to that, the probability is too low for consideration.
Primary wave B would be a complete zigzag. The subdivisions all fit and now it has a clearer three wave look to it.
Primary wave C should unfold downwards as a single or double zigzag. So far it may be a single zigzag, with intermediate wave (C) an ending expanding diagonal. All the subwaves must subdivide as zigzags within an ending diagonal. This fifth wave does not look like a zigzag but instead subdivides as and looks like an impulse.
Primary wave C may not move below the end of primary wave A at 1,867.01. This invalidation point is black and white for both a contracting and barrier triangle.
Primary wave C may now be a complete zigzag. Primary wave D upwards should unfold as a single or double zigzag. For a contracting triangle, primary wave D may not move beyond the end of primary wave B above 2,116.48. For a barrier triangle, primary wave D should end about the same level as primary wave B at 2,116.48. The triangle would remain valid as long as the B-D trend line remains essentially flat. This invalidation point is not black and white. This is the only Elliot wave rule with any grey area.
Thereafter, primary wave E downwards may not move beyond the end of primary wave C.
The whole structure moves sideways in an ever decreasing range. The purpose of triangles is to take up time and move price sideways. Price exits the triangle in the same direction that it entered, in this case up. When the triangle is complete, then the bull market would be expected to resume. This triangle should take several months yet to complete.
HOURLY CHART
Click chart to enlarge.
This hourly chart follows on directly from the labelling of the main daily chart.
Minute wave iii may be over as an impulse. Minute wave iii does show an increase in momentum beyond that seen for minute wave i on the daily chart.
On the hourly chart, there are a few problems with this wave count which reduce its probability:
1. There is no alternation in either structure or depth between minuette waves (ii) and (iv), both are shallow zigzags.
2. Minuette wave (iii) shows only a slight increase in momentum on the hourly chart beyond that seen for minuette wave (i).
3. Minuette wave (iii) did not breach a base channel drawn about minuette waves (i) and (ii) (no longer shown for reasons of clarity in the chart).
4. There are no Fibonacci ratios between minuette waves (i), (iii) and (v).
5. There is no Fibonacci ratio between minute waves i and iii.
It is technically possible that this idea is correct. Alternation is a guideline, not a rule, and momentum is a guide and not a rule. This idea is presented to consider all possibilities, so that we are prepared for the unexpected.
This idea requires a new high above 1,949.45 for confirmation.
If that happens, then the upwards movement may be minute wave iv. It should last about two to three weeks. It should exhibit alternation with minute wave ii. It should be shallow, so most likely ending about the 0.382 Fibonacci ratio at 1,958. It would most likely a flat, combination or triangle.
If it is an expanded flat or running triangle, then it may include a new price extreme beyond its start. There is no lower invalidation point for this reason for this wave count.
So far, if this upwards move is a longer lasting correction for minute wave iv, then the first wave within it may be a complete three. That would indicate that minute wave iv may be a flat, triangle or combination. These are the most likely structures for a fourth wave. All may include a new low below the start of minuette wave (a) at 1,878.93.
BEAR ELLIOTT WAVE COUNT
DAILY CHART
Click chart to enlarge.
This bear wave count fits better than the bull with the even larger picture, super cycle analysis found here. It is also well supported by regular technical analysis at the monthly chart level.
Importantly, there is no lower invalidation point for this wave count. That means there is no lower limit to this bear market.
The downwards movement labelled intermediate wave (1) looks like a five. If minor wave 2 is seen as a double flat with a triangle for wave X within it, then the subdivisions all fit nicely.
Ratios within intermediate wave (1) are: minor wave 3 is 7.13 points short of 6.854 the length of minor wave 1, and minor wave 5 is just 2.82 points longer than 0.618 the length of minor wave 3. These excellent Fibonacci ratios add some support to this wave count.
Intermediate wave (2) was a very deep 0.93 zigzag. Because intermediate wave (2) was so deep the best Fibonacci ratio to apply for the target of intermediate wave (3) is 2.618 which gives a target at 1,428. If intermediate wave (3) ends below this target, then the degree of labelling within this downwards movement may be moved up one degree; this may be primary wave 3 now unfolding and in its early stages.
Because minuette wave (ii) was a deep correction of minuette wave (i), it would be expected that the correction of minuette wave (iv), when it arrives, should be shallow against minuette wave (iii). Minuette wave (iv) may not move into minuette wave (i) price territory above 1,993.26.
HOURLY CHART
Click chart to enlarge.
The subdivisions on the hourly chart for both wave counts are the same, but here the degree of labelling within the impulse of micro wave 1 is moved down one degree.
Instead of the end subminuette wave iii this may be only another first and second wave complete.
Within micro wave 3, no second wave correction may move beyond the start of its first wave above 1,949.95.
At 1,655 minuette wave (iii) would reach 4.236 the length of minuette wave (i).
This wave count requires a further increase in downwards momentum.
The lower cyan line is copied over from the daily chart. Price is finding support and bouncing up from that line. This may be yet another second wave correction.
Upwards movement breached the base channel today, which was drawn on this hourly bear chart yesterday. The channel is removed as it may not be working, but the breach must be taken as the earliest warning that this wave count may be wrong and the scenario on the first hourly chart may be right.
Sometimes lower degree second wave corrections do breach base channels drawn about first and second waves one or more degrees higher. This happens sometimes, but not very often. Base channels should be used as a guide. They do not invalidate a wave count when they are breached; they are a warning.
If the base channel is not working here, then the channel should be redrawn. This best fit channel today is drawn from the start of minuette wave (iii) to sit along the early corrections within subminuette wave i at the beginning of this movement. A parallel copy is placed lower down to contain all the movement. If price gets that high, it may find resistance at the upper edge of that channel. The invalidation point will not be moved.
Third waves show their subdivisions clearly on the daily chart when they are very long extensions. The middle of a big third wave showed its corrections at micro degree in the prior bull market. When waves extend in price they necessarily also extend in time and the lower degree waves become more time consuming. I have no problem with submicro wave (2) showing on this daily chart. I would expect to see a great many subdivisions on the daily chart if intermediate wave (3) is a big extended wave.
This wave count expects price is not yet near the strongest part of this third wave down. It expects a huge downwards movement over the next couple of weeks. These waves are not exhibiting Fibonacci durations, so an expectation of when it may end would be a vague guess only. I am not prepared to do that. The trend is down. Expect surprises to the downside.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Note: This section of the analysis is updated 11:59 p.m. EST.
An upwards day comes with slightly higher volume. The weak bullish warnings from divergence on On Balance Volume and Stochastics has seen price bounce up from about the lower cyan trend line (on Elliott wave daily charts, not this chart). The strong volume for today indicates it is entirely possible that price may yet continue higher.
On Balance Volume is touching the lower cyan trend line. It normally works well with trend lines, so some resistance may be very likely here. The cyan line on OBV is today slightly adjusted to touch as many points as possible.
ADX and ATR agree that there is still a trend and it is down.
RSI has returned from oversold but is not yet neutral. There is some bearish divergence between price and RSI from today’s high and the high three days ago. Price has made a lower high, but RSI has made a higher high. This indicates some weakness in today’s upwards movement. It is a weak signal though.
I have added another purple horizontal line which may provide resistance, if this bounce continues higher. It is about 1,950 – 1,952.
DOW THEORY
For the bear wave count I am waiting for Dow Theory to confirm a market crash. I am choosing to use the S&P500, Dow Industrials, Dow Transportation, Nasdaq and I’ll add the Russell 2000 index. Major swing lows are noted below. So far the Industrials, Transportation and Russell 2000 have made new major swing lows. None of these indices have made new highs.
At this stage, if the S&P500 and Nasdaq also make new major swing lows, then Dow Theory would confirm a major new bear market. At that stage, my only wave count would be the bear wave count.
The lows below are from October 2014. These lows were the last secondary correction within the primary trend which was the bull market from 2009.
S&P500: 1,821.61
Nasdaq: 4,117.84
DJT: 7,700.49 – this price point was breached.
DJIA: 15,855.12 – this price point was breached.
Russell 2000: 1,343.51 – this price point was breached.
This analysis is published @ 04:43 p.m. EST.
Jack
For his call today on a partial
Retrace –
Great song
http://youtu.be/uzMx60ea_gI
Thank you. I love that movie. Is one of my favorites. I took some profits week before and bought a Benelli M4 H20 last Saturday. I am from Georgia, USA. We love our constitutional rights, especially second amendment down here…:)
YIKES!
Vern-IMO banksters don’t make money the old fashioned way, they are part of the globalist team and are given certain roles at certain times no matter the profit or loss. If JP Morgan is told to lower the gold market, they will, even if it cost them $20 billion because as part of the team they will be given the opportunity to recoup that loss in the future. If any major bank or brokerage does not perform as assigned their balance sheet will go insane and their stock price will fall–they are done. These are all computer driven digital markets. Markets go up or down at direction of the team–all computer digital entries that cost nothing.
But good news is none of this manipulation invalidates EW. Because a market wave is a market wave–energy in motion.
“One BIG difference: The FED wants to maintain stability AT ALL COSTS, if not, an “orderly” decline…the big banks priority?
MAKE MONEY! Don’t think they are not going short this market if and when it suits ’em…they are banksters, remember? “
Sad but true. I don’t think we know the half of it. Look at what they did to Bear Stearns when even other banksters don’t get with the game… 🙁
So far as EW goes I could not agree more…I’d like to see ’em stop what’s coming…
Hi
All
Have a great weekend! Thanks for all your technical contributions and comments!
Laters
-Ace
Only two wave counts to worry about now. Triangle went kaput today. Should make Lara happy to not have to publish it… 🙂
Yes indeed 🙂
The less charts the better.
There is a huge possibility of some kind of bankster intervention by way of comment over the week-end in an attempt to influence the markets. While any such influence would no doubt be short lived, it is something that has to be considered seriously as we decide what to do about any short term positions…
The fourth wave correction, expanded flat, could explain a bounce when markets reopen.
There was quite a steady upward move off the lows. It does look like some sort of triangle, rising bear wedge perhaps…??!!
Vernecarty – I’m noticing the divergence with price at this new low below August 2015 lows and VIX. While price has made a new extreme, VIX has not.
This looks to be bullish.
But I’m not very familiar with VIX. You are.
How much weight would you give this divergence?
It is slight. But it is there. Price is making new lows on less volatility than August.
Now, from an EW perspective if we have not yet reached the middle of a big third wave that psychologically makes sense. It would not be until the middle that the weight of opinion is with the trend, only at the middle would most realise that a big move is upon them. And so before the middle there looks to be some confusion. A lesser volatility would be explained.
But a classic TA POV… what to make of this divergence? How bullish is it?
Lara,
I found this article about vix and xiv interesting/
http://www.thestreet.com/story/13425788/1/stocks-will-continue-to-sell-off-this-one-important-indicator-reveals.html
Lara,
Here is a short video about some recent Vix option positions. https://www.youtube.com/watch?v=aBCnJxVgYZY
Also, I think Jan Vix options expire on Wednesday, so there is only one more trading day to bring the Vix down which lines up with a bounce here in the market.
I haven’t done enough to look through the lens of Vix expirations but from what I have read, there tends to be a sell off in volatility leading up to the expirations when we are lofty like this. We will see on Tuesday.
Believe it or not Lara, I think it is quite bearish. Your comment on psychology is right on the money! In my experience VIX spikes at interim lows tend to be a pretty reliable reversal signal, suggesting that at least a temporary bottom is in. I was really quite amazed that the SPX took out the August lows with nary a spike; to me that suggests a remarkable level of complacency and great confidence on the part of the crowd that a big bounce is coming and they can stay put. I don’t think we have capitulation for a wave down of this degree…
We may indeed get a manic run-up next trading day…I suspect it will be quite short lived…
Looks like a stampede for the exits underway…oh my…!! This could get very, very ugly.
The Chinese interventionists had the effort blow up in their faces and that is probably on quite a few minds…
What are you looking at to see a stampede?
Now I see it. Unfortunately it has not yet materialized.
Yep. It fizzled. The banksters spent billions today. I really thought they would try to power it into the green going into the weekend. It will be truly amazing to see how they deal with the sentiment of a super cycle degree bear market. Looking for a quick final spike down and intra-day reversal for Tuesday.
Everybody and his grand-mother cock-sure of not just a bounce, but a complete recovery of losses from these levels. Compared to August, fear has gone completely AWOL. Wow!!
I agree on the fear factor. IMHO, each time the banksters props up the markets, it makes the final capitulation that much worse.
That’s what really worries me. I really hate these slow death spirals that drag the process out of the market’s getting to where it needs to for the first meaningful bounce, which I think is around the 1700.00. area. Many of the other indices have already reach that relative area in their declines. A clean flush and strong intra day reversal would be so much preferable to what they are doing. Oh well, we may as well get accustomed to it because they are not going to change the way they do business. I am also expecting some kind of new QE new announcement at the end of primary one.
The scenario on the first hourly chart:
If price is now in a fourth wave correction (minute iv) then this new low today is a B wave of an expanded flat. It is 1.38 X wave A. This is the normal length. Expanded flats are very common.
Target for wave C up to be 1.618 X A = 1,948. That is somewhat close to the 0.382 Fibonacci ratio at 1,953 giving a target for a bounce of 1,948 – 1,953.
This idea has a slightly better look today; MACD does fit somewhat with this third wave; minuette (iii) was a little stronger than (i) and (v) is weaker. This may explain the divergence today with price and MACD.
I have checked the subdivisions of todays wave down on the one minute chart. It is ambiguous. It will subdivide either as a five wave impulse or a three wave zigzag. And so we must consider both possibilities.
This idea expects a bounce early next week for one or two days to move above 1,934.47 to the target 1,948 – 1,953.
Confirmation point: 1,934.47.
Invalidation point: 1,993.26.
It is still my opinion that this idea has a lower probability. But please do be aware of it and manage risk accordingly.
If it turns out that this wave count is correct then the bounce may present a nice opportunity for us.
Second that…
The wave counts will remain pretty much the same today.
For the hourly bear scenario: expect surprises to the downside. Not just surprises in price but surprises in the markets generally. Flash crashes may lock us out of our accounts if this wave count is correct.
There is now a series of eight first and second waves for this bear wave count. That means the middle of the big third wave would still be ahead.
Momentum on the daily chart is further increasing today. Further increase should be seen as intermediate (3) still has to be stronger than (1) on the daily chart.
On the hourly chart within minuette (iii) momentum still has to increase substantially. Today there is some divergence between price and MACD; price has made new lows but MACD has not. This is bullish. I have learned the hard way though to take this indication as a warning, it is not definitive. Sometimes that divergence just disappears and does not portend a trend change. So its a warning to be aware of other possible wave counts, but it does not have a big effect on probability. IMO.
The channel on the hourly bear is a best fit now, not a base channel. So it does not have to be breached to the downside. The base channel isn’t working (sometimes they don’t). Momentum is more important.
Today price is finding support at the lower edge of this channel. That may hold.
Add a mid line. That my become useful for corrections. If this wave count is right then the middle of the third wave may remain in the lower half of the channel, or it may breach the lower edge.
Please take Laura’s caution about brokerage accounts seriously. It is an unfortunate co-incidence that this is happening over a long week-end and I already had a big delay in getting logged in this morning, no doubt due to a mad scramble to get in on the part of account holders taken by surprise. I am not sure what a good solution is to deal with this eventuality. Clearly anyone holding long positions with leverage (hopefully no one here!) could wake up to dire market conditions next Tuesday…do be careful everyone…
Lara–sure hope you will post an update before close today. Big decisions to be made before 3 day weekend.
Of course.
Lara,
As far as I can tell, the channel has still not been broken to the downside, notwithstanding the large drop today. Is that correct?
Peter
Correct.
It may be that the base channel just isn’t going to work this time.
Sometimes they don’t.
But I still would expect momentum to build. So far today on the hourly chart there is strong divergence between price and momentum; momentum is waning not building.
I wonder how large block purchases affect the way momentum shows up on the way down…
Hi
ALL
Perfect song for this moment:
Europe – The Final Countdown
https://www.youtube.com/watch?v=9jK-NcRmVcw
All
Frame it. Think about it we are about to REALLY TANK HERE! Just like AUG 15. A couple huge down days with the VIX at 50-60+ by mid week next week!
NO JINX ALL!
Alison
How are you holding up? Everything o.k?
I am not in the market yet – Lost LOTS in oil and miners, but waiting for a clear call.
Thank you for your concern and call appreciated.
A
Forget about losses. Focus on new positions.
later..
Hello Alison, me too. I am waiting for the opportunity to get in. Around 1950 is the magic number I am looking for…my plan is to get back short in three stages. I’ll start shorting if we get back above 1940. In the meantime I’ll enjoy my cash position in this three day weekend…
No worries the large 3rd wave is still out there. Whatever happened today wasn’t it (we didn’t have the major uptick in momentum). Today’s b wave was exaggerated a little because of option expiration date and irans’s entery to the oil market panic. Transitory with the waves still intact. I love Elliott wave. Is like telling a story. You just have to read the waves. All I said is an opinion. Above is my plan that fits my style and needs, and subject to change. Please be careful with your money.
I’m long a few miners via options out six months. I was a bit early and had to roll some positions. I do think the metals are due for sizeable bounce soon…
Kol ha navod avnerilan 🙂
It’s very counter intuitive but adding a few upside hedges. Rolling shorts a bit farther into the future to protect against banksterism…
BEARISH!
DONT DO IT! IMO – DONT BE WISHY WASHY!
STICK WITH THE BEARISH OUTLOOK!
NO NEED TO SECOND GUESS THIS DECLINE MAN!
Always hedge…usually money well spent! 🙂
My target for cashing in is 1700.00 area ACE. Until then, I am just using pops from the hedges to add to medium and longer term holdings…it works for me bud! Compounding is the most powerful force on earth…! 🙂
Jack–SPX has taken out 1867, what’s next?
Oh, please see Lara’s comment on wave B expanded flat. We did a textbook bounce 1.38 X wave A. Then we bounced into a wave C with a midpoint target of 1950. IMHO this is the wave count we’re in. My plan is to remain on the sidelines for now till I get the setup I am looking for…it fits just right
There’s a man, with a plan!
Hope you get a sweet entry point. Bounces against the ATR stops have been working perfectly on the way down…except for recent whiplash….loosened my stops a bit
The big third wave is still out there. I think the downside movement that we started from 2081 was a first wave impulse for wave 3 with the larger 3rd wave still out there. What concerns me is that upside counter trend rally might end up being a pretty good size rally. $CPC (put to call ratio) is printing 1.52 which is bullish.
It seems to me both counts need at least one more move down. In bear markets some of the most dramatic moves come AFTER oversold conditions. I placed a few hedges in case the pop comes early but both DJI and SPX have some downside catching up to do I think…the 2013 targets seem to be a magnet for the indices so far…
with Monday being closed, the selling could increase into the close. I cant imagine wanting to be long into a long weekend. Tuesday will be interesting for sure.
If that happens, there could be a lot of orders on Tuesday morning where the client says to the broker or financial manager, “Just get me out so I can sleep at night. I don’t care what it costs.”
If that is the case, we might finally see the real ‘fear’ show up, a panic selling fest.
If we get another strong reversal up without any kind of VIX spike I think that would be the mother of all bearish signs. It would have to mean the most powerful leg of the decline is still ahead I think…hard to imagine how a multiple of EIGHT (an octuplet of thirds?!) first and second waves would unfold. China saw some 7% intra-day declines so we are talking over a thousand points down in futures if that is what’s happening. Even the bull count should see a move a bit lower come Tuesday.
I thought Lara’s target was a bit low but it’s starting to make sense with the slow way things have been developing to the downside…
1573 FLASH CRASH BY WED
NO JINX!!…
imo
I though it would too but it did not really, just kinda meandered into it…looks like it’s forming some sort of triangle before the final move down. DOW declined to join Russell, Transports and SPX in an interesting divergence…
SPX has taken out August low; DJI so far has not…
The way of the (3) submicro
Good night and Saturday peace
Laila Tov avnerilan
The PPT is now going to probably have to start fighting the algos as well as the retail investor…this ought to get really interesting…
Vern–PPT owns the algos. Treasury, Federal Reserve, Big Bankers are the PPT.
One BIG difference: The FED wants to maintain stability AT ALL COSTS, if not, an “orderly” decline…the big banks priority?
MAKE MONEY! Don’t think they are not going short this market if and when it suits ’em…they are banksters, remember? 🙂
Massive block purchase of volatility spiking VIX to 30 intra-day…
Hey Paresh:
Send me an e-mail at vernecarty@msn.com
Have just sent
pr398@hotmail.com if anyone else has anything interesting to share. It will be very much appreciated
Hello Paresh,
Please include me on your list.
I am curious….
Peterf@pacbell.net
Thank you.
IMHO – I have managed to convince myself self that this is a b wave
“If an analyst can reasonably look at the wave structure and ask, what is this? Then most likely is a b wave.” or something like that writing it from memory. from Elliott Wave Principle, Prechter & Frost
I could be wrong, it wouldn’t be the first
As of writing the momentum is strongly to the downside
Jack – what does that mean – upside to follow?
Alison, we are with all the signs out there in a bear market….
So, I wouldn’t be playing upside if I wasn’t sure what I am doing.
1867 is a very important number with S&P. If we break below it is no telling how low we can go.
Having said that IMHO we could be finishing a counter trend rally that started yesterday with an upside target of 1950. Very dangerous to play it IMHO.
Big question now –how high will SPX bounce?
Yes, there is lots of enthusiasm now for the Bear, but is it possible SPX just finished Bull hourly (b) and will bounce to (c) ?
Hopefully that was it.
I’ve been short since September waiting for W3 down!
Was deep underwater at one point, totally the other way now. Not even close to being tempted to close, lets see where this goes!
Amazing how polarized the market is. I follow another Elliot Wave site, they are calling for a bottom now and to buy. I don’t see it
Bring on the fall!
Stuart I have to say I really admire you for hanging tough. I kept my mid and long term positions through the volatility but have to admit I got bamboozled by the algos on my short term positions ( I should have known better!). Staying put even when you are underwater because you have done your homework is the mark of a savvy (and ultimately successful!) trader. Thanks for the reminder bud….
In my very humble opinion, there is still way to little fear in this market considering what is happening. VIX saying the crowd just doesn’t get it…they will soon enough…
First block of bankster buying in play…you know what to do…!! 😀
A lot of folk are going to decide no way they are going into this week-end long the market. Monday night futures ought to be interesting. I was one day off in my expectations…like a lifetime when you are trading 🙁
A new low below 1879 has been set. Now we look to take out 1869. It must fall today.
Pandemonium is starting to break loose. I can’t even log in to some of my trading accounts! How crazy is that!? I am glad I set things up earlier. Holy Smokes!
This kind of thing is going to get worse as the market crashes.
I would not be surprised to see some kind of halt in trading in US markets in the future. I don’t think it is going to happen on this leg but I would not bet against it when primary three down shows up.
No doubt options expiration contributing to the volatility today…
Exactly.
Expect surprises to be to the downside.
Not just surprises in where price goes, but surprises in the markets generally.
We may be locked out of our accounts at some stage. So its wise to set everything up carefully when its quieter. And do our homework!
For traders not pre-positioned there is going to be a great temptation to jump in with market orders at the open- don’t do it!
The banksters are going to keep trying to stem the tide and give you better entry after the open. You can afford to be patient. No way they are going stop this run-away train. THIS is what a third looks, smells, and feels like…
Good advice.
Vernecarty/ Options – what is a good level to short the DAX from?
I dont trade the DAX. It moves like a penny stock.
SPX 1700 or 1650 1 month out puts
for education only should do the trick
dont worry- drink water and go for a walk it will all be over soon to the downside.
pick a short entry and close your screen
bye
Are you shorting the index itself, or are you using an ETF, options or futures? Either way I would try to get filled below the current bid, how would much belo would depend on how you planned on shorting it.
Alison
As a contributing member. Be positive and have absolutely NO doubt this is going down here. In my all experience of trading I can put my reputation on it. Hang in there and GET SHORT! Just manage risk!
Don’t get shaken out!
imo just DO IT and close your screen and come back in 10 days. Trade or invest at your risk..
Hope that helps!
Really worried about getting short at this level.
A rally up to yesterdays high would be awful.
Honestly, i can tell you this is it!
be strong.
Wow! I was expecting a flat week!
JOHN
GET SHORT BROTHER!
Trade or invest at your risk..
Hi John
Would sure love to see some of your charts showing where the next support region cluster lies…
Hi – New here, and pleased to be here. Seems to be a very turbulent time!
I see that the group is very supportive which is great as I have only been trading for 3 years, but investing longer. I don’t trade full time so miss lots.
Have I missed the opportunity to short here or is there likely to be a good entry point?
Alison
A lot of us got rattled on that sharp reversal yesterday but there were a few clues we missed that suggested it was temporary. Lara gave a very reasoned assessment about the lack of momentum, channel containment, and lack of alternation that militated against the third wave being complete.
As sharp as the reversal was, another thing noticeable in hind- sight is that it really did not come after a true capitulation spike in the VIX or UVXY and that in and of itself should have been a red flag. While they did pierce the upper bands, we have seen numerous examples of capitulation spikes in the past and yesterday was definitely not an example of that happening.
It doesn’t matter how long was has traded the markets there is always an opportunity to learn and improve. A few years ago no one cared or worried about algorithmic trading but these days one has to take it into consideration when making trading decisions.
This is a nascent bear market in its early stages.
Lara’s target for this third wave down is 1665 so there is ample time to get positioned. I am sure you already know the importance of having a plan.
Mind your stops.
Have clear profit targets.
Be sure to hedge. Good luck Ali!
Thank you Vernecarty for your thoughtful response.
I will look to get short sooner rather than later, just mindful of buying here as it my spike again?
However, aware that in 3rd,3rd,3rd patience doesn’t always pay!
Thanks again!
Most welcome Ali. Bids usually fall slightly after the open before rocketing higher so the MM can take advantage of market orders. For a short term trade I am going to try and get in just under the bid at the open. Sitting on mid and long term volatility calls and quite happy with developments so far… Lara was right!! 🙂
Look at the channel on the hourly chart. Maybe draw another couple of lines along the highs to see the common touching points for each small rally.
When price gets back up to one of those lines, if the trend is still intact, then enter short there.
That’s a really simple method that generally works well for me.
But what I’ve been finding really tricky with this particular market is where to set my stop. So far I’ve had it too close, I think this market needs room to move. The corrections can be quick and deep.
Alison
As a contributing member. Be positive and have now doubt this is going down. Hang in there and GET SHORT! Just manage risk!
Don’t get shaken out!
imo just DO IT and close your screen and come back in 10 days. Trade or invest at your risk..
Hope that helps!
Futures vindicating Lara’s preferred count.
The banksters reversion to the mean algo trading yesterday was quite effective in dislodging a lot of short term bears, me included. (I did a little research and found out a lot of the soft-ware tags the 9 day ema for auto buys and sells), and I learned a valuable lesson about stop placement during bear market rallies. The futures were clearly being bought earlier in both Europe and the US as they fluctuated back and forth over several hours with the DAX even showing some green earlier.
Third waves don’t care about banksters and algos. It does look like that elusive septuplet is about to grace the stage, and when it does, I suspect no one will be debating the fact…
Lara thanks for sticking by your guns. Based on your advice (which I agreed with) I got re-positioned and I am glad I did! 🙂
Fantastic. Me too. Now to keep my stop in the right place and hold this for longer.
“A notice for members: I was advised yesterday by the MTA that I’ve been awarded CMT.
So now it’s official. You have a recognised qualified person doing your analysis :-)”
BRAVO!!!
Thank you John!
It indeed is some accomplishment. That last exam was the longest and most difficult I think I’ve ever sat.
Laura, I have a question about when to label a 1-2 when it does not overlap the previous 1 down. Are there any guidelines around that or is that a gut feel based on the context of the waves (e.g. we are in nested 1-2 setup).
That’s a good question.
A lower degree 1-2 doesn’t have to overlap the 1-2 one degree higher. Sometimes they do overlap, and sometimes they don’t.
In this particular instance I’m judging on alternation and momentum.
And so the guideline I’m using most here is that the next impulse did not have a clear and strong increase in momentum (when I look at the two together on the hourly chart). And so I don’t want to label it a third wave, so it may be another first and second wave. Because that’s the only other option for an impulse.
I don’t make gut feeling decisions in regards to analysis. It must always be based on evidence and logic.
In trading – Be prepared
I hope you all got short the rallies as the last push lower at the cash close was pretty bearish when we erased all those points from the highs…
hi
All
I had to log back in.
Futures are selling off.
Unless they somehow stick save it we could really be in for a SURPRISE in the cash open.
I really hope nobody is LONG AND WRONG…
Lara,
Thanks for the update.
I am wondering about the ‘guidelines’ of EW. Could it be that the higher the level of wave, the more likely the ‘guidelines’ would be followed. I think this may be true of time frames as well. So, for example, when we observe a lack of momentum on a wave in the hourly time frame, it not as significant as the same condition on the daily time frame or weekly and so forth. It would seem to me that this might be applicable to ‘guidelines’ of EW. They are more reliable the higher the level.
If that is reasonable and true, then the lack of momentum we are observing at the micro level may not quite as concerning. The momentum on the daily level , as I see it has been very strong. It has moved many oscillators and indicators to extreme oversold positions. The weekly and monthly indicators are both pointing down and at the beginning of their oscillation.
As far as bull versus bear, I defer to other. But I am concerned that some pressure needs to be relieved from the oversold conditions we have right now. A correction moving sideways for a week or so, could possibly relieve those oversold conditions and build strength for the 3rd of a 3rd of a 3rd etc.
Just my thoughts.
Thanks and congratulations again.
I’ve wondered about that too.
I’ve spent long periods of time (several months) keeping a wave count at the 5 min chart level fully updated. Along with higher time frames. So I could check all the subdivisions of every single movement.
And my conclusion was this:
At the lower time frames the waves just are not always so clear. Sometimes a move will be clear at the hourly level and look odd at the 15 min level. Sometimes a move will be clear at the daily chart level and not look right at the hourly.
And for the S&P I have noticed it sometimes looks weird at the daily chart level while making sense at the hourly (whereas Gold more often than not looks really good at that level).
But when it comes to the weekly chart level a market with substantial volume like the S&P500 should have mostly the “right look”.
So overall I agree with your conclusion. That is what my experience so far points to.
And it’s like the book says. You have to go with the timeframe that is clearest. But I would add the caveat; as long as the subdivisions will work at lower time frames as well (even if proportions aren’t perfect)
I am out!
Bye!
Jack
Hope you can stay alive the next few weeks in the market…
Bee Gees – Stayin’ Alive (1977)
https://www.youtube.com/watch?v=I_izvAbhExY
Thanks man, I’ll try. Appreciated it…
Lehitraot avnerilan
ata shovav ….. nechmad
Toda
Verne
DEAD CAT UPDATES –
1950ish maybe overthrow to 1960s before we RIP LOWER(THIS WONT CLOSE THE HOUR CANDLE)
Save it!
Later,
ACE
SPX MATH
A. 2,116 – 2,000 = 116
B. 2,000 – 116 = 1884
Today we tagged 1878 at the lows.
So, now what?
How high is this dead cat bounce?
WHY I AM STILL BEARISH:
I have often wondered about how central bank intervention affects developing wave form under Elliott Wave Theory. The experts tell me that the theory accounts for central bankers (who after all are also emotional) and their involvement has no effect. While that may indeed be the case, I am inclined to believe that despite the same eventual outcome, banksters can affect wave development in two ways. One, in the duration of the wave itself, and two, in the complexity of the wave’s sub-structure as it develops. This is not based on any kind sophisticated statistical analysis, or other rigorous scientific inquiry, but simply on observation. Convinced that the foregoing is true, I have therefore devised three simple rules for traders navigating bankster…er, I mean shark-infested waters and surviving with their hide at least partially intact. Admittedly, I don’t always observe them faithfully, though I should! The shenanigans of these players fall into the two broad categories of the out-right nefarious and criminal, with such notable examples as cooking the books of the Greek government to get them into the Eurozone under false pretenses, using depositors money to finance trillions in toxic derivatives (which, when they blow up, are going to make the financial crisis of 2008 look like a hiccup compared to the projectile vomiting that will ensue), as well as the out-right malfeasance and mal-investment of financing hundreds of billions in idiotic stock buybacks, so the insiders can sell out at a premium and leave investors holding the bag, and the shale so-called boom where the cost of extracting the product will forever far exceed the return that can be realized from its eventual sale. Here is what I have learned:
1.Never underestimate the banksters, or bet against them when the emotion of the crowd is with them. If you doubt the truth of that statement, just look at the last seven years (or your portfolio if you were short!)
2.Never leave profits sitting in the market. (Long term traders in a confirmed trend may be excepted)
3.The bid/ask spread is not always what it seems. They often will pay more than the bid, and take less than the ask.
Happy returns trading the bear! 🙂
Do you ever think of writing a diary or a book on CB and the SPX?
I have a good song for you:
Journey – Wheel in the Sky
https://www.youtube.com/watch?v=MxGEVIvSFeY
Thank you Verne. I appreciate your insight and experiences. In addition we know that the floor traders, brokers, and professionals if I can call them that, can manipulate bid and ask points if not the markets. I was around when the Hunt brothers cornered the silver market for its first moon shot to $50 an ounce. But they got caught.
So I thoroughly agree that the average joe or jane needs to be aware of the dangers and obstacles faced in the markets.
Most Welcome Rodney.
Unlike last night, US futures now in sync with global markets deep in the red. I must assume the banksters are still buying, thus making reliable price discovery in these markets quite a challenge. Based on what global markets were doing last night I was sure the US sell-off would continue but you saw what happened. It sure would be nice to see the market commit decisively in the short term. If the bear count is correct and a sextuplet of thirds is next we really ought to see conclusive evidence of that count being correct today. There is quite a bit of debate in the analytical community with some making a strong case for a developing triangle with the C wave concluding yesterday and others seeing a third down as in the other major indices. I am personally holding off on short term trades until I see the kind of momentum that indicates the August lows will be taken out. A gap up open in UVXY and new short term high would be one great clue. Despite the futures and my own bearish leanings, I never underestimate the banksters….at some point, an intermediate three wave down should be displaying triple digit declines in the futures market…
Despite the incredible spike this morning, the possible sub-micro really does not look that much out of proportion on the chart. It is quite shocking to think about the possibility that despite the distance the markets have fallen this year, we have yet to see a third wave down. I will post some musings about how I think markets may be affected by intervention and would welcome any feed-back it might prompt.
Be disciplined. Be patient. Don’t try to pick the bottom.
Heartfelt congrats on CMT officialdom Lara!
They are only confirming what we all knew already! 🙂
Thank you Vernecarty
Hi
All,
Just a friendly remember a couple rules you should follow:
1. Buy Low
2. Sell High
3. Never Lose Money
4. Dont forget rule #3
Thanks,
Ace
I agree on the dead cat perspective…