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ABX Index Triangle Eliminated
The ABX-HE-AAA 06-1 index has advanced, eliminating the triangle wave count. The zigzag or WxY count is still in play. The index has a little further to rally before it breaks the peak of the rally's 1st leg.
Yields on the US 10 yr bond are finding some resistance. The best wave count I have is a zigzag from the may have completed this week from the June '08 high. The stochastic, MACD, and RIS are giving signs of a bottom. The yield moved from the lower bollinger band to the middle on Friday, and threatens the upper trend channel lines.
http://stockcharts.com/h-sc/ui?s=$tnx&p=D&yr=0&mn=6&dy=0&id=p75635173805
SPX INDU NDX Wave Count
All wave counts start from Last Tuesday's high.
SPX Large 1-2 and then Medium 1-2. If the wave count is correct, then tomorrow should start Medium 3.
INDU. It looks like a bunch of zigzags forming a corrective triangle to the downside. Wave d of the triangle. If wave e drops more than 450 points, then it is not a triangle.
NDX Large 1-2. Large 2 started this monday. The correction looks like a nearly completed flat, and would look better if it retraced more.
All indicies are calling for a turn lower sooner rather than later.
ABX Mortgage Index up, New E-Wave?
The ABX-HE-AAA 06-1 index at http://www.markit.com/information/products/category/indices/abx.html was up today. No E-wave counts we're violated to force a new count; however, I'm adding a correctve triangle (presently in wave e) as an alternate count to my preferred count of wave 2 zigzag complete, new wave 2 of larger Wave 1 of Largest WAVE 3. The alternate impies another day or so of choppy equity market advances. The preferred count implies the crash continues sooner than later.
Interest Rates to Rise on FRE-FNM Bailout
That's the "cause-effect" I expect the headlines to read. E-waves were giving a realistic chance of the beginning of Wave 3 in the 10 yr yield a week or so ago. The 4.5 year yield cycle was calling for a major yield-bull / bond-bear back in March-April 2008.
Using these tools I would conclude the equity markets sold off hard last week to start Wave 3 of WAVE 3, so the euphoria of the bailout will quickly wear off.
An interest rate spike would make it even more difficult for ARM holders to refinance their mortgages, for consumers to pay off their credit cards, or people to buy a new car. The bailout has now entered the realm of unintended consequences.
And remember, "Backfire" is spelled F-E-D.
ABX Heads Lower
The ABX-HE-AAA 06-1 headed lower, enough to break the lower trendline of the rally of the last 2 weeks. This index shows a clear zigzag where wave c truncated. At a broader level of magnification the zigzag just broke above the upper trend line of the May-June selloff on the second try. It remains to be seen how long it will remain above that trendline.
As this index goes, so go the markets.
http://www.markit.com/information/products/category/indices/abx.html
VIX breaks upper Trendline
The full stochastics were rising over the last month while the VIX was falling. This is a negative divergence, a signal that the trend is questionable.
The MACD shiws a bottom taking place and a rising VIX in the near future.
http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=0&mn=6&dy=0&id=p75635173805
10 YR - No Break
I think the 3.70% level is an area of strong support. The 4.5 yr cycle bottomed in March '08 and the ensuing rally was an impulsive e-wave. The recent pullback in the yield is a zigzag correction about to complete the zag.
If the pullback in yield were impulsive, the second segment (wave 3) would be sharper and deeper than the (first wave 1). Presently the potential for wave 5 to overlap wave 1 is very high, a violation of rules.
Fundamentally there is so much pressure to dump treasuries as the last source of cash. This is highly deflationary.
KENL - $MID
wave b of b of the July rally advanced beyond the end of wave a, yet wave c of b does not look impulsive, so its not a flat.
The best e-wave count would be WxYxZ, a complex corrective move of 3 non-impulsive advances. Drawing an upper trendline, and estimating the rally concludes late next week, I get a target of 840.
The volume continues to decline with time. This indicates Wave 1 has not started.
So we're in the same ballpark.
Intraday Wave 2 Flat SPX, INDU
The 1273 target I made for the SPX last night took place in the pre-market. The opening selloff was the intraday wave 5 of Wave 1. The intraday Wave 2 was a flat, as wave b finished the 2 PM hour lower than intraday Wave 1 at the opening. The rally into the close looks incomplete, so a slight rally in the pre-market or at the opening is likely.
If the SPX drops below 1263(INDU below 11340), then chances for a minimal 48 point (500 point INDU) drop go way up.
SPX intraday e-wave
The rally off the lows around 1 PM in the SPX was a zigzag. The decline into the low of the day was also a zigzag. This is setting up to be wave 4 flat. wave c sompletes tomorrow morning, target of 1273. Wave 5 sells off through the afternoon.
July Rally Still in Force??
I'm now open to the possibility the rally off the July lows is still in place. This count applies to the SPX and INDU. If so, the wave count would be Wave 2, a zigzag. Wave b was a flat. Wave c started last week and will be motive.
GE in SELL Mode
Thursday's wave count was fairly accurate. The price did not reach the $30.50 target. Truncation of several degrees and ending diagonal signalled a sharp drop. The $29.50 area was breached triggering a shorting opportunity.
Today finished a wave 1, and saw wave 2 begin. So far it looks like a zigzag, but the time consolidating is too short. maybe a double zigzag or flat will emerge from the zigzag Wednesday or Thursday to make a better time balance.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=ge&time=&freq=
Chuck's UGLY Waves
Definitely in a 3.3.1 down. More precisely 3.3.1.1 down. The pattern looks like the 3.3.1.2 bounce will take place tomorrow and extend into Thursday. There is no telling how many wave 1.2.1.2.1.2... degrees will unfold. This market has a higher crash potential now.
ABX-HE-AAA 06-1 Confirms New Bear Leg
This was a the best rated AAA of its vintage, and it dropped nearly 1% today. The drop from August highs to present is much greater than any pullback during the March-May Bear Stearns bailout rally.
http://www.markit.com/information/products/category/indices/abx.html
GE Ewaves and other TA
GE has been in a corrective wave (double zigzag) since the July lows. Wave b of the double zigzag is a triangle. This signals the next advancing wave will be the last. wave c began last friday. It too is a double zigzag with a triangle separating the zig and zag. Tomorrow all the degrees of wave from the July low should finish, testing the $30.50 area.
http://stockcharts.com/h-sc/ui?s=GE&p=D&yr=0&mn=2&dy=0&id=p87917302788
Other TA shows the stochastics overbought, the MACD roling over, and the MACD difference declining since the triangle began. A major indicator is the volume since it has been steadily declining since the July low. The declining volume indicates the rally does not have the strength to last a long time.
ABX AAA-rated index fell sharply.
Its rally was stopped short by the upper trendline of the May-July waterfall selloff. I see this as the signal the equities' rally is nearly done.
NDX Volume Fades as Price Rises
This is an indication of the rally losing momentum.
http://stockcharts.com/h-sc/ui?s=$ndx&p=D&yr=0&mn=6&dy=0&id=p75635173805
E-wave SPX and Indu
My original thoughts last week for these indexes was a zigzag off the July lows, and wave c was shaping up to be an ending diagonal. I may have been premature. I'm thinking today was wave d of the ending diagonal. wave e will take us into reversal Thursday.
The VIX too looks like there is and ending diagonal forming. wave e will take the Vix down (Market UP).
The ABX index hardly budged today despite a larger market selloff. This is nonconforming behavior. It suggests the markets will bounce back from todays selloff.
The NDX was down a fraction. This too is a nonconformation. NDX looks like it wants to finish wave 5 of c tomorrow.
After that I'm looking for a turn lower to kickoff Wave 3 of 3 that will last 6-8 weeks.
Taser - HSI SSEC
I keep an eye on major global markets. The Chinese markets are interesting because they are predominantly manufacturing based. Where they go, eventually will the finance based markets (the West). Fundamentals in China are slowing down along with the equity markets, so I put their bubble at half deflated. Denial is being replaced with reality. SSES target of around 1000.
ABX Index down hard on Friday.
The ABX index I use as a guideline fell 1% on Friday despite the spectacular equity rally. This is a non confirming indication. When a bond enters junk status, it trades like a stock. To me it hints equities are coming unnder pressure this week.
SPX and INDU e-wave
Wave 2 from the July lows (FRE-FNM bailout) I count a motive wave (Wave A) then a corrective wave (Wave B), and finally an ending diagonal (Wave C) from the end of July to present. Wave 3 of 3 should begin this week.
Confirmation of Wave 3-3 beginning would be a drop below 1260 in the SPX or below 11400 in the INDU.
Chuck -Expecting Next Wave Down
I am expecting the next wave down too. My count is 3.2 down as well. I noticed the financials were weak today. They've been leading the turns lower. ABX mortgage garbage index is hitting a trend line from the top of the last waterfall. SKF bounced off its 200 dma. The time fibonacci ratio is 0.65. Tomorrow's open would make a nice turning poing.
JNJ new all time high
The 9 year ending diagonal should be now be complete. Wave 5 started this year. Wave 5b was a triangle, signalling the rally out of the July lows to be the last advance from the wave starting this year.
There is always the possibility of a double zizag to extend the choppy advance another year, or a smaller ending diagonal (waves b,c,d and e ) to be completed over the course of at least a another year. Confirmation if the price breaks below $61.50
Once JNJ tops it should lose 50% within a year.
Also since JNJ has been the strongest Dow stock, and it is topping, it forecasts the rest of the market will sell off from here.
http://stockcharts.com/h-sc/ui?s=jnj&p=D&yr=0&mn=6&dy=0&id=p75635173805
Australian market break support
The AORD broke below the the level the day the Freddy-Fannie bailout was announced. This may be a false break as Wave 2 of 3 flat could be forming. A flat is a more bullish count as a 5 to 8 day rally would follow. The bearish count is the start of Wave 3 of 3, which would include some open chart gaps to the downside before a multimonth consolidation begins.
http://stockcharts.com/h-sc/ui?s=$aord&p=D&yr=0&mn=6&dy=0&id=p75635173805
Fundamentals Events
This is the month college tuition is due. If you are 1 of the 40,000 students in Massachusetts you have been told to go find another lender, after 100 have stopped making gov't backed loans and 30 have left the college loan business. I doubt Massachusetts is the only state where college loans are tougher to obtain. Next month school taxes are to due, some are higher than expected. These should put a strain on the markets as parents sell stocks, bonds and mutual funds to raise cash to pay these expenses.
Chuck - NDX
After today I agree the bounce of the July Lows are corrective. The pattern certainly looks like a triangle, however, other markets are something else. If the markets started wave 3 of 3 today, then it was not a triangle, but a complex correction. We won't know until wave 5 or 5 breaks wave 3 of 3 lows.
SPX Wave ??? Flat Update
Nix the flat count. This bounce looks like a zigzag near completion followed by some downside. Fibonacci price and time ratios just are not there.
A better count would be to consider a half finished double zig-zag would be a better count in time proportion. wave a completes tomorrow morning then a correction begins. This would let fibonacci price and time ratios by the end wave c to converge over the next 2 weeks.
What I find hard to believe is there would be much upside left in the general markets considering UYG, the ETF for the financial sector soared over 50% in 7 trading days. That kind of return is generally unsustainable.
Mixed Market Signals
As the bank and financial stocks rallied hard from the lows this week, the same could not be said for ABX-HE-AAA+06-1, the best performing ABX index of the last vintage. The equity market may have gotten ahead of itself, or has to reverse to get in line with what the mortgage indexise are doing.
And there is the NDX / tech sector which fell on Friday due to 2 of its pillars, MSFT and GOOG. These are to the markets what GM was in the 1950's and 1960's: What's good for GM is Good for the US.
SPX Wave ??? flat
Over the last 10 days one could argue a flat was traced out.
The rally off Tuesday's lows looks like a clear, nearly complete 5 wave pattern. Even if this is not a flat, some sort of pullback is due just because a motive wave has completed.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
Gettin, you said that so eloquently.
That's the count I'm looking at. The sellof from May '08 has not had open chart gaps, characteristic of wave 3 of Wave 3. Eventually there will be open chart gaps to the downside.
Chuck703VA Wave C vs Wave 3
My preferred e-wave count for the INDU and SPX is finishing wave 1 of Wave 3 or starting wave 2 of Wave 3.
The October '07 selloff into the March '08 lows had a relatively wide channel compared to the May '08 selloff to present. If they were Wave A and C, their channels and duration would be more similar.
The argument against having Waves 1 and 3 is wave 3 should have ended much lower, and lasted longer.
An extending Wave 3 resolves these two arguments.
JNJ close to major top
Take a look at the 10 year /weakly charts for JNJ.
There is a huge ending diagonal in play, starting from the lows in 2000.
WAVE 5A of the ending diagonal began from this year's lows. JNJ is in WAVE 5C-zag. It shot up as post triangle moves usually do. There may be a little more upside to make all-time highs before turning.
The significance of JNJ is it has been one of the strongest Dow stocks, yet its pattern shows a major top is almost in place with a potential for a very sharp sharp retracement. A falling tide is about to sink this boat.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
TJ - Bottom Falling Out
Large corporations still have large, unfunded pension liabilites, as do municipalities.
States' budgets are hurting.
The Federal budget will be hurting if they try to bail out FRE FNM.
The amount of digital dollars to printed dollars is probably 20:1. Something that costs $20 now could end up being bought for $1 during the panic phase of the credit contraction.
Blindfold yourself, throw a dart, and whatever you hit could very well be the next shoo to drop.
Lexus: CASH = 90-95%
I'm keeping 5 to 10% of my portfolio in RYVNX as icing on the cake. It doesn't matter what the return ON investment if there is no return OF investment. Cold Cash is about to take the throne as indicated by runs on banks.
ABX INDEX CRASHED!!!
DOWN 4% for the ABX-HE-AAA 06-1 index, the highest rated index of subprime mortgages. This is a full system meltdown. I'm taking all my money out of my trading accounts. Deflation is also a once in a generation event that can be very profitable.
SOLD my SKF
With shares FNM FRE falling 40-50% SKF should have been up over 20% Around mid day the intra-day charts showed a rounding top on SKF, and FRE-FNM made nice bounces. I felt it was time to get out of SKF.
My analysis was proven correct (finally) this evening with the SPX futures UP OVER 14 points. I'm calling an intermediate term bottom. I'll wait for this wave ii to run its course over the next 2-4 weeks. Meanwhile I'll change my allocation to 90% cash, and 10% ETFs.
Entering a series of waves 4-5's
The 11600 level in late June that broke the March '08 lows looks like a classic wave 3-3-3-3. This marks the half-way point in time and price. Now comes several degrees of waves 4 and 5. I'll hold out for a lower price to go long in 3-4 weeks for a dead cat bounce. Target around 10500 for INDU.
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=6&dy=0&id=p75635173805
Many more 333's in the INDU.
The markets are looking really crashy. By e-wave symmetry I get a downside forecast for the INDU of at least 10100 over the next couple of weeks.
Late July / early August bottom. ( end of WAVE 3).Good place to cover shorts
Rally for 6-8 weeks (WAVE 4) Good place to take money out of banks.
September crash (WAVE 5) Looking for a buying opty if financial system is still operational.
Estimated Prophet: OIL Top
Prechter has a FREE WEEK. One of his publications contains a target range for oil. His analysis of commodities tend to be more accurate than equities.
Bear Volume Pattern SPX
The fall in the SPX index the last 2-3 weeks was on increasing volume. The bounce of the last 3 days has been on declining volume. This is typical bear market price-volume behavoir. More long-term downside to come.
http://stockcharts.com/h-sc/ui?s=$spx&p=D&yr=0&mn=6&dy=0&id=p75635173805