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Dead Cat Meow Bounce.
The german DAX gapped up today and consolidated in what looks like a triangle before another huge rally into the day's close. Triangles signal the next wave of the same degree as the triangle is the last in the next larger degree. So the DAX should head lower tomorrow, either as a new bear market motive wave, or as wave b of a longer consolidation.
The US markts made a more impulsive wave off Friday's lows. This raises the possibility of a flat which started with the election rally. This impulse (wave c) could be done, or it may extend. I think this flat is a wave 2 of smaller degree.
Let's see how the ABX (AAA mortgages) index behaves before calling a top. It rallied hard today.
AlOrds (Austalia mkt) consolidating
The AlOrds in Australia had a similar rally as the US markets. Tonight the ^aord is consolidating for a second advance. The US markets will most likely do the same tomorrow.
I think the rally off fridays lows will be a zigzag.
http://finance.yahoo.com/q/bc?s=%5EAORD&t=5d&l=on&z=m&q=l&c=
ABX now 66c on the dollar.
This reminds me of the how the BBB bond index acted relative to the 10 yr US Treasury in the 1930's Depression. Corporate bond crashed out of fear of default while the 10yr US Treasury rallied. That's where we are now. In the future I would expect to see a huge selloff in the treasury, not out of inflationary fears, but from having nothing else to sell to raise cash to pay debt.
Sloppy Waves + Big move down =...
Must be a bunch of waves 1-2 at many degrees from the election high. The wave are definitely distorted.
The VIX made a strong move up. The drop from the October '08 has been ~60% reclaimed, a fib ratio.
The SPX, RUT, and NDX have take out the October '08 lows, but the INDU has not.
ABX index plunges even more
Now it's around 73c on the dollar. The 10 yr US treasury Bond had quite a rally. These tell me the entire non-treasury bond market is about to collapse.
The VIX looks like it is forming several small degree wave 1-2 combinations of the November 'o8 lows. The SPX, NDX, INDU show the price in the lower band, which is turning down in anticipation of more volatility. Equity markets are not far behind the bond markets.
ABX index continues plunge.
ABX-HE-AAA 06-1
The index I've been observing the last 3 to 6 months has finally fallen through 80 cents on the dollar. It was supposed to be the best rated for those originated in 2006. When this index falls, so do the equity markets.
Chuck, Friday threw me for a loop.
My smaller degree counts have been tossed out as I reconsider the larger degree counts such as yours.
All I know is external events keep happening closer to Prechter's model than anyone elses. That's what I'm using to keep longer term perspective. I was telling my girlfriend she should be cutting back on non-essentials because schools are facing budget crunches. She went on for 5 minutes how "safe" her science teaching job was. The next day the principal announced there will be a 10% budget cut next year - expect some people to be let go. This is THE most desired public school in that part of the state.
Enough information about the auto industries woes has been made public that a bailout won't work. Nobody is going to take a chance buying an American car.
We go deeper into the abyss
New wave count at higher degree.
The both the 3,3,3,3,3,3... and triangle possibilities have been eliminated with today's drop and spike. AND WHAT A THURSDAY REVERSAL SPIKE IT WAS!!!!
The corrective wave from the October 2008 lows looks more like a flat in the INDU, SPX, NDX and RUT. wave c started today and should push higher tomorrow. Look for the price to break wave c lower trend channel to signal the beginning of the next motive wave to retest lows.
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=6&dy=0&id=p75635173805
surprisingly the ABX index continued to plunge to new lows. Often junk quality debt will track the stock markets. This is why I am very doubtful of todays rally.
Still more waves 3-3-3-3-3-3... in All Markets
Plain and simple, the most devastating part of the market crash is here. The wave count of many degrees of waves 3-3-3-3-3-3... are about to be resolved 20 to 50% below current levels.
The triangle pattern (off Oct '08 lows) probability has been reduced as the price broke below the lower triangle edge formed by start wave a / end wave b.
The ABX index plunged today. It had started heading lower before Paulson bailed out of the bailout pplan to buy ricky bonds. It appears as if his plan was a ruse to allow his friends to sell into a bond rally. If he lets AIG go, then it signals his friends have finished their flight to quality (CASH).
ABX-HE-AAA 06-1
http://www.markit.com/information/products/category/indices/abx.html
Chuck - Larger Triangle
Yes, that looks very likely too.
Today's patterns open up many more possibilities than eliminating them.
Opty in Gold:
The consolidation in gold's sell off from the Oct '08 highs to lows is nearly done. The big question is... "has a triangle completed, or is the other half of a zigzag going to form before another wave of selling tests the 1 year lows?"
The answer is significant. If a triangle, then the wave of Oct '08 selling is corrective, and gold will challenge all time highs sooner rather than later; else, there will be better bargains.
http://stockcharts.com/h-sc/ui?s=$gold&p=D&yr=0&mn=6&dy=0&id=p75635173805
Wave Count 1-2, 1-2
The Election selloff made a temporary bottom on Thursdays close ( Larger Wave 1). Friday's opening into Monday's opening was a zigzag (Larger Wave 2). The rest of the day the market sold off ( smaller wave 1) until a buying started to come in at 1:00 and a second consolidating rally at 3:15 into the close ( smaller wave 2 flat).
Bearish {preferred):
The smaller wave 2 looks like a nearly complete flat. Tomorrows opening could gap and crap, or just crap. A fibonacci +50% retracement in both time and price has occurred, increasing the chances the consolidation is over.
Bullish:
An emerging double zigzag or flat in the larger wave 2. The second zigzag (wave 2c) may have started from the lows of the day. If a flat, there would be downside tomorrow below Thursday's lows followed by a sharp rally.
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=INDU&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=3&freq=9&startdate=&enddate=&hiddenTrue=&comp=Enter+Symbol%28s%29%3A&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=3&optstyle=1013
HamVestor-
I focused on the bear market bounces, not the size of the downward movements leading to the gaps down. Judging by tonight's futures, the SPX will be closer to the 50% bounce of last weeks selloff, so there is a good chance of a buildup of waves 1-2 of several degrees before the gaps down. That gives you more time to trade before making a deposit in the First Local Bank of Mattress.
Carnage Today, Bottoming Tomorrow.
The e-wave pattern from Tuesday's high looks very motive. Today was definetly a wave 3. The last 2 hours of trading began the consolidation, probably a wave 4 to be confirmed by a rally at Friday's opening. The rest of Friday should be another test of today's lows, but fails to hold the break lower. Monday looks like it will correct this week's selloff 30%, 33%, 38%, or 40%. As the market get closer to huge gaps down, these pullbacks should be on the shallow side instead of the 50%, 60%, 62%, 66% variety.
The ABX mortgage index headed sharply lower. This has been a fairly good intermediate trend indicator.
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=spy&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=3&freq=9&startdate=&enddate=&hiddenTrue=&comp=Enter+Symbol%28s%29%3A&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=3&optstyle=1013
Wave 3 of 3 of 3 of C Started
Look for the markets to drop 40% by the end of the year. This is also when business fundamentals are moving in the same direction as stock prices. Bad and Good news yields down days.
I kept telling my co-workers, "regardless of the outcome of the election, the markets are done rallying, and ready to selloff hard."
Possible Ending Diagonals?
The INDU SPX and NDX made choppy advances and light pullbacks today. The RUT made more of a motive advance.
My e-wave count has slightly changed.
SPX and INDU are in zigzags from early October '08 low.
NDX and RUT are in FLATS from the same point in time.
Both patterns are calling for a 5 wave advance out of the late October '08 low.
Friday E-wave tough to call.
SPX. INDU, and NDX looked motive between 11 AM and 3 PM. Selling picked up in the closing hour, but held above the beginning of the motive wave. The RUT rallied pretty strong on Friday. It looks like the zigzag off Tuesday's lows has completed.
All markets indicate a selloff should start tomorrow, Monday. Here's where the wave count gets fuzzy: was this rally off the lows a single zigzag, double zigzag, wave a of flat, wave a of triangle? Regardless of preferred count, all counts point lower the next day or so.
Have Profitable Trading.
NDX intraday e-wave
Today was very choppy. It looks like a triangle, or most of one. The futures are down, which would complete wave e. Triangles signal the next wave of the same degree is the last in the larger degree. This is short term bullish for the markets.
Buy the open. Then a 4 to 10% rally should develop the rest of Friday, into Monday, and maybe ending Tuesday close (election day). The timing of the pattern fits nicely with a "sell the news" tradition.
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=ndx&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=3&freq=9&startdate=&enddate=&hiddenTrue=&comp=Enter+Symbol%28s%29%3A&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=3&optstyle=1013
NDX wave ii up.
My ewave count for the NDX is wave 3 of 3 began at the 2000 point level in August '08. I don't believe it has ended, only experiencing a smaller degree wave 2 in a very extended wave.
What I'm going to look for is structure. A zigzag or double zigzag would greatly favor this bounce from last week's lows as a smaller degree wave 2 since the larger degree wave 2 (July lows to Aug highs) was a zigzag. A flat would not guarantee either smaller wave 2 or larger wave 4. A triangle would definitely signal a larger wave 4. What makes this so challenging is a zigzag is the first sub-wave of flats and triangles.
Bearish divergence on NDX and RUT
The RUT and NDX made new lows on Friday, but the SPX and INDU did not. I think the e-waves the SPX and INDU are making are zigzags, while the e-waves the RUT and NDX are making are flats.
For a record % rally in one day, today's volume was slightly less than the huge move up a couple of weeks ago.
Tomorrow I think we see a continuation of the rally or a gap up, followed by drifting lower.
I made my plan Sunday night, and stuck to it.
If the market futures looked horrible this morning, then I would transfer my $$$ from my brokerage to my bank; else I would wait for a 5 to 8% rally before buying TWM.
I took my marbles out of the sandbox. Even if I'm right about the market going much lower, I would also be right about the increased risks of being unable to cash out. My losses over the last 10 years are about $50K, which I consider a bargain for all I've learned about the market. I'll play defense for now and paper trade to keep my skills sharp for my return to the market.
The markets are in crash mode. The circuit breakers are about to be tested.
I'm thinking Triangle too.
And it is about to make a big move to retest lows. If it really is a triangle, then a monthlong rally should follow. Two big moves to play.
SPX E-wave 3-3-3 extensions
The rally out of last Thursday's lows looked corrective, and very short lived. There was much enthusiasm. I favor this rally as a smaller degree wave 2 based on the following characteristics:
1.) It was a very sharp bounce which took very little time.
2.) No big open chart gaps have appeared.
3.) There have been no techincal difficulties handling the volume of trades.
4.) The market has not been shut down. like Russia.
5.) The is a waterfall crash.
6.) People in work have started wondering what to do. At the end of Wave 3 is when most actually take action.
7.) In bear markets stocks sell even on good news. There are still rallies happening on good news such as modification of the bailout plan and AIG proposal today. Iy's still early in the large Wave 3 sequence.
Even if I am wrong about this being a wave 2. there is still e-wave support for more downside. The selloff from Monday this week into today's lows looked impulsive. The rally out of today's lows looks like a zigzag so far.
Chuck, WE ALL BAILED OUT...
... THE BANKS.
But seriously, I couldn't help myself and bought some SKF at $140 and sold today at $160. I didn't want to be caught overnight with the possibility of another SEC-FED imposed short ban on financials. I still have a small position in RYVNX. I better sell it before a short ban is imposed on ALL stocks.
ABX continues to pull away from a major top. The market doesn't believe a FED will be able to buy all of even the best rated mortgage debt.
Peg's Waterfall Count
I agree about the waterfall scenario. Fundamentals and the market are much more in sync. This usually happens in larger trend WAVE 3. The past 2 weeks shows the chart going vertical. Much more downside is ahead.
Bailout Talks Collapse.
Now so will the stock markets.
SPX futures -13. The 5 minute chart looks like a waterfall.
Are U Smarter Than Buffet??
When the South Sea Bubble popped, Sir Isaac Newton (physicist and father of calculus) lost a significant amount of his wealth.
PEG - What if Bill Passes?
The equities market is melting down regardless of the bill. Actually I think it's getting worse than before a plan was announced to calm the markets last week. The chart of the 10 yr yield has held its post bill news spike, while the US markets have dropped BELOW Thursday's close. The NDX gave back over 70% of the spike!!! and don't forget LIBOR is screaming higher.
Gold and oil have pulled back from their spikes as they signal there is still inflation fear in the air.
It looks like stocks and bonds are both in selloff mode.
BLiss - Oil and Dollar
I have to disagree with you. Oil is a fear indicator, based in percieved supply-demand, and the currency it traded in. It is the threat of a hyperinflating dollar that was behind the spike.
Hog - I Chose Deflation as my poison.
It rewards prudence and eliminates moral hazards. It is a more stable depression since the currency will still exist.
Something tells me that the bankers are trying to scare people with inflation to get their US dollars.
Hog- Nope, Nothing Wrong With Your Post.
BIG Move on Lower Volume
Friday's historic advance in the markets has technical weakness behind it. The volume didn't spike higher. As a reference, The volume on Tuesday was nearly double Friday's. Thursday's volume was maybe 25% higher than Friday's. Wednesday did look like a capitulation day with spiking volume.
The general pattern in a bear market is for volume to increase as the price decreases, and decrease as the price increases. This 6 month daily chart of INDU clearly shows this.
From an E-wave view, my preferred count changes to wave c of 2 flat of larger Wave 3.
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=6&dy=0&id=p75635173805
More downside is indicated by volume and e-waves.
SPX Futures UP 25pts AfterHours
WOW!!! It looks like Wave C of a zigag correction may complete overnight. Possible pop and drop in the morning,
Ewaves SPX DJIA
SPX
WAVE 1 Oct '07 High to March '08 Low
WAVE 2 March '08 Low to May '08 High
WAVE 3 May '08 High to present
Wave 1 of WAVE 3 May '08 High to July '08 Low
Wave 2 of WAVE 3 July '08 Low to late Aug '08 Highs, maybe a truncation
Wave 3 of WAVE 3 in progress. This should send the SPX down at least 400 points. Target of 900.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=6&dy=0&id=p71227652516
INDU same wave count. Target of 8000.
http://stockcharts.com/h-sc/ui?s=$Indu&p=D&yr=1&mn=6&dy=0&id=p71227652516
Targets are based on fibonacci ratios of Wave 3 = 1.62 * Wave 1
Hey Bliss, IT'S CRASH TIME.
The SPX futures area already down 7 points.
Gold E-Wave
March '08 high to present is corrective
Wave A - March high to May low
Wave B - May Low to July high
Wave C - July high to present in wave b flat. wave c target $650. area
http://stockcharts.com/h-sc/ui?s=$gold&p=D&yr=0&mn=6&dy=0&id=p75635173805
TekProd-Now I agree with your 10 yr yield forecast.
With the huge move in the yield today, too much of the yield rally off the March lows has been retraced to be corrective.
SPX Futures Bounce From -37
Presently -30.
The bounce is looking corrective as indicated by a clear zigzag. If the futures are anything better than the -37, then buy the morning drop and lock in a 5 to 8 gain. Otherwise look at the chart because the next leg down from the bounce has the potential to be 80 points.
http://charts.barchart.com/chart.asp?sym=esz8&data=Z10&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