It was expected that price may move a little lower for Friday.
This is what happened.
Summary: There will be two expectations for this bounce: either one more day up to find resistance at the upper cyan trend line, or three days up to about 1,987. When the bounce is done, then the downwards trend should resume, and it may show an increase in downwards momentum.
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 – 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, or combination. This first daily chart looks at a flat correction.
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.
Primary wave C should subdivide as a five.
Within the new downwards wave of primary wave C, intermediate waves (1), (2) and now (3) may be complete. Intermediate wave (4) may now find resistance at the upper cyan trend line. This would see it end within the price territory of the fourth wave of one lesser degree.
Intermediate wave (2) was a deep double zigzag. Intermediate wave (4) may exhibit alternation, so it may be shallow. It would most likely be a flat, combination or triangle.
The idea of a flat correction for cycle wave IV has the best look for the bull wave count. The structure would be nearly complete and at the monthly level cycle wave IV would be relatively in proportion to cycle wave II.
HOURLY CHART
Click chart to enlarge.
The first five up may now be complete. Minor wave B may correct to about 0.382 or 0.618 the length of minor wave A. It may not move below the start of minor wave A at 1,810.10.
It may be more shallow than the 0.382 ratio, if price finds support at the lower cyan trend line on the daily chart.
DAILY CHART – COMBINATION
Click chart to enlarge.
This idea is technically possible, but it does not have the right look. It is presented only to consider all possibilities.
If cycle wave IV is a combination, then the first structure may have been a flat correction. But within primary wave W, the type of flat is a regular flat because intermediate wave (B) is less than 105% of intermediate wave (A). Regular flats are sideways movements. Their C waves normally are about even in length with their A waves and normally end only a little beyond the end of the A wave. This possible regular flat has a C wave which ends well beyond the end of the A wave, which gives this possible flat correction a very atypical look.
If cycle wave IV is a combination, then the first structure must be seen as a flat, despite its problems. The second structure of primary wave Y can only be seen as a zigzag because it does not meet the rules for a flat correction.
If cycle wave IV is a combination, then it would be complete. The combination would be a flat – X – zigzag.
Within the new bull market of cycle wave V, no second wave correction may move beyond the start of its first wave below 1,810.10.
I do not have any confidence in this wave count. It should only be used if price confirms it by invalidating all other options above 2,104.27.
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.
Downwards movement so far within January still looks like a third wave. This third wave for intermediate wave (3) still has a long way to go. It has to move far enough below the price territory of intermediate wave (1), which has its extreme at 1,867.01, to allow room for a following fourth wave correction to unfold which must remain below intermediate wave (1) price territory.
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.
Intermediate wave (2) lasted 25 sessions (no Fibonacci number) and minor wave 2 lasted 11 sessions (no Fibonacci number). If current upwards movement is a correction for minute wave ii, then it is likely to be more brief than minor wave 2 one degree higher. A Fibonacci 8 sessions would be most likely. So far it has lasted 5.
It does not have to exhibit a Fibonacci duration (note that neither intermediate wave (2) or minor wave 2 did). On the way up, look first for price to find resistance at the upper cyan line. That line may hold and force this correction to be more shallow. If that line is breached (watch it on the hourly chart), then look for three days more upwards movement to the target.
Minute wave ii may not move beyond the start of minute wave i above 2,104.27.
The most likely structure for minute wave ii is a zigzag, and the most likely target for it is the 0.618 Fibonacci ratio of minute wave i at 1,987.
HOURLY CHART
Click chart to enlarge.
Minuette wave ii is most likely to subdivide as a zigzag and most likely to end about the 0.618 Fibonacci ratio of minute wave i at 1,987.
Within the zigzag, minuette wave (b) may now be complete. If it is, then within it subminuette wave c is 1.93 points short of 1.618 the length of subminuette wave a.
The green channel is drawn using Elliott’s technique for a correction. Draw the first trend line from the start of wave A to the end of wave B, then place a parallel copy on the end of wave A. If minuette wave (b) is complete, as labelled, then minuette wave (c) should find support at the lower edge of the channel. If the channel is breached before minuette wave (c) could be possibly complete, then the channel is wrong, minuette wave (b) is not over, and it would be continuing sideways or lower. If it does that, it should find strong support at the lower cyan trend line.
If this is correctly labelled, then minuette wave (c) may end mid way within the channel. First look for it to find resistance at the upper cyan trend line. If when price gets there it has made a new high above the end of minuette wave (a) at 1,930.68 and minuette wave (c) could be seen as a five wave structure, then it may possibly end there.
But if when price gets to the cyan trend line is has not made a new high above 1,930.68 and / or minuette wave (c) cannot be seen as a complete five, then expect the line to be breached and price to continue upwards to 1,987 ending on Wednesday.
When the bounce for minute wave ii is complete, then this wave count expects a third wave down at three degrees to unfold to new lows.
FIRST ALTERNATE DAILY CHART
Click chart to enlarge.
This was the main bear wave count up until two days ago. With three days of upwards movement, price is no longer behaving as expected for this wave count, so it has reduced in probability.
It is still technically possible, but less likely, that the middle of the third wave of intermediate wave (3) is imminent. Subminuette wave ii may not move beyond the start of subminuete wave i above 1,947.2.
Price absolutely must find resistance at the upper cyan line. This second wave correction should end here. It could do it with one last upwards day to make a slight new high above 1,930.68 and end at the upper cyan trend line. Please remain aware of the implications of this wave count which expects the S&P is on the verge of a huge fast downwards movement. This is possible. This is what a surprise to the downside may look like. A new low on strong movement would be very strong confirmation of this wave count.
SECOND ALTERNATE DAILY CHART
Click chart to enlarge.
I have previously noted this idea in the text and now it is time to chart it, so that the implications are clear.
Within the downwards impulse unfolding, it may be that intermediate waves (1) and (2) are complete and now minor waves 1, 2 and 3 may also be complete within intermediate wave (3).
This wave count expects minor wave 5 to be extended within intermediate wave (3). Minor wave 5 should also show a strong increase in momentum, so that at its end intermediate wave (3) has clearly stronger momentum than intermediate wave (1).
There is no difference to the target for intermediate wave (3). This wave count makes a difference to the invalidation point. Minor wave 4 may not move into minor wave 1 price territory above 2,019.39.
This wave count also has a lower probability than the main bear wave count. This wave count would be more typical of commodities than the S&P.
Minor wave 2 lasted 11 days. Minor wave 4 may last a Fibonacci 8 or 13 days, so that the proportion between these two corrections is similar and the wave count has the right look.
Minor wave 4 would most likely be shallow and would be very likely to find strong resistance at one of the cyan trend lines.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Three days of upwards movement on slightly increasing (but still relatively light) volume, followed by two small downwards days on declining volume, support the Elliott wave count that expects a bear market rally is unfolding and should yet move higher.
The next resistance line is about 1,950. Thereafter, 1,990 and 2,020. As price comes to the first line of resistance, if we see upwards movement on declining volume, that would strongly indicate the rally is weakening and should end.
ADX is declining. It indicates the market is not trending; it is consolidating. It has not indicated a trend change: the -DX line remains above the +DX line.
ATR is also declining, typical of a consolidating market. This supports the Elliott wave count. If this upwards movement was a new bull market, then ATR should not be declining.
On Balance Volume broke below its pink trend line. The lower dark blue line is new. It is reasonably shallow, long held and repeatedly tested but has been broken also twice. It offers some reasonable technical significance. It may hold up price; expecting upwards movement for Monday due to OBV finding support here seems reasonable.
RSI is neutral. There is again plenty of room for this market to fall.
Stochastics is nearing overbought. If this market is consolidating, then the upwards swing may reasonably be expected to end soon. If Stochastics begins to show divergence with price (upwards), then look out for an end to the bounce.
Overall, the volume profile is more bearish than bullish. Price remains below the 200 day moving average. There is a series of lower highs and lower lows. Original Dow Theory has indicated the market has made a major trend change from bull to bear. Overall, the bullish wave count has very little technical support while the bear wave counts have much.
INVERTED VIX
Click chart to enlarge. Chart courtesy of StockCharts.com.
I have found slight divergence between price and VIX from one day to the next a reasonably reliable indicator of an end to a movement.
To illustrate what I mean, I’ve added some red and green arrows on VIX (inverted). From a day to day basis, if price made a new high but VIX did not, this was a bearish signal. If price made a new low and VIX did not, that was a bullish signal.
Price made small new lows two days in a row, but VIX did not. This is a bullish signal. It supports the idea that the bear market rally is not over and that price should move up next week.
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.
I am aware that this approach is extremely conservative. Original Dow Theory has already confirmed a major trend change as both the industrials and transportation indexes have made new major lows.
At this stage, if the S&P500 and Nasdaq also make new major swing lows, then my modified 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.
These lows must be breached by a daily close below each point. So far the S&P has made a new low below 1,821.61, but it has not closed below 1,821.61.
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 @ 11:27 p.m. EST.
I find this sentiment gauge useful. Swings from extreme fear to a neutral reading during a correction help confirm our bear wave count IMHO.
http://money.cnn.com/data/fear-and-greed/
Thanks. I’ve forgotten to check that indicator. It is very useful. Another indicator that supports the bear case is the the put to call ratio hit 0.58 today. No one is buying puts. Sounds like a top. I just think the market has one more pop up to run the final bear stops. If that does not happen tomorrow, then it may be all over for this correction and down we go.
That does look like a low put to call ratio! Thanks Rodney.
No one seems to be mentioning it, but looks like a big ole flat correction. Can’t stop seeing it lol
Starting from around Jan 20th, up until right now. Might be complete
Every time I see your name I have to sing a verse of “Elis Coming”,, Three Dog Night. O geez, now Im dating my self.. No offense Eli, Im just weird. hee hee
Great song. Great album. Great group. In fact it is the second vinyl album I ever bought and I have bought quite a few.
Hahaha yeah i get that all the time. I was just a kid back then but i know the song 🙂
Eli, a lot of things in EW look a like. This is the reason why it is difficult to know the exact pattern that the wave is in while the wave pattern is developing.
It is generally accepted that the waves you are talking about was a fourth wave up and a fifth wave down followed by a second wave up. As far as we know, this one is not a flat (it visually looks like a flat, but as an EW’s characterized wave is not).
I hope this helped…
I agree… I pay for services because I personally can’t see it as it unfolds.
Yea, it’s not that hard to go back and count on a chart as long as you research and can remember the rules/or look up as needed. But once you are in real time… at least for me I see strange things.
Same for me. I need Lara’s analysis and all the great commentary on this forum. Thanks.
Agree with all, it is indeed hazardous to try to count in real time. But if valid this structure would be just about compete. And it could be a fourth wave but it could also be a second wave, with a few adjustments. The degree is also up to interpretation. I will defer to Lara’s judgment. Certainly, we may end up in a similar place. Potential imminent downward movement in next day or so. Wave 3 or wave 5. Maybe even another wave 1
Some analysts are indeed actually viewing the current upward correction as a minor degree wave two…
The b wave would subdivide as a five.
That is why I’m not seeing a flat there.
B waves must be threes.
Ah i see that. I thought it might be a double zigzag, because the fourth wave would have overlapped with the first wave, the way i was looking at it. Of course, looking at it that way makes the first wave of that movement pretty suspect, and you have that second wave as an expanded flat i believe, so no overlapping problem. That’s a better look, and would make a big flat invalid because of that.
Looking at the volume profile on the gap up today vs the gap up on 12/29….light volume,…12/29 followed by a swift selloff. Coincidence?
Really useful info Barry – thanks for posting. I struggle to get good volume data on IB so always pleased when members point out divergence.
I second that! Very helpful and timely information today Barry. Thank-you.
My comment before the close for the wave count:
So far it looks like there is a five up on the hourly chart for the hourly bear. See Thomas’ chart below, he’s nailed it.
The channel about this correction is drawn on the hourly chart, it won’t change.
When that channel is breached by downwards movement that shall be earliest indication the correction may be over and the next wave down may be underway.
While price has not quite invalidated the daily bear alternate (with invalidation 1,947.2) it is so close and that second wave is now so deep… for a second wave at such a low degree that looks wrong. I will make a judgement when the session is closed and I have volume data on whether or not I publish that wave count again. I now judge the probability to be very low, it may be too low for further publication.
As always, my analysis will rely heavily on volume data. If this session closes with lower volume that will support the Elliott wave counts that see this upwards move as a correction.
Hi Lara – on the 5 min chart the final move up to todays high looks like a 3 not a 5 to me (giving the final move up to todays highs the look of a b wave) so I didn’t give it much weight until I saw your comment.
I am not stating that this move still has higher to go – just wanted your experience on how much weight I should give lower degree moves like that.
Clearly while it stays below todays high the move must be over. In any case I’m short!
When I made my comment I had not looked at the five minute chart.
I see what you mean.
Yes, it looks most like a three not a five.
It could be either. If its a five then the fourth wave would be quicker than the second. That’s possible.
I’m not going to give much weight to the five minute chart. I’m going to wait for the channel on the hourly chart to be breached before I have any confidence this upwards move is over.
And I need to see volume data for today after the close before I make a final judgement.
So yes, it certainly could move higher. That fifth wave would be pretty short if it’s over there.
Many thanks for your thoughts Lara.
Yeah – I’ll certainly be keeping an eye on that channel irrespective what the final move looked like.
Maybe still in a small fourth wave. That would mean on more push to a new recovery high tomorrow to end the move. That would actually be perfect if an impulse down tomorrow were strong enough to produce a bearish engulfing candle.
That would certainly start a fire under UVXY 🙂
From your mouth to God’s ears! Fire…good! 😀
It sure looks like a replay of the movie from last December. I imagine if minute two completed today we should see a sharp move down for minuette one of minute three tomorrow with an initial bounce of the 1900 pivot. It should print a red candle tomorrow though I would think. Either that or we move above 1950. I am definitely leaning toward the former. Have a great evening everyone!
I will repeat this post because everyone ignored it!
Scott Mined of Guggenheim Partners is calling for sub 1% 10 Year Treasury Yield to a possible .88% by the end of the year…
If that occurs… That means everything has gone to hell… But right now it means all is going to hell…. 1300 S & P 500
This guy Scott is most often correct on Yields, so I would not ignore this call! I have been following his interest rate calls for many many years. That is his strength… equities is NOT. He is wrong most often on equities.
More evidence Bear Wave Counts are correct and will play out.
I see things a bit differently as I think it is rising rates is what is going to ultimately undo the FED and forestall any possibility of additional stimulus. I am not sure how falling rates would adversely affect the equities markets. Markets have risen for seven years under ZIRP.
An inverted yield curve is one of the most reliable recession predictors.
To get rates that low at this point in time would mean… a safe haven trade into treasuries. It would mean recession is as clear as day and depression is on the horizon. (At this point in time in the Interest Rate Cycle). Major market event lower creates… a safe haven trade of that magnitude! I am talking US Treasury Rates.
No other explanation can be possible! Certainly NOT after the Fed has shifted to a Rate normalization strategy! The Fed can ONLY control the Fed Fund Rate… The markets control all other yields.
It has puzzled me that while the stock market in the US has been moving up in a bull market for over six years, interest rates in the US have been moving lower.
I have been taught that normally low interest rates occur after a period of economic contraction, to attract new borrowers. But the US has had low interest rates for a long time as the economy was supposedly expanding.
This is contrary to what I have been taught is normal. My interpretation is this fits if the bull market was a B wave.
For B waves something is “off”. It does not fit normal behaviour, it doesn’t make sense.
In the short term they can influence Treasuries. Look at Japan. Ultimately the market will overrule them as defaults start to rise and it dawns on the masses that in a deflationary spiral there is nowhere to hide. Furthermore, the slaughter taking place in equities is going to force liquidation by bond holders to meet margin calls and other obligations. A huge unreported story is how all the Sovereign Wealth Funds have been liquidating equity positions to meet obligations as the price of oil has tanked. Increased supply means lower prices, means higher yields.
That would be for Investment Grade Corporate Bonds in the USA and elsewhere!
High Yield is already getting hit.
The world flocks to USA Treasury Debt… as a safe Haven, as the last debt standing! That has not changed yet… it may if the wrong people get elected in November and within the next decade or so. But this year, last debt standing status will not change.
Fixed Income Securities are a vey strong knowledge & experience base for me going back to 1982.
Elsewhere in the world, most banks & insurance companies must buy their Sovereign debt of the nation they headquarter in and do business. Not in the USA…
Also, the USA does NOT have a Sovereign Wealth Fund. Most Countries in the world do have.
I wonder of people would still buy Treasuries if they knew the FED’s capital ratio. They have an unbelievably bloated balance sheet and it would not take a very large upward move in rates to blow up their portfolio as the asset prices decline. Who are they going to sell to?! The fact of the matter is the FED is INSOLVENT. Strange that treasuries would be seen as a safe haven… 🙂
That doesn’t matter because as of today when compared to elsewhere in the world US Treasury Debt will be the last debt standing.
The Federal Reserve is NOT the US Treasury… lets not forget that. The US Treasury backs the debt. Yea down the road if things get really bad and the rest of the world defaults … the US Treasury may default. That is not in the cards any time soon.
Doesn’t mean that the longer term debt won’t lose value… it certainly can… but that would be after the mega safe haven trade occurs.
Now they have the technical guys out selling exhaustion at 2000 on CNBC NOT here at 1950.
You know his firm sent him out there to spew that stuff so that the boss at his firm can have an opportunity short the market or cash out there mistake in going Long this market!
These people are so transparent!
Anybody pushing folk to go long this market at these levels is either insincere, or indolent. I think we really need to keep the big picture in mind. So far, lower lows and lower highs continue to be the theme. Even if 1947.20 were taken out it would not immediately alter the overall big picture imo….the trend remains down….
Jack
I found this analysis of the 2 hour on twitter!
Very interesting dont you think?
Boss I went in 100% short….
Rollin Rollin Rollin…
Great. I am greatful you share knowledge on your free time with me. l will post a technical chart tommorow.
Small five down from high of 1946.70
Looks good.
Here’s the hourly chart for the alternate bear count.
Quick facts only – As of today from 2,116 to 1,946 we are down -7.9% in this third wave since Nov 2015 to Feb 22,2016….
Thanks Thomas –
Need macd to turn down and we may have something!
Safe trading
Yes, that is exactly how I will be labelling it today.
And so the target at 1,987 doesn’t look like it will be met.
This movement may be over soon.
Now we can draw a channel about it. When the channel is breached to the downside that will be the earliest indication it’s probably over.
Perfect – thank you for the update Lara
Thanks also Thomas.
Alison
You are very welcome!
Either we see a three wave correction with additional upside or an impulse down to slice through 21 day EMA which provided support last Wednesday and Friday. Will take a quick upside trade if we break 1950.00
Daily Bear Alternative Invalidated there?
Looks like further upside in SP500.
Holding short on FTSE still but unsure my tolerance can stretch much further.
Anyone seen as sunlight for the FTSE downdraft?
A
No… 1947.20 is invalidation price.
Scott Mined calling for sub 1% 10 Year Treasury Yield to a possible .88% by the end of the year…
That means all goes to hell…. 1300 S & P 500
I am seeing 1946.70 on S&P as today’s high so no invalidation (yet)on the bear alternate yet. Please do correct me if i am wrong
High 1946.70 is confirmed as the HIGH!
Was it not a new high above ii to invalidate it?
I have a new high on tradingview and fxpro
Thinkorswim high 1946.70 has always matched the published high in the past and with Lara’s published high… I am 100% confident in that!
Thanks Joseph
That is really good to know.
Cautiously optimistic?
You are correct. I am sometimes truly puzzled by why people pay for Lara’s analysis, completely ignore it, and clutter the forum with irrelevant opining. No offense intended. 🙂
I will be moderating heavily from now on.
I think I have been too relaxed so far, I do not want to stretch anyones patience too thinly.
I for one would most welcome that – I miss good timely info on here because I don’t check in until the end of trading anymore.
I would never have any issue with any comments backed by tech. analysis etc – anything other than emotion / flip flopping etc etc I very much welcome – a small bit of useful info could save the shirt on your back but it’s hard enough to put up with my own emotions when trading without dealing with other peoples. Ignoring is not really an option either, as you always have in the back of your mind that you might have ignored something that could cost you dearly.
I hope I do not come across as being nasty (I realise I probably do), but I find it incredibly frustrating and know no other way (other than speaking out) of making the situation bearable rather than just giving up on coming here during market hours 🙁
I suspect that perhaps a person could fail to realize how disconcerting frequent and emotional posts can be to those of us who are trying focus on price action and share with the board what we are seeing. It is a really beautiful thing to hear from other members who are seeing the same thing you are, or who may have spotted something you missed. Having to scroll through a lot of belly-aching or wild assertions that are not based on actual price action or the EW analysis can be quite a distraction. I think the spirit of the board has generally been remarkably congenial and I don’t make my own comment in a spirit of criticism for its own sake. Lara has been wonderfully gracious in giving is quite a lot liberty to share out perspectives. Hopefully we can all do our part to make the experience as enjoyable as we possibly can for all here. Just my penny! 🙂
Agreed – I don’t think for one second it is intentional.
We are all adults here (presumably – suppose nothing to stop wizz kids trading their pocket money!), and it would be a shame if Lara had to waste time moderating. It really should not be necessary.
Time is finite supply – I’m sure most members would rather Lara was allowed to concentrate 100% of her EW S&P time on what we pay her to do.
I don’t know if anyone will read this post because it is a few hours after the original thread started. In any event, I sure hope if I am ever being disruptive for any reason, that you Lara and any other EWSM member would let me know. I trust you will.
I also agree about postings on Saturdays and Sundays being aloud to digress like it did this weekend. But the posts for the most part were related to the social behavior of EW.
My bad. Allowed not aloud.
You’re fine Rodney.
If a member is disruptive I email them directly with the problem.
One warning is given.
After that if it happens again that member is removed from comments, and possibly from the membership.
I do not enter into further communication and I’m not going to waste my time moderating. I’d rather be doing analysis and trading. That’s what we’re here for.
I personally don’t have any issue whatsoever with anything that is posted here at weekends / outside market hours – I’d just rather the majority of comments made during market hours were kept as relevant and free of emotion as (humanly) possible.
Rant over – thanks for listening! 🙂
I count 5 waves up for wave c and a possible end to this correction. Channel break will confirm.
So do I.
SPX has already broken above the 13 and 34 day EMA. The 50 day is next up right around 1950. If that is broken and holds, the possibility of touching the 200 day EMA increases significantly. The 200 day EMA is currently around 2025.
In addition, it looks like the 13 day EMA will cross over the 34 day EMA. This is a bullish signal. The weekly MACD is rounding at what might become a bottom.
Yep yep that signal indicator was the major theme to all of this if we cross 1,950. It will be interesting to see this speed of the final wave c since volatility has been totally pushed down. I am keen on learning how this event unfolds.
From and untrained eye, it appears this run up is losing steam. I’ve added some VIX 3/16 25 Calls at .95
Final wave up may indeed be underway. Ideally, we see a close at the day’s highs, and volatility gap up tomorrow. Failure to convincingly threaten 1947 calls any potential assault on the 2000 pivot into question. Volume quite tepid.
I think the members here (who are more experienced than me) have outlined to you very clearly that there are invalidation points for the various counts that Lara has specifically identified. They are labeled and easy to see on her charts.
Verne
Vix oversold? or does that not matter in a down trend?
Verne Jack or Joseph
That is one huge monthly hammer but the month is not over….
Verne
Now up +7.6% from being down -13% from 2080.
Jack
We seem to be here. Which means potentially +4.6% to the upside at 2040(That old gap fill what a surprise) is the termination point and that could take a few weeks to another month away!
I am bearish but the market goes where it wants to go!
Jack
Does this look like it is playing out here like Oct 2015? Melt back up????
Beautiful 6 month long Head & Shoulder Pattern.
I’m waiting till this Friday. I sure hope this declines….
But part of my guess although it could be wrong is we grind and grind higher for weeks!
If you paid more attention to Lara’s clearly marked invalidation points ACE, it might help with the mark jitters you seem to be so prone to allow to overwhelm your perspective. Get a grip will ya?! 🙂
Thanks for the confidence boost!
I am new to third waves!
So, I do read it
but i get frustrated because I am still learning and when things dont work out it gets old waiting…
It is human!
Vix at support???
The problem with VIX is once it is below 20 the market crawls….
For someone still learning, you’re very opinionated.
Sounds to me like you’re NOT buying EW analysis in general.
I am new to the right way to do elliot waves.
I am in general very skeptical but that is my personality.
I learned elliot wave the wrong way from someone else. So, I am honestly jaded!
Then sit back and follow Lara’s counts for a while vs what actually occurs…
These constantly changing panic posts are not helping anyone… it’s just creating doubt in our individual analysis and causing us to re-analyze everything over and over. NOT a good use of time.
I wasn’t panicking I was showing technical charts that show higher prices to come imo.
i guess i can wait this week for this to play out….
Ace, I am emailing you about your participation in comments.
I will ask you to please refrain from making any further comments until you have received, read and considered my email.
Thank you.
I just got your message. ok, Lara!
Sexy H&S pattern… Perfect… it never can look better than that.
Amazing isn’t it? With all the evidence staring us squarely in the eyeballs that there is STILL all this bullish sentiment! Wow!
There is however and underlying cautionary note-volatility is not completely collapsing the way it usually does ahead of a bull run of high conviction, the big pop today notwithstanding. The descent is quite orderly. The fear will come…it always does… 🙂
The all clear (Back to Bull) has been given on CNBC! Everyone on there is Giddy… as they were on Intl CNBC overnight.
This Low Volume Overnight +180 point move up in the DOW($DJI) and the 18 point increase since the open to 11:44AM has all the bulls giddy!
Low volume has been this markets theme for some time. I have tons of instances that still show bullish continuation even with the lowest volume possible…
Yep… That just provides support that this has been a bear market since the TOP in 2000 all along at a higher degree.
Doesn’t matter, Nothing has so far been invalidated. Look at Lara’s analysis.
ok. I will wait for the analysis today for the preferred bearish count…
$DJI (DOW)… We now have a topping doji at both the 1 hour and 30 min. chart level
just under…
The Trend line drawn from the lows of 3-2-2009 to 11-8-2011 & extended right.
The high in place based on this candle stick is 16616.52
We had the same high in the SPX last week that was captured after 1895 was taken.
With that said – the other alternative is we pull back here in the high 1800s and then that would be the B Wave and then take off and hit 1987-2000 imo… But again I am new to elliot wave the correct way…
Verne
Does that look like a falling wedge to you on the VIX?
Verne
Since you do UVXY. Here is the VIX summary decline on the last 7 days -36.7% and it still going down…
We are in the teens now.
What is your max pain on the VIX here?
Buy! Buy! Buy! (volatility, that is…) 🙂
What are you ACE, a trader or a mouse? Squeak up! 🙂
Just a bit of friendly kidding of course! 😀 😀 😀
And exactly WHY, are you confused, may I politely ask? 🙂
So the way I look at it. I am looking for this whole thing to finish this week. Today looks like it is holding. 2-3 more days and if it holds well you get my drift?
But seriously, that second close below the upper B band is a volatility trade that I normally jump on with both feet. I chose to tread lightly the last time it triggered as I have a great deal of respect for that monster grizzly lurking in the shadow with huge teeth and claws, and glowing red eyes…man I hate getting mauled!! As Stockman says, so far the bear has just been pawing the markets, the mauling is yet to come… 😀
Verne
Shooting star here! If the next 11 minutes holds it could get ugly fast!
Interesting. Looking for a hammer in VIX and UVXY.
“If I had a hammer…!” 🙂
10:02AM
DOW up 214 but the overnight move was +180 so after the open the move is only +34
The pattern of overnight moves up or down continues… where the bulk of the move happens before the cash market opens.
OK folks. I am going for 10 UVXY 5 strike 2018 calls at market price of 36.25
Hey Olga, ain’t no way you are outbidding me on the Branson spread if we are in GSC bear market decline! 🙂 🙂 🙂
Selling remaining calls. Very nice trade. Waiting for doji or bearish engulfing candle.
SPX trade above 1950 would invite a short term trade to take advantage of challenge to 1900.00 pivot. I may trade a contract or two but quite content to observe…we are on thin ice methinks… 🙂
Well gm!
You looking for a massive move lower with speed and force in the next 2-3 weeks ?? 1600 maybe as a first target ???
Don’t know when it’s going to happen and frankly, don’t care. Out of all short term trades and content to let the market come to me. It’s going to be amusing to watch the banksters wear themselves (and others) out in the short and possibly medium term. I suspect that when the decline begins, it’s going to get very ugly and very quickly. The market may take back the entire 7 year run before 2016 concludes- that is what bear markets do ordinarily, and at possibly GSC, this one would be the BIG KAHUNA! Who in their right minds would be trading those odd on the long side?! Yikes! 🙂
UVXY crouching…!
Why? How long did it take to wipe out the previous several years’ gains in 2008?
oh ok.
Sorry! I meant 2000 pivot (but y’all knew that!) 🙂
I’ve never seen the Vix go down so fast and still being sold non stop.
I think I’m just going to wait the next 3 days!
We do seem to be moving faster up as opposed to down.
News today:
Dow adds 200 points, out of correction as oil jumps
But unless you were in on Friday you did not participate in the +200 move!
This is all controlled in the overnight futures market. Low volume move higher.
We erased half the move down from 2080 in 6 trading days.
We still potentially have several days ahead of us for further upside.
The market is somehow going up.
Macd seemed to be the clue all along!
MACD… works until it does NOT work any more. I have seen many times where it did not work and lost money on a couple of those. So please don’t preach to me about MACD as some godsend indicator.
Right now MACD on the daily is at -8.4. That is up from -40 or so. I am glad with every point up as it means another point of profit on the way back down. The daily MACD will eventually be in a position to sustain a longer and more powerful move down.
Rodney
So you mean when it goes to 0?
Because the way I study it is it happens in 3 phases and could take weeks to months!
1. Go back to 0
2. Grind sideways on 0
3. Head Lower -10
4. Then the real sell off starts -10
But this could all be wrong as it is only 1 significant technical indictor.
I re-read Prechter’s most recent EWT and the thinks the bearish count allows for a DJI correction to as high as 17,000 in a second wave correction, He may be right. Sold half my calls. Holding remainder for further upside. Keeping an eye on how UVXY behaves around 40 pivot. For this to be a genuine bull trap, market needs to close at today’s highs or close to it. A fade is a big red flag.
I don’t think we get anywhere near that. I have been reading him a long time and I think (based on all other data I follow) is a comment (17,000 1st) that I would not go along with.
I think it depends on what degree correction we are in Joseph. If primary one down is over, I would actually be very surprised if it did not get that high or even higher with the VIX making a new 52 week low. The market will tell us what degree this correction is by how high it re-traces. What an incredible opportunity is being handed to the bears…! 🙂
Plus that was kind of an off the cuff comment by him… he didn’t chart it.
I t imagine he was thinking about the fact that bear market second wave re-tracements can be quite deep. I wonder if he had a fib ratio in mind, even if no chart provided….
Yes sir. “Luck is opportunity met with preparedness.” by George Allen, NFL Hall of Fame coach.
SPX should print a fat green candle today as correction iterative of last December’s continues. I will be selling upside hedging calls at the open as strong overhead resistance commences at 1950.00 I am done with short term trades and putting remaining capital into leaps. There may some additional short term wrangling but trying to follow every single market tick is a complete waste of time at this point. Last Friday’s UVXY gap open was a trial run and head fake. The next gap up open should be the real deal and signal the end of the current correction. Stay frosty….!
Vern,
Per you note on the 2018 leaps, you could very well buy deep in the money calls and sell higher strike $100 to capture the premium and offset the premium paid on the deep in the money calls. If UVXY goes to $125, no worries as you would have captured $95 plus the covered call premimum anyways. Does this make sense?
Absolutely! It does limit upside return but also reduces risk. I expect to get assigned 40 strike puts if market continues higher the next several days and will definitely be selling calls against the long position. While UVXY could decline to my break-even price of 33.50, I would be surprised to see it go much below that and will start hedging with bearish call credit spreads if it breaks bellow 35. I do not at all mind being long UVXY. If the bearish wave count is correct it’s a no-brainer trade. 🙂
Thanks for sharing your positioning here! Short, hold, and prosper.
Most welcome, and thank you! 🙂
Lara,
Does EW account for pre-market and after-market moves?
I am thinking of scenario when market hit the resistance outside the normal trading and trend reverses.
Yes. If after hours action moves price then it gaps open higher or lower.
The gap is considered and the point price is at on the open is considered.
Only if after hours opens and closes about the same point does what happen in between that not matter.
Thomas
I see oil going to $44 as a guide to spx maybe. I could be wrong but that’s going to be a big move up.
Are you basing this on the SPX move up?
I ran a basic fib retrace from the top it hits that number.
I am with Lara on the direction of oil, but am not trading oil.
No way Oil goes there… The fundamentals do NOT support that. Nor do the Techs as I see it…. 34-36 max.
One big red flag is the big oil stocks. As much as they have declined, their price to oil ratio is as high as ever, well above the mean. This is because of expectation of continuing dividend payments. Either they both continue lower, much lower for the oil majors, or the majors become disconnected from the price of oil as the latter rallies and the former lag or continue to fall. The same thing happened to the upside with the majors far out-stripping the rise in oil prices. I suspect the oil price decline has more to go before a lasting bottom, possibly even sub 20 per barrel…
Does anyone remember ES futures in 2000 or 2008 ?
How did the market sell off on ES futures back then before the cash open ?
Down Big. Really Big.
You can watch some youtube clips of the premarket from networks like CNBC.
Oh ok
Does it matter? I don’t think so. If it behaved a certain way then it doesn’t have to do the same thing now.
And again, the answer is in the charts in front of you. Take the time to look for the answer yourself before asking it here.
Offer your analysis rather than asking for this membership to to that work for you.
doc4bax
You around? Seems like you had it right from last week depending on what happens by the close tomorrow if we recapture 1950. Window dressing and close this market 2000+ by month end and rally the first week of March as NEW money flows in every month. Technical out of correction territory. What a call!
nah,, I’m hoping for a sideways action this week, perhaps that favorite color of mine (cyan ) will hold us down. yet prepared for a climb to Laras target to end this thing.. then down big all of March. I mentioned window dressing could hold us up this week.
oh really! I must have read wrong…
I am going to cross my fingers here. It just doesnt look good here! I guess that is what bear shake outs do!
Check out this weekly SPX setup?
I am not sure about the wick at the top of the second candle and how strength can be measured from it.
Window dressing is at the end of a quarter… not the end of a month.
Oh o.k. Thanks for that clarification.
CJ,
What is your take on the price action SPX weekly or monthly. Do we just wait and see for definitive levels. At some point something technical has to make sense!
I find it very interesting that this is taking so long to play out on this crawl decline.
At some point something is going to line up.
I just wonder what happened to all the sellers?
My gut feeling is we grind sideways then shoot higher to at least 1985 at end of month/early March and then fall and fall hard through March. Beware the Ides of March.
It is becoming more clear with each passing month that Trump and Clinton are likely the two going for fight it out for next us president.
Market has already indicated that it wants a republican president and with Trump leading, markets will reflect that starting tomorrow and with each primary as they wrap them up.
Meaning what? Trump = good or bad for market?
Wall Street backs Clinton… NOT Trump. What I mean by that is all the people running all the big money back Clinton. They don’t want the carried interest tax rule to change.
The Presidency stuff will not make a difference for the markets at all! Not until 2017 at the earliest when legislation on the next agenda begins. The devil is in the details.
Clinton has done a great job in NYC. I’m part of her campaign!
It would be a cold day in hell… for me to consider backing her.
We should not talk politics on this board… it might get very nasty and ugly!
I’m biting my tongue so hard I can taste blood 🙂
I’ll refrain so we can keep this site politics free, we get bombarded enough with it everywhere else.
We should ask Lara to suspend specific members from posting if Politics is discussed. That family idea will cash and burn fast!
As long as the comments policy is adhered to I don’t have a problem with politics being discussed. Especially in relation to Elliott wave social mood and markets.
I do understand though that it is an emotive topic, so it’s especially important to remain polite and respectful with this particular topic. Hard as that may be 🙂
I expect we have a wide variety of political persuasions here, and the membership is global so we have members who have interesting things to add from points of view outside the USA too.
Haha I am totally just kidding. I have no political choice ….
I only care about markets!
I am really glad you said that about election cycle. I was not clear about this…
Hi
Jack
I really believe in the bear alt count with all my research that matches.
It will be key how this week unfolds.
My educated guess is we can retrace the entire movie back down closing those 3 gaps to 1810 by this month end and we can still achieve the massive drop the first few weeks of March taking us near 1550ish and that would be precisely the total original fib day estimate on this site.
Simply brilliant work!
Ace, I think we’re going sideways for a few days. Way too many bears out there right now. Bears have to capitulate for this market to go down.
I’ve got my finger on the trigger with the three stage shorting plan. Ready to short when I see a setup. IMHO this week is going to be big in terms of market direction. I do think that March is going to be a good bear trading month. Although, it is possible for the sideways action to get dragged deep into March.
Again, I could be totally wrong. I can tell you this, markets are ripe to go down at any given moment…
I hope so
This would all be to funny if we play out like 2008. Wait for Aug to Oct to drop. That would be hilarious….
Hi
All
News update. Es down -4 handles.
Those small candles on the daily in my experience show an end to a move.
Let’s see it by the cash open 🙂
I want to see ES down over 50 handles
ES from 3 to 4 AM will show how Monday will open. Too early now.
The real question is what do we do 3 days at the famous 1987. Another 5% from there could potentially be in the cards!
I sure hope not. We seem to be getting mixed signals and unexpected surprises in futures to be honest!
They will be positive by open.
I know right
That is how predictable this market is
What a joke
Oh and markets are not supposed to be predictable!
So this goes to show what we are dealing with!
An artificial construct?
Hi Folks,
For folks who are interested in astro trading, here is new twist. Based on some reading that I have done, it appears that we are going to see a rare combination after 32 years that might lead to a very challenging next 200 or so days. The planets Mars and Saturn are going to be together for next 211 days. Last time this happened was 32 years back as typically, it is no more that 45 days or so. Mars moved into this position on Feb. 20, 2016, let’s see what this brings to the markets.
I like the idea!
I use gann wheel time and time again!
I would be open to read it.
But this market has to break down first IMO!
Joseph
You said to check back with you and see how you are looking at this potential 3rd wave decline.
I really thought that 1900’s was out of the cards 2 weeks back and here we are.
I understand markets are changing as so should outlook.
Curios, will this be your week of final judgement?
For any members interested in Oil – I am not going to comment on wave count as that is protected content on the EW gold site, but Lara did share some very timely information on this site.
February 19, 2016 at 12:53 pm
February 18, 2016 at 7:13 pm
Lara also made a very important point (imo) on gold in a comment below.
Lara often (very kindly) provides huge clues for members here on what gold and oil are doing if you read her comments, but given where both oil and gold is at the moment and their possible importance to wealth preservation and S&P, I have absolutely no hesitation subscribing to both EW sites.
Hi
Lara
I know you have the oil analysis subscription and that is separate from spx. I really do plan on pursing that at some point.
If the correlation with oil(wtic) moves driving spx direction is valid.
Since we are in the middle of the third wave on spx.
Would it make logical for the middle of the third wave of spx to track oils as a high probability move for the spx as just a 1-3 sentence summary on here ?
I have both of them going down for their most likely wave counts. But first S&P has to move up a little.
Hi
Thomas,
I have a question for you since you brought up the oil(WTIC) price last week. What is going on with it? Are we due for a retrace up more before a fast drop? Reason being is I now believe SPX is tightly correlated to WTIC…
If so, any specific price targets in the near term signal a bearish decline?
Check out Olga’s comments above. I am not placing too much weight on the correlation between oil and the S&P 500. It is just one component. Look at how dramatically oil declined in the past couple years, while the S&P500 went higher and is just rolling over now.
Yes i agree over the years, but still look at how close it has been linked lately.
So, basically this correlation between oil and spx is not true now?
point being is if oil is true:
Could we all be looking for a huge decline on the spx that is just not going to happen right here. Waiting and waiting for something that just wont happen. 2017. Doubt is in the air.
The correlation exists right now and I think both oil and the S&P500 are going to decline.
The correlation did not exist previously.
It appears to exist now.
That does not mean it must continue to exist from now.
We may look at what S&P prices and Oil prices may look like if it does continue to exist, but we may not insist it will continue to exist.
The difference in how we think about it is a little subtle, but very important.
hmm good point.
I guess we have to wait and see what develops this week!
What I am trying to speculate and visualize is how this will all play out!
a. Upto 1,950-60 and then straight shot down to 1,511
b. Upto 1,980 and then straight shot down to 1,511
c. Upto 2,000 and then straight shot down to 1,511
d. Upto 2020 and then straight shot down to 1,511
e. Upto 2,040 and then straight shot down to 1,511
f. Upto 2,080 and then straight shot down to 1,511
g. Upto 2,100 and then straight shot down to 1,511
Interesting is I just pulled the force index and it looks about topped out!
I guess the real question is what is mot likely probability and it will definitely be interesting what happens to the Bollinger bands and MACD from here on the SPX this week!
laters…
Jack, Joseph,Rodney, Verne:
It looks like the SPX has been “lock step” with oil(WTIC) decline since the beginning of 2016. If this is true – it works until it doesn’t. Unless oil(WTIC) drops fast we aren’t going down in the near term imo – i could be wrong…
What is interesting is oil keeps on ramping up on rumors but never retraces any of the rumors….
If we can solve the oil moves best probability – I think that would be the key imo – i could be wrong…
Quantitative Trading Systems
I use Portfolio 123 to design and test my systems. This web site offers institutional quality data at an affordable price from 1999 to present. I don’t know of a better source for this kind of system testing that is available to individual investors. They offer great tutorials on how to build a proper system that minimizes curve fitting and has a reasonable expectation of working in the future.
I have been successful at designing systems that trade liquid small and mid cap stocks that compound at rates above 50% in simulation. Actual results will be lower than simulated performance. Here is how they work:
Stocks in the US are ranked based on value, growth, price momentum, etc..
Minimum thresholds are set for market cap and liquidity.
If market breadth is strong, then the top 10 stocks from the ranking system are purchased.
If the ranking of a stock that is held drops below a level, then the stock is sold.
New purchases can only be made if market breadth is strong, otherwise cash is held.
Portfolio turnover is around 4 times per year.
Portfolio 123 sends me an email once per week that includes buy and sell triggers for my systems. This trading approach takes me less than 1 hour per week to implement trading multiple systems.
These systems are long only or in cash. I do not expect to make a profit from them in a bear market. I am not trading them currently because we are in a bear market. My systems are mostly in cash right now anyways due to weak market breadth. I have not been successful in designing a quantitative system that shorts stocks, and haven’t seen one from another designer on Portfolio 123.
Here are some pitfalls and risks. Portfolio 123 subscribers can offer their systems to other users for a fee. There are several systems available that show huge gains in simulation but are unlikely to duplicate these results in real time. I have seen several systems implode! They generate high returns in simulation using curve fitting and very high turnover of illiquid stocks. I think the only way to ensure that a system is designed properly is to do it yourself or be able to view all of the rules that make up the system.
I am available to help anyone here that decides to explore this type of trading. I can be reached directly at tjbirnie@sympatico.ca.
Hope everyone is having a great weekend!
Tom
Many thanks Tom – I’m going to have to read that again (quite) a few times to get my head around it. I thought EW was complex! 🙂
Joking aside – your sharing is very much appreciated (and a welcome break to my gloomy posts below)…
I’m sure I could have explained it better. The key is to design systems that make sense and are not too complex. The more complexity, the closer you get to an over optimized curve fitted system that is unlikely to work in the future.
I find your gloomy posts very informative!
Thanks for sharing your system Tom. I think your call on the system in the current environment is wise. The bear market is going to screw with a lot of automated trading systems. The rumor is that the HFT algo guys are already making adjustments, with some programs now selling at the 21 day ema instead of buying as so many stocks are now trading below that pivot…
Much Appreciated Tom!
Nice to see another fellow Canadian on this board!
That is very kind of you to share that Tom. Thank you.
System design is one of my weak points, and so I think I really should check Portfolio 123.
Your system sounds logical and so I can see how it should work well.
That was a warm reception! Thank-you for the responses. The first time I brought this topic up to a group of technical analysts and traders at a meet up group, the majority told me that automated systems don’t work.
I’m sure that some automated systems could work for some of the time.
It depends on what the parameters are.
Automation could remove emotion. That seems to be a good thing to me.
But I’m guessing you’d have to constantly monitor it to ensure it’s still working.
I agree, and I think we can do a better job here assessing when these systems should be used. A confirmed bull market using elliot waves and traditional technical analysis is more effective than just using market breadth in a system.
I can already hear some of you thinking, O.K. Verne, so what??!!
It gets even crazier.
I pulled up UVXY call prices of Jan 2018, strike price 5.00., ALMOST TWO YEARS AWAY!
Guess what they cost? Yep! 39.80
Either the world is going to end in the next few months, or somebody is going to come and arrest me and shut down Lara’s site…just kidding!
But seriously, I am rethinking the way I am going to trade this bear market. The implications of these distortions are simply mind boggling.
One this is certain, that is going to change big time, and quite soon methinks….
I know some members have been quite concerned that this (possible) Wave 3 has been a little ‘leisurely’. I personally view this as totally normal (if not incredibly frustrating).
We are only in W3 of Cycle W1 down – so alot of the market denial and ‘buy the dip’ mentality still remains. That said, Wave 3’s are Wave 3’s at any degree – the upcoming W3 should still be a cracker.
Now W3 of Cycle W3 (further down the line after a huge greed driven Cycle W2 bounce), will be a real destroyer. I won’t be be trading it as you’ll probably not get your money out of your stockbroker.
My strategy will turn totally from trader to capital preservationist during Cycle Wave3 (I might at a push trade just smaller amount during W1 (only) of Cycle W3 depending on what’s going on).
But during W3 of Cycle W3 – I’m out and everything I own will be in physical form! (I’ll probably also be *renting* a place in New Zealand to get as far out of the way as possible). By the end of W3 of Cycle W3 it will be those who have lost the least that win the most. I’ll be in physical cash and physical gold / PMs (ratio to be determined by EW projections) awaiting purchasing quality assets / companies at the bottom of the Cycle W5 for pennies.
I think short selling will be banned, but personally do not think it will be banned until after the utter devastation caused by Cycle W3. By that time it will be far too late.
And as a sidenote – if they ban short selling after Cycle W3, Cycle W5 could be much swifter (and perhaps deeper) as there are no short sellers (closing positions for profit) to prop up the final waterfall.
Maybe Lara can put us in touch with a good real estate agent! 🙂
I hope to be on the beach back in the BVI by then.
I am with you on the carnage of wave three. I think at that point, as counter-intuitive as it seems, the only money traders should have in the market is money they would not mind loosing. I think many banks and brokerage houses are going belly-up before it’s all over, to say nothing of market circuit-breakers melting down. If they ban short-sellers of course its going to make things much worse as they are destroying the natural bottom the market forms as they cover.
I agree trading primary one down and two up as precisely as possible is the safe route, then swiftly getting out of dodge, except for “play” capital.
I’ve already been onto Lara for information on that front 😉
(estate agents can be easily found online – http://www.realestate.co.nz/ – I was more interested in the current state of the market / NZD:USD). I have childhood friends out in NZ so it makes it a bit easier and I can stay 6 months in NZ without a visa with options to stay longer if required.
By the way – Laras gold service covers NZD:USD (sometime free I think?) from time to time. FYI – NZ property market currently at the top of a text book bubble. Hence me placing *renting* in above.
I love BVI – lived there and visited many times, but (for me) it is far too close to US & Cuba (absolutely no offense meant to any members born in / living in those countries). I have a property near BVI – but I would not consider it far enough out of the way if things seriously got out of hand.
Olga my plan exactly. Except I have only been joking with friends and family about moving to NZ. I might give it a serious thought about actually doing…
We might all need to be in NZ during (a possible) Cycle 3 in order for Lara’s EW service to reach us Jack! (assuming Lara’s host is located in NZ – otherwise Lara might not be able to get onto her own website!)
Now there’s a whole new can of worms opened right there! 🙂
Such a jolly topic!
Host appears to be situated in Michigan, USA (according to DNS / IP)
Just sayin…. 🙂
(Joking aside – would be very easy to change host at very short notice if the need ever arose)
I’m sure Lara would be willing to let us all crash at her place,,, hee hee
Cesar and I have considered what if our websites don’t work.
We have back ups, daily. We can host here on our own machines at home. We have a pretty good set up with a few Macs and a quality UPS… but that still relies upon the internet working and NZ electricity supply continuing.
We have all members email addresses so if we can’t post to a website we can email the analysis directly.
And at the end of primary 2 I’ll be posting on the site and emailing to members the importance of making sure your email address with us is correct, my email address is added to your address book and you all check spam / junk in case my emails end up there.
As for NZ, if any members are considering coming to stay a while at any time for any reason then do contact me. I’ll give you all the insider / local tips on best spots to see etc. And if anyone needs assistance with finding accommodation I can point you in the right direction.
I’ve lived in Northland much of my life, and I know the North Island well, all over. Not so much the South Island. Although I have a sister in Dunedin.
We may consider moving our host to New Zealand before primary wave 3 is done. We shall see how the US looks to be coping.
I expect that the problems in NZ may be less, but that’s a massive assumption. Our government debt to GDP ratio is relatively healthy (not good, but not as bad as many other countries). It’s our private / household debt that is very bad, propping up a property market bubble. Latest Real Estate figures see an important trend line breached and so I expect the top is now in for NZ real estate.
The banks in NZ may fail. And there’s no deposit guarantee. Depositor funds can be frozen in part or full, and after bank owners have paid what they can then depositors funds can be used to pay bank debts. So I’m not keeping too much money in NZ banks.
Hi Lara,
I’m sure Cesar is well aware, but provided your Domain Name (elliottwavestockmarket.com) is regsistered with a NZ registrar, you should be pretty safe and always be able to point website traffic to another location (inc your home IP), irrespective where your host is located.
A problem could arise if your domain is registered with a domain registrar outside NZ in the event you could not access their site to transfer it to a NZ registrar / change the nameservers / change the DNS to point to the location / host of your choice as members would still not be able to reach your new host / your server at home.
That said – if worse came to the worse, you could just register another name and email everyone the new URL / email updates etc, but you obviously wouldn’t want to lose all the goodwill attracted to your current URL due to being unable to re-new it on time etc.
Just a few thoughts from someone who is currently taking similar steps to protect my own IP.
True, and thank you for the comment Olga.
It does make the assumption that New Zealand will be less affected in a global bear market. I suspect that may be correct, but I’m also aware it’s an assumption that may not be true.
I’m thinking “laraelliottwave.com” might be a good alternate URL. And this is something, a backup, that we may look into.
I wanna see the SHIRE!!!! and BAG END!! 😀
Ah… the Waikato.
A giant toilet now I’m afraid. Intensive dairy farming 🙁
Quite sad really.
New Zealand has a few rather dirty secrets.
I am hoping that dairy prices continue to fall, then some of those more recently converted farms may fail and be used for something less polluting.
You don’t say! Really? Which island did you live on? I am from Tortola and really jealous of Branson’s nice spread on Necker Island! 🙂 🙂 🙂
Australia is also pretty far out of the way but also suffering from a humongous real estate bubble. I have connections in Barcelona and at one point thought I would love to move there but considering what is going on in Europe, that notion has been scratched off the list of possible destinations.
Lived in Road Town a few years back – still got quite a few friends there. Not the nicest place on the Island but quite suited me at the time. Almost killed myself falling off a little scooter out there – (brake fade coming down Ridge Road) but that’s another story!
Barcelona for me is a stunning city (architecture) but also an absolute crime capital imo – pickpocket is considered a fair sport in the tourist areas (apologies for any member from there – is just my experience). Lots of scams (cutting your tyres at traffic lights etc, etc). You have to have eyes in the back of your head.
That is all well documented on travel websites so I’m not alone in that view.
It sure is small world after all. I’ve got three acres off the Ridge Road with a spectacular view of Road Town and the harbour. I hope to build some villas and a B&B one of these days. I’ll post a pic later of the view.
The only way I would live in the city is if I could find a small walled villa. Right now they are not cheap and extremely scarce, (most people live in apartment complexes) but I think they eventually will be as the deflation spiral accelerates…
By ‘live in the city’ – I presume you mean Road Town? 🙂
Ha Ha – that’s like me calling Douglas the city – Islander mentality – it’ll never leaves me 🙂
I’ve got me eye on Branson’s pad – I’ll be bidding against you for it at the end of Cycle W5 🙂
You can rent the whole shebang along with staff and use of amenities for a mere 64k (as of two years ago) per week. I think they have a limit of thirty for that price. You may want to try, before you buy! 😀
City of Barcelona actually. Here is a view from the Ridge Road site.
Nice Vernecarty. Thanks for sharing!
memories……..
February 20, 2016 at 9:07 pm
memories……..like the corners of my mind, misty watercolor memories… 🙂
Most welcome Lara, hope you and Caesar can come visit sometime when everything gets done!
Thank you Verne. If we are in Europe and visit Spain (there’s some good surf there) we will be sure to catch up
Sidenote 2: Major wars (world wars) often crop up around /after W3’s of high degree. There seems to be alot written about the virtues of war being productive and getting a nation out of a depression (utter rubbish in my view – totally coincidental if at all true). I certainly believe most governments would not hesitate to use war to hide their own incompetence and keep the populace looking the other way. Social mood during / after a Cycle W3 would make easy pickings for crackpot leaders (who often rise to power due to desperation) imho
We are near the top of the market (peak in social mood) and yet world superpowers are already at each others throats. What will this look like at the end of W3 or Cycle 3 when 3 quarter the population (if not more) stands in line for soup.
I am the last person who wants anything like that to happen again but it is better to accept the higher probability and have plans in place than panic after the event.
I do not take stating the above lightly – but we are all adults presumably being a member of this site believe that EW (so social mood) has alot of credibility. We know based upon our knowledge of EW that social mood will very likely take a serious hit if things play out the way they appear to be going.
I very much welcome being challenged on the above (with reasonable argument) if any member thinks the above is an over reaction.
I for one think it is far, worse than you have stated, no argument here… 🙁
What if we are already in primary wave 3?
I have thought about that. Problem is the VIX does not confirm the kind of panic we SHOULD be seeing. I know there is another side of that argument that argues that the sense of awareness of most folk is so dulled by complacency as to not even perceive the house burning down around them…how sad…
Unless I’m missing the essence of the question, imo we’re still in Cycle W1 so I don’t think it matters much – some waves within W3 of Cycle W1 might extend on their 5th waves rather than 3rds.
I’ve just got my eye on the bigger picture i.e. the middle of the W3 of Cycle W1. Once we reach that point VIX should start picking up steam.
We need to be able to identify waves so we can safely avoid face ripping rallies, but I’m not sure that identifying the exact degree of internal sub divisions is that important (to me) and might change as the structure unfolds.
I agree. When the sweet spot of the third wave, even for primary one occurs, UVXY is NOT going to be meandering around the way it has been the last few months. It’s going to scream North like a banshee on fire, like a rocket-ship off the launching pad, like a bat out of…well, you get the picture… 🙂
I simply cannot imagine what a third wave down at primary degree after a GSC top looks like…nor can anyone alive today ’cause we have never seen one…
In terms of the wave counts, I sometimes wonder about the degree. While I am quite confident that we are not in primary three, I am not so confident that we can completely rule out the completion of primary one down, which would now put us in primary two up. If we keep marching higher and blow past the invalidation points I think we would have to consider that as well as the bullish count. It would be unprecedented to have completed an intermediate wave three down with such muted volatility. On the other hand the market has been doing very strange things of late. We had that historical spike in the VIX back in August when the market decline had not advanced as far as it now has and yet the VIX has not revisited those levels. Furthermore, we had no corresponding historic spike in UVXY so somebody must have made a monster one time bearish bet back then or unloaded an unprecedented about of equity. Another strange thing was that truncation and the UVXY capitulation spike becoming disconnected from VIX and coming in the middle of a corrective fourth wave and not at the end of an impulsive third or fifth wave as in normally the case. It may well be that the distortions in the market are now becoming so pronounced that what used to be fairly reliable signals can now no longer be relied upon, and that we have to be prepared to see what we thought were market rules and guidelines shattered. I am very curious to see how high wave C now continues.
“fairly reliable signals can now no longer be relied upon”
Well that has been going on for 3 Years at least for sure and I can make a case that has been going on since 2011.
Can’t argue with you an that point. The FED has done a substantial amount of damage to the price discovery process no doubt, which has resulted in literally hundreds of billions in mal-investment. Nonetheless, all the hidden detritus notwithstanding, the relative absence of fear based on what the market has ALREADY done is quite incomprehensible. I can only ascribe it to the unshakable confidence the crowd has in the ability of the banksters to keep the party going. Is it possible that so few folk are able to see that we are at a yawning financial precipice, only awaiting the slightest of shoves from rising interest rates to send us over the edge?
The Black-Scholes model for pricing options is supposed to be a price discovery method. It is designed specifically for proper risk assessment through price discovery. One of the few things many investors recognize is how the FED’s money printing has obliterated the price discovery process, and this is probably one of the most dangerous and deadly side effects of Q.E. One of the features I like about Mark Spitznagel’s work is how he points out that in many ways option pricing in the market is not at all commensurate with the actual risks that market participants face. After reading several of his articles I thought I would do a little bit of my own due diligence to see if his arguments held any water in terms of actual option prices. He may be onto something. I will give a single example from one of my favorite instruments, the VIX futures ETF UVXY. We all know that historically market crashes tend to occur in the Fall season so we would expect portfolio insurance for someone who wanted to hedge with UVXY would see the heightened risk reflected in steeper ask prices for calls for that period. I checked to see what it would cost me to buy (ask price) 10 UVXY 5.00 strike calls to hedge my portfolio in the month of June, this year, vs what it would cost me to do so in the month of September, three months later.
The bid/ask for 5.00 strike options for June,12, 2016 is 35.00/39.70, so it would require an outlay of $39,700.00 at the market (plus commissions) to hedge my portfolio through June 17 with 10 UVXY 5.00 strike call options.
What would it cost me to do so through September 16, 2016?
The bid/ask for those 5.00 strike call options is 35.05/39.60
It would cost me $39,600.00 at the market (plus commissions) to hedge my portfolio through September.
Not only is there no additional time premium for the later dates, there is clearly no seasonal risk premium either. In fact the market is pricing a REDUCTION of risk, albeit miniscule, for the later strike date.
I think Mark is onto something…something big… 🙂
Mark Spitznagel is someone we should be familiar with. He has an interesting article on the “Q” ratio that gives great insight into what our bearish EW count may be indicating.
http://davidstockmanscontracorner.com/whens-the-crash-happening-right-about-now/
Just musing out loud. Does anyone think the size of the candles on up days during the counter-trend rise from Dec 21 to Dec 29 could possibly be related to the strength of the subsequent decline? Since the bearish count expects the strongest part of the move just ahead, if they are positively correlated and looking at the candles the last three up days, any such correlation would imply a bigger, fatter (and jucier?! 🙂 ) green candle than the one we saw on December 29 coming next Monday….unless of course they are inversely related!(which is more intuitive psyhcologically). Oh, the places the mind will take you trying to decipher this tricksy market… 🙂
Food for thought… starting in the summer of 1987 there were several sharp swift up periods followed by swift down periods, repeated over and over. That lead to… well you all know the answer to that.
Not saying that’s what will exactly happen again… but it certainly feels the same prior to then as it has felt since August today. This is from my memory only and I did take a big hit financially that year in options. So you tend to remember situations like that.
Then as now… the analysts thought these swings were welcome news and very healthy. That everything is okay. The bullish talking heads were out in full force then selling their bullish view as they are now. In fact then I loaded up long the market.
Thank God Joseph, we are now older and hopefully, wiser… 🙂
From an EW point of view they are totally related imho. The way I see it, the waves are perceived as follows in a bear market (at high degree (and even at lower degree – but from a a shorter term memory standpoint):-
Wave 1 – is just a healthy correction – buy the dip!
Wave 2’s – total greed – buy the (wave 1) dip you idiot!! – the market only goes in one direction (up) – the correction is over – we cannot possibly lose – free money!! – purpose is to provide the ‘all is well again’ signal to even the most sceptical players in the market. Also meant to wear out the early bears trading it (us!)
Wave 3 – panic – “abandon ship” capitulation and fear – so very sharp – fear is one of the strongest emotions.
Wave 4 – apprehension – we’re not sure – is this a bull trap? The clever ones have waited to pickup bargain prices – the Wave 3 wounded see the market rise and grab their ‘final chance’ to cut their losses (so sideways rise and fall)
wave 5 – Oh no it’s another wave 3! – ‘I’m not taking any chances – I already lost my shirt’ – exhaustion of sellers / total belief the market is dead and will never rise again.
That’s why wave 5 is usually strongest in gold and commodities – the fear aspect is in the final part of the move rather than the middle.
The above (or something around that theme) is what gives each elliott wave their ‘personality’
BTW – I think you can also add Central Bank ‘tinkering’ to the Wave 2 personality – which possibly makes them (a little) sharper / deeper than greed alone.
But they too are human and will panic in Wave 3 and beyond just like everyone else.
The realisation that the CB is smoke and mirrors will add to the Wave 3 fear, so they are pulling ever more tightly on an elastic band with their shenanigans.
I think primary two up is going to be the most manic, “all-in” display of bankster bravado and bull frenzy, ever seen, with markets climbing three or even five percent daily. I expect volatility to decline to historic lows under the onslaught of cash dumping and buying mania. Cramer is going to have to have a larynx replacement! New all-time lows in the VIX AHEAD of approach toward old market highs will be the “exit stage left” alarm bell for me personally.
Has anyone noticed the drop in volume of the tech heavy NASDAQ ETF QQQ? The chart shows volume to be lowest in last two months. I suspect investors are pilling into the individual names as feel worst is over.
Interesting. Volume of 28M Friday was about half the 59M average. It does indeed show a steady decline after the spike at the low on Feb 08. Volume also declined to a low of around 11 million on Dec 24 two days before the Dec 29 high, then steadily increased as the market sold off and peaked at around 91M, again two days before the low on Jan 20. It appears that volume declines as the market rallies and increases during downturns. Looks like typical bearish behaviour to me.
Vern,
I am watching it very carefully. BTW some firm upped the PCLN target to 1600.. 🙂 I plan to pile on some cheap puts to see how those play out as side play nothing serious.
Anyone here has opinion on diamonds as safe haven against the paper money?
Can you believe that? I plan on trying to pick up a contract or two with an open stink bid myself to try and take advantage of the current mania. Colored gems have a lot going for them. They tend to do well in times of crisis and hold their value, easy to conceal, easy to transport, concentrated value in a small item. Make sure you deal with a reputable seller who will be around if you want to liquidate in an emergency and who knows what you own is truly worth.
I was under the impression that diamonds were in a bit of a bubble along with such items as fine art, fine wine etc, etc. To me it is mind blowing why money is pumped into those rather than PMs right now. Maybe I’m missing something?
I could be totally wrong as it is based on what I have heard from various sources – not technical analysis of price.
Not a market I really understand well but I know the way to make money is buy low and sell high, and PMs imho are relatively under valued.
If that is also true of diamonds then would be very interested in knowing, albeit liquidity is also a major factor as pointed out by Verne.
One thing I do know about diamonds – they are one of the best methods of carrying large amounts of wealth with you undetected during such times as capital controls (as pointed out by Verne). But with all the warnings provided here (and by Laras bear EW count), nobody here should really find themselves in such a daunting scenario.
Maybe because metals have been in a bear market since 2011? Well, at least Gold and Silver have.
And so, Elliott wave theory, if they’ve just bottomed (as I strongly suspect they have) then the mainstream mantra may be that they’re not a good investment, that they’ll keep going down.
Maybe.
Some folk think we only completed wave A down of an ABC correction because of the 30 year commodity cycle. A few are calling for an ultimate bottom in Gold at 750.00. If they are right, the next year or so is going to be a once-in-lifetime opportunity to collect physical PMs. I think in any case the miners are going to buck the trend and that we have seen the final lows in that sector, the opposite of what they did at Golds top when they lagged badly.
Even if they’re right (and I’m not stating an opinion either way), some EW structures allow B waves to retrace more than 100% of wave A without breaking any rules 😉 🙂
The structure of Wave A would be very important in that regard.
first,, woo hoo
lol dude you are fast…
The things that please some people!!!!
It takes more than stiff bastards to make this world work :)…got to appreciate the small stuff in life sometimes…