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Lingering doubt about today's selloff...
The ABX barely budged. These indexes of highly toxic mortgage debt should have moved much lower with the equity markets. Even more so because banks holding the junk got hammered.
The 3-4 day low is in for the SPX. Maybe a consolidation tomorrow?
Scenarios- Ending Diagonal Since March Lows.
This applies to most markets.
This would finish wave c of a flat which started in November '08
This March '09 rally is rounding over with choppy trading. It looks more like a long term top than a temporary pullback.
OIL Flusher is Backing Up
Maybe this is turning out to be Wave B triangle correction in wave e. The timing is potentially synchronous if the global equity rally off the March '09 lows turns out to be an ending diagonal.
http://stockcharts.com/h-sc/ui?s=$wtic&p=D&yr=0&mn=6&dy=0&id=p75635173805
Volume Trend
I've noticed on most of the US indexes over the last 3 weeks volume has been falling as price advancing, THis tells me the rally is going to run out of steam pretty quickly. I'm looking for a down day or close near the bottom, either with significant volume to signal a top is in.
http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=0&mn=6&dy=0&id=p75635173805
http://stockcharts.com/h-sc/ui?s=$indu&p=D&yr=0&mn=6&dy=0&id=p75635173805
http://stockcharts.com/h-sc/ui?s=$spx&p=D&yr=0&mn=6&dy=0&id=p75635173805
http://stockcharts.com/h-sc/ui?s=$ndx&p=D&yr=0&mn=6&dy=0&id=p75635173805
The Dow Transports e-waves
Tim Wood posted his weekly Dow Theory comments on the Dow Industrials vs the Transports. He's thinks a larger bear market rally is in play.
http://www.safehaven.com/article-13007.htm
I can agree with a multimonth consolidation on hand, but not fully. Just a quick glance of the Transports from the truncated high in June '08 to the March '09 lows shows a 5 segment move. Wave 2 was the consolidation around the 5000 level. Wave 4 consolidation was around the 3500 level.
http://stockcharts.com/h-sc/ui?s=$TRAN&p=D&yr=1&mn=3&dy=0&id=p93633734677
I think the markets have been in a multimonth rally since November '08 when considering the finer wave structures. I'm much more comfortable with a flat correction. The wave off the November '08 lows is clearly a 3 wave correction. The Jan '09 highs to the March '09 lows looks much more like a zigzag than a motive 5 -segment wave. Wave c should follow. So far it been motive with one consolidation. Target above 3500, and challenging the 200 DMA.
For Tim Wood's out come to be validated, the transport index would have to start a selloff pretty soon (wave b), ending below 2600, in choppy trading. This would create a 3 wave sequence off the March '09 lows. wave c zigzagwould then rally into late spring, finishing a double zigzag.
For my outcome to be validated, the market climbs higher to complete Wave c flat 3, 4, and 5. This would coincide nicely with my count and the addage, "Sell in May and go away"
Intraday-hour ticks
http://charts.barchart.com/chart.asp?sym=$dowt&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
EEM Wave Count
Whatever count I had for EEM has changed, but only minor. Monday when I was calling a top and got a 4%+ drop I think it turned out to be wave 4 of c of (2 or B) instead of a completed large Wave 2 or B. Today the price pushed above last week's high, so we're probably in wave 5 of c of (2 or B). The intraday chart shows one more push up at tomorrow's opening should finish the count before the next bear market leg begins.
The rest of the markets are somewhat distorted to get a good wave count.
Wave 2's and B's are false rallies. This one would certainly qualify as jobless numbers increase, consumer debt defaults increase, car sales are way down, and home prices continue to fall.
Daily
http://stockcharts.com/h-sc/ui?s=EEM&p=D&yr=0&mn=6&dy=0&id=p40517811635
Intraday
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=eem&time=&freq=
ABX Index DOWN, Jobless Claims UP
This is the second consecutive day this ABX index has been down. Today the selloff accelerated. The last time I wrote about the ABX index it was that it lagged the equity market turn. Now it may be back to leading the equities.
http://www.markit.com/information/products/category/indices/abx.html
ABX.HE.AAA.06-1
Eventually fundamentals align with the market. Today was a whopping 740K initial jobless claims. The chart is nearly vertical. There is no way the markets are predicting a turnaround in the economy 6 months from now. 2.5 million people have lost their jobs in the last month alone. At $50K apiece, that's $125 Billion in lost income. The effect is worse if you consider a $10 K payout apiece of unemployment insurance ( $25 B increased burden to those employed ). 6-12 months down the road. The consumer just isn't ready to recover when funds are being reduced or cut off. MEOW this is just a dead cat bounce in the markets. Get ready to go short again.
http://www.bullandbearwise.com/InitialJoblessChart.asp
DoubleTake -Going Concerns
Don't worry about the trillions in TARP money that was dished out. Banks are starting to return it because the strings attached are more of a noose.
Some of the US debt can be wiped away by the US gov't by "selectively defaulting" its debt held by Americans. This would satisfy foreign governments' investments in US Debt.
The gov't may confiscate 401K plans under the premise that stocks are too risky for retirement funds, and replace them with US Debt. Argentina did this.
There is the gold confiscation precedent.
Social Security could be adjusted downward because of the inverted pyramid and fewer people employed making contributions. (I like this idea, but prefer a complete phase out of the program)
Impose a 100% estate tax. After all, you can't take it with you. Anyone objecting implies he wishes his parents dead. I like this the best since it gives the living a chance to grow their own financial security without onerous taxes. "Every generation must pay its debts",Thomas Jefferson
Oil - Gusher to Flusher
The sharp selloff in Oil has convincingly broken the lower trend channel. The e-waves look complete as far as an ABC corrective rally off the Dec '08 lows. Wave B was a textbook triangle pattern. Oil goes much lower (below $25) from here in a larger WAVE C
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=6&dy=0&id=p83254249100
EEM - Emerging Markets E-Wave
This is one of the clearest wave counts of an electronically traded fund; therefore, the application of e-waves will yield the lowest risks on returns.
The print high of 53.74 in October '07 was followed by a triangle. The rally out of March '08 truncated (failed to make a new print high).
WAVE A of the bear market started in May'08. WAVE B (zigzag) bear market rally started in November '08 and looks to be finishing up any day now. WAVE C is very close to beginning.
Other technicals favoring a top:
1.) Stochastics have been in the overbought area for 5-8 days.
2.) The 200 dma is resistance to significant rally.
3.) Last week the volume trended down as the price trended up, a divergence.
http://stockcharts.com/h-sc/ui?s=EEM&p=D&yr=1&mn=10&dy=0&id=p65772376626
SPX Rally Broke Channels
From the March lows until March 19 the trend channel was very narrow. Since then the channel has more than doubled and rounding over in overlapping advances. The transition from narrow trend channel to overlapping advances signals a turn is near as harmony (market consensus) yields to discord (market disagreement). Engineers would say in phase harmonically related sinusoids are going to out of phase sinusoids with non-harmonically transitioning frequencies.
http://charts.barchart.com/chart.asp?sym=$INX&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
ABX Mortgage Index in Rally Mode
The strange thing about this 10% rally in 3 days is it lagged equities. We'll see if the leading nature of the ABX has changed to a longer term lagging indicator.
OIL Keeps Pumping
Since the Feb '09 lows, oil has been in a choppy advance. The last week the daily range has narrowed somewhat. It looks like there will be a strong pop in the coming days. The 200 dma is a good target at $80.
http://stockcharts.com/h-sc/ui?s=$wtic&p=D&yr=0&mn=6&dy=0&id=p75635173805
USD Update
David Petch vividly shows the e-wave count for the USD I mentioned yesterday. He also gives some fundamental reasons behind the anticipated move.
http://www.financialsense.com/fsu/editorials/petch/2009/0323a.html
Nikkei Intraday wave 4 Triangle and wave 5 Thrust
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=%5En225
A nearterm top is in. Global markets retrace during most of this week.
VIX, USD, and TNX vs TYX
The VIX is sporting a fairly large triangle from the October '08 highs. I'm looking for a break of the upper trendline to signal the start of another bear market sellof. Reaching 50 this week would do it.
http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=1&mn=0&dy=0&id=p90917023296
The USD is going to surprise the stop limit out of many people!!! July to Nov '08 was a strong rally. Since then the dollar is tracing out a FLAT. It's in wave c at the moment, with a bottom in sight this week. In this context, I see a potential "flight to safety" in the USD as bearish for equities. ( It's not truly safe, but people think it is)
http://stockcharts.com/h-sc/ui?s=$USD&p=D&yr=1&mn=6&dy=0&id=p07418058627
TNX vs TYX
The TNX yield made quite a drop this week on the FED's announcement to buy $300B of treasuries. The TNX (10 year yield) retraced the yield rally to the 38% level. The TNX broke below its lower Bollinger band. The bounce brought it back in, still substantially lower than the pre-FED move. I'm having difficulty counting e-waves for TNX at the moment. The best count would be a leading diagonal wave 1 followed by wave 2
The TYX retraced the yield rally to the 62% level. The TYX broke below its lower Bollinger band, but closed the day inside the bands. The bounce brought it back above the mid channel. This is more of a recovery than the TNX made. The e-Wave for the TYX yield shows a motive move from the Dec '08 lows to the Feb '09 high. Since then a FLAT has traced out. The FED announcement coincided with wave c of the flat. Yields should start to climb substantially, prohibiting many mortgage refinancings, something the housing market does not want to see.
I can't imaging the TYX yield spiking and not the TNX yield.
A spike in both of these yields would probably force the FED to stop printing money and the Treasury to abandon its rescue efforts. Someone with power is going to protest behind the scene.
http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=0&mn=6&dy=0&id=p54376438595
http://stockcharts.com/h-sc/ui?s=$Tyx&p=D&yr=0&mn=6&dy=0&id=p54376438595
Top is IN- Crash in Progress
The last wave 5 I was looking for probably truncated. It was so weak that it didn't break the upper trendline of the wave 4 triangle.
INDU and SPX TextBook E-Waves
Today was the larger wave 4 of the Nov '08 Flat-C. It was a textbook triangle. There should be only one more thrust higher and a retest of today's opening high before a top is in. Since the market has move higher very quickly these past 2 weeks, and is close to the top, this last advance may be muted or finish overnight.
The ABX index rallied a little. It looks more like a pause before a lot more carnage below.
The INDU, SPX, NDX, RUT, DAX, FTSE, NIKK, AORD are synched to drop from a FLAT correction. The SSEC is set to drop from a triangle that just broke the 200 dma.
INDU SPX e-Waves Update
Today the smaller degree waves 4 and 5 traced out. The larger degree wave 4 began. The futures look to go a little lower at tomorrow's opening. So a small selloff at the opening should complete the largest degree wave 4, and the final wave 5 of this 2 week rally should begin.
Surprisingly the ABX did not rally more, only about 1.5% This did break a nearly 2 week selloff. Meow!!
INDU and SPX E-Wave Count
I'm going to revisit a count I was considering a few weeks back:
From November '08 lows to present is flat. The initial rally out of November was clearly a 3 wave sequence. The January '09 selloff was definitely a 3 wave selloff. The present rally has been motive with two larger wave 4-5 combinations left before reversing at some degree. There may be 3-4 days left in the rally.
The INDU 50 dma at 7700 and upper bollinger band at 7600 are resistance.
The SPX 50 dma and upper bollinger band are both resistance at 806.
ABX Index Dropped Another 4% Friday
This is a non confirmation as the stock markets have been highly corelated with ABX indexes. Even the treasuries rallied. The ABX would lead the major market turns. Are the markets and ABX decoupling, or have the stock markets experienced a false rally?
TJWNY: Hedgies dumping SKF and FAZ
I've often reflected on the concept of the "Greater fool theory" One of the questions that popped into my mind was, "if the transfer of wealth is from the weak to strong hands, who becomes the new weak hand when individual investors no longer have wealth to take?" I guess the answer is hedge funds.
ABX Index Plunges Further.
The ABX index I've been tracking dropped more than 2.5% today DESPITE the huge financial sector and general market rallies of the past 3 days. It is now below the Nov '08 lows. I have no idea how much was passed along to the goverment.
http://www.markit.com/information/products/category/indices/abx.html
Select this index ABX.HE.AAA.06-1
It's CRASH TIME.
OIL, From Black Gold to Sludge
Today's chart is technically significant for oil. It gapped below the 2 week channel's lower trend line. With oil and ABX bonds showing strong technical weakness, the stock market rallies the past 2+ days are probably just another bull trap.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=4&dy=0&id=p38881798941
ABX Index Slide Continues.
The ABX index I've been tracking continues to slide DESPITE the huge financial sector and general market rallies of the past 2 days. Investors no longer believe the government will be able to back the toxic debt.
http://www.markit.com/information/products/category/indices/abx.html
Select this index ABX.HE.AAA.06-1
SPX 10 e-wave
From Tuesday of last week, there was a zigzag UP followed by a zigzag DOWN. So far last Friday into today has motive. That would make the sequence a flat correction. The final hours of the day look like a wave 5 started; whether it completed will be seen tomorrow. I think this will be Wave 2 correcting Wave 1 which started on February 9. The 33% retracement would be a 736 target.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
OIL E-Wave update
In looking at the rally in oil off the Feb '09 lows, its trajectory looks rather shallow compared with the Rally off the Dec '08 lows. The action has been fairly choppy in wave c of WAVE B (rally off Feb '09 lows). This is a sign of corrective activity, not the motive activity needed for prices to go higher. This rally looks structurally complete from an e-wave view. The stochastics are in the overbought area. I'm now in favor of a top forming in oil.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=4&dy=0&id=p16349799801
Getting Shanghai'd
http://stockcharts.com/h-sc/ui?s=$SSEC&p=D&yr=2&mn=0&dy=0&id=p13894591720
The bear market rally looks like WAVE B triangle. Wave e just started. Give the Shanghai a week to break the 200 DMA and reverse into the start of WAVE C.
Altenate count is more complex WAVE B with considerable choppiness.
OIL Gush Started
The wave b triangle in Oil (Early January '09 to Feb '09 lows) is complete. The larger Wave C closed above the upper edge of the triangle AND the 50 day moving average last week.
wave a lasted 8 to 10 days. I'm looking for a fibonacci multiple for wave c of 13 to 16 days, but I have a tough time believing the larger Wave B retraces such a small percentage of the drop from $147.
What else could it be?
My alternate count has Wave A as a zigzag and not an impulse. wave c of A was a truncating ending diagonal. This predicts a very sharp move to start Wave B which began last week. Upside target is $75+ area where the 200 day moving average is.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=4&dy=0&id=p56549335626
Futures Indicate INDU SPX Open Chart Gaps Down.
The INDU and SPX are below their last bear market bottoms and poised to drop lower. If the market experiences 2 or 3 open chart gap down days in a row, then chances are the markets are in the WAVE 3 of 3 of 3... conut.
OIL Still on the Launchpad
http://stockcharts.com/h-sc/ui?s=$wtic&p=D&yr=0&mn=6&dy=0&id=p75635173805
The e-wave count is still Wave b triangle which started January '09. The debate is little wave d triangle, or little wave e ending diagonal. Either way, the price is really close to the convergence of the edges of the triangle. The price should spike any day.
I'm moving my upside target from $70 to $80's because this is where the 200 day moving average is.
Conflicting Data
The stock markets had a wonderful day. The ABX (mortgage index), fell a couple percent. junk rated debt usually trades in parallel with stocks, not counter. The bond market just isn't buying the stimulus and other rescue attempts. The chart for ABX-HE-AAA 06-1 shows wave c of a double zigzag consolidation is still a possible wave count.
http://www.markit.com/information/products/category/indices/abx.html
The mood at work is getting openly gloomier despite no rumors of layoffs. This is a symptom at the beginning of a Wave 3.
ZigZagMan-
Your chart was hit by a rogue e-wave!!!
OIL is about to GUSH
Oil is showing a textbook corrective e-wave.
wave a - late December low to early Jan high.
wave b - nearly complete triangle.
wave c - starts any day now
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=3&dy=0&id=p12127627827
The triangle indicates there will be a wave c, not wave 3, since traingles occur next to last wave of the larger degree. This makes me think the stock markets are ready for that 4-6 week rally I was calling for last week. The headlines will read next week: "stocks and oil rally on confidence the economy is turning around." I won't be fooled. The timing of this rally fits perfectly with a general pump-and-dump into earnings reports the first week of April.
Lost the E-Wave Count
I was looking for rally over the next 4-6 weeks. Instead the INDU and SPX are challenging their November '08 lows. It's tough to see the 5 waves of various degrees to the downside, so maybe Jan 1st to present is still a B-wave, and the 4-6 week rally will start any day.
Maybe the clarity of the waves is being obscured by forced selling as liquidity dries up. The funnymentals sure look horrible, and getting worse. This would be a strong sign of a WAVE 3 collapse occurring over the next couple of weeks.
INDU and SPX E-wave
I'm much more confident of the wave count for SPX and INDU now. The alternated count of continued consolidation off the Nov '08 lows is in play.
Wave A Nov '08 low to Jan '09 highs. zigzag
Wave B Jan '09 highs to early Feb '09 low- TRIANGLE!!!
WAVE C predict a zigzag lasting 4-6 weeks.
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=6&dy=0&id=p75635173805
The long term WAVE C
Wave 1 Oct '07 to Mar '08
Wave 2 Mar '08 to May '08 -double zigzag
smaller wave 1 of larger Wave 3 May '08 to Nov '08
smaller wave 2 of larger Wave 3 Nov '08 to 4-6 weeks from now. -double zigzag
I really believe Wave 3 was not completed, and is expanding, is that motive waves never have two zigzags, double zzags, or flats in the corrective positions. If consecutive corrective patterns are observed, chances are high the larger wave is expanding.
ABX giving a short term buy.
There is a textbook triangle in the rebound. Wave c of the rebound started today. The stock markets have been following this index in general.
http://www.markit.com/information/products/category/indices/abx.html
Select ABX-HE-AAA 06-1
NDX E-WAVE Recount Forced
Today the NDX advanced past its January 09 high. The alternative wave count I have is continued complex consolidation from the November '08 lows. Wave C or Wave Y
I would like to point out a top is close as the index climbed on declining volume. The Stochastics have entered overbought, so be on guard. The DAX,FTSE, SPX and INDU have not broken similar resistance, so a large part of the market is still weak.
http://stockcharts.com/h-sc/ui?s=$ndx&p=D&yr=0&mn=6&dy=0&id=p75635173805
DoubleTake - Thriving Corporations.
Religion!!!
In bear markets people "get religion", literally. They find comfort in being part of one of the few highly organized, herds around.
OIL E-Waves
Long term ABC correction from the $147 top
Wave A $147 down to $35 was very motive. It made a long decline with a very narrow trend channel. Wave 3 extended 2x. Textbook wave to look at. The wave count is so easy a fifth grader could do it.
Wave B dead cat bounce. From January '09 high to present looks like a triangle is forming, then a move to the $60-$70 range. What I don't know is if the move to $60-$70 range will be the end of Wave B, or a more complex time consuming wave. I favor more time consuming.
Wave C should take the price below $20.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=1&mn=0&dy=0&id=p32442361352