SPX wave 3 extended

The rally off the late September lows looked complete when I made my call, but extensions happen. I think wave 3 finished today with a couple days of wave 4 and 5. Even though wave 3 extended, wave I was the largest, and wave v was the smallest. This is a clear sign of momentum deterioration. Think about how a sine function rolls over as it approaches the crest of its wave.

I count 5 waves up in SPX.

wave 1: late September low to early October high
wave 2: early October high to early October low.
wave 3: early October low to mid October high.
wave 4: mid October high to mid October pullback.
wave 5: mid October pullback to present

Some sort of pullback is due, regardless of the degree of wave just completed.

The US markets are getting VERY toppy.

My long term model is still heading lower. The steepest part should be starting.

WTIC is a gusher!

That's the behavior of a post triangle move.

Short Term Counts

With today's move, I'm changing my preferred count to a Wave 2 flat that began from the August lows. The rally the past couple days looks much more motive than the sell-off post FOMC meeting.

Graphs of my spectral model



I finally got around to figuring out the file upload feature. I hope this works.

------------ Top chart ------------
The model in pink.
The moving average is yellow.

The model is equal to the sum of the moving average + Filter 1 + Filter 2

The model correlates to the market with a score of 0.9168. This is a very strong reading since a score of 1.0 would be perfect correlation (identical data series).

The model has rolled over a month after the market rolled over. The fact that the market and model have rolled over is not sufficient to call a top. The outputs of BOTH filters must also have rolled over to reduce false major top signals.


----------- Bottom Chart --------------------
The second chart shows the outputs from the 2 filters.
Filter 1 is red. Its output has a period of about 7.5 years.
Filter 2 is blue. Its output has a period of about 3.5 years.

At the major tops of 2000 and 2007, BOTH filter outputs made tops.

Presently, Filter 2 has topped, is entering the segment of steepest descent, and has 200 more days until it reaches a bottom, and has topped out before Filter 1.

Presently Filter 1 has also topped; however, its effects won't be felt for another 6 months.

Sinusoids can be used to fit and estimate a more accurate trajectory than "down". Just knowing the market has topped and is heading down for YEARS is sufficient to reason to liquidate the portfolio.

Monday looks more pivotal than Tuesday.

I count a wave ii flat from September 28th closing to present. wave c of the flat is half way done. Completion on Monday October 5th looks probable. Once wave c completes, wave iii of wave 3 should take the SPX down 200 points fairly quickly.

Western Texas Crude about to Pop

http://stockcharts.com/h-sc/ui?s=%24WTIC&p=D&yr=0&mn=6&dy=0&id=p88548584632

WTIC has been forming wave b triangle of a zigzag off the Augus 2015 lows. It may have already started wave c zag. Upside is 200 day moving avg ~ $51.25.

Markets Could Go Either Way



http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=spx&time=18&startdate=1%2F4%2F1999&enddate=1%2F4%2F2013&freq=9&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=4&timeFrame

http://www.barchart.com/interactive_charts/futures/ESZ5

My primary count from the FED meeting high is a series of waves 1-2-1-2. Wednesday could be a very sharp sell-off.

My alternate count is a possible Wave-x (3 move correction) of the rally out of the August 24 lows. Another 3 wave rally the next week or two.

Still a chance for the wave 4 triangle pattern...
... but that is fading fast. wave e of the triangle, while still smaller than wave c, broke above the upper edge made by waves a and c. Throwover happens, but it looks strange. This consolidation is taking a little longer than wave 2 (from the mid July low to the mid August tag of the 20 day moving avg). The triangle broke the upper channel of the motive wave from July highs. The open market chart is also between Fibonacci ratios of 0.5 and 0.6, so a little more to the upside.

Zigzag or double zigzag counts are quickly becoming preferred.
A distant 3rd place count is a flat.

Eliminating wave 4 triangle count would open up the possibility of cascading waves 1-2, which would be a crash scenario. The Chinese SSEC is into wave 3 of 3, so another wave of global sell off is around the corner.

Triangle in SPX

http://www.barchart.com/interactive_charts/futures/ESU5

The price is now at the tip. We'll know very soon if the move off the August 24 lows is a triangle in wave e, zigzag, or double zigzag.

Nikkei crash resumes

http://stockcharts.com/h-sc/ui?s=%24NIKK&p=D&yr=0&mn=6&dy=0&id=p34173313267

Tuesday night the Nikkei took off like a rocket ship with an 8% rally. The rocket is heading back to Earth tonight with an orbit 3% lower.

The slightly bigger e-wave picture I see is:

Wave 1: August 2015 high to August 2015 low. Motive wave.
Wave 2: August 2015 lows to September 08 high. Corrective flat.
Wave 3: September 08, 2015 high. Just starting. This should be worse than the 15% drop of Wave 1.

SPX futures - correction looks complete.
The morning support for a 1% pop at the open couldn't hold.
Waiting for confirmation with a drop below 1900.

Triangle part of Zigzag

The SPX futures show the price has pushed above the upper edge of a triangle. wave c (zag) is under way. Since this correction the past 8-11 days is not a triangle, my alternate count of a series of waves 1-2 of multiple degrees now becomes my preferred count. Downside pressure should become intense over the next 2-3 weeks.

SPX Futures Triangle

Over the past 9 days of consolidation the price looks to be forming a triangle of some degree of corrective trend since the channel lines are converging.

SPX Futures e-Waves

wave 1 - July 20th high to July 27th low
wave 2 - July 27 low to August 18th high. flat
wave 3 - August 18th high to August 24 low. extended motive wave.
wave 4 - August 24 low to September 3 high. Possible triangle

Forecast: wave 5 finishes slightly below the end of wave 3 (7-8% drop).

Alternate count
Wave 1
Wave 2
Wave 3 => wave 1, wave 2

Alt forecast wave 3 to drop more than 10%.

Other technical indicators include:

channel lines / devil's pitchfork: lower line July 27 lows to August 24 lows. Draw upper parallel line from August 18 high. Price is currently near the upper channel line, and could find support at mid channel, which is similar to preferred e-wave count

My spectral model indicates the price has fallen too quickly from the model. At past tops, the price would retest the overhead resistance made by the model; thus supporting preferred e-wave count. The rate of sell off, however, was similar to that at the steepest section of the 2008 crash. Being so early in this bear market with such strong downward forces supports the alt count.

US Dollar index ready to blast higher.

Since the March 2015 highs, the US dollar index has traced out a double zigzag correction.

wave a / zigzag 1 from March 2015 highs to May 2015 lows.
wave b / triangle from May 2015 lows to August 2015 highs.
wave c / zigzag 2 from August 2015 highs to August 2015 lows.

The dip below the 200 day moving average was a bear trap as the dollar reversed and broke above the average.

http://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=1&mn=6&dy=0&id=p55003451777

NOW the SPX futures look like a flat.

Wave A: from Monday's lows to Monday's highs = zigzag
Wave B: Monday's highs to Tuesday's low = zigzag
Wave C: Tuesday's lows to Thursday's close high = motive

Friday should trade lower since a change in direction follows the completion of a motive wave. Look for a waterfall of waves 1-2 of several degrees.

http://www.barchart.com/interactive_charts/futures/ESU5

SPX Mini Futures corrective flat.

Those wild gyrations to the upside look like a flat. Tuesday's afternoon selloff looks motive and dropped below wave b of the corrective flat to confirm the rally off Monday morning's lows as corrective. Flats generally occur before or after the longest subwave (1,3,5) of a larger motive wave. With wave 1 dropping 11% last week, wave 3 should be at least a Fibonacci 16% drop. That would make the next downside target 1650.

http://www.barchart.com/interactive_charts/futures/ESU5

Rebound looks like a zigzag.

The morning rally off yesterday's lows and the overnight rally off yesterday's close look motive. The overnight rally looks like it wants to roll over, a little weaker. There is a Fibonacci level of 50% retracement not too far away at 1960.

http://www.barchart.com/chart.php?sym=ESU15&t=BAR&size=M&v=2&g=1&p=I:20&d=M&qb=1&style=technical&template=

WOW, talk about Wave 3's being wonders to behold!!!

Worse than I thought.

With the futures down 2% it now looks like wave 3 of 3 of 3... waterfall situation. No doubt a crash is taking place.

I see money seeking safety in gold and US bonds. When I see both of these "assets" selling off in tandem with the stock markets, then I'll know margin calls are REALLY accelerating and the crash is half way done.

Mini SPX E-waves: Finding a bottom

http://www.barchart.com/interactive_charts/futures/ESU5


The sell off from the August 17 highs looks nearly complete. Tonight's lows completed wave 5 of larger 3. There is at least one set of waves 4 and 5's, maybe even a second set at larger degree. Monday or Tuesday morning look like ideal timeframes for near term bottom. The choppy, corrective rally should last 3-4 days.

Investors will project this sell off as continuing for much more time, but we know the market makes more escapes from pins with kickouts than a professional wrestling match.

Spectral Model and E-wave Confirms INDU Top

Today's break of the February 2015 lows confirms the ending diagonal count from the October 2014 lows is complete. The only real hope bulls have is trying to count an ending diagonal from the February 2014 lows. Such an alternate count wound not have the classic sharply converging lines of an ending diagonal.

Indications from my spectral model are the top is in place. The market has fallen below the model after many years above. The market top is a few % points above the top in the model. The model usually lags the market within 100 days. The model has dropped a few % points from the top. These are all characteristics present at the other major market tops over the past 90 years.

SPX at critical point.

The SPX futures chart shows the price contracting since the July 20 high. http://www.barchart.com/interactive_charts/futures/ESU5 This could be a series of waves 1-2 of decreasing degree, or Wave 4 triangle.

In the triangle count, wave e has slightly dropped below the lower edge. If the futures market drops below the 2056 level, wave c will be the smallest, and invalidate the triangle count.

If the futures were to rocket higher before the opening, this would be typical post-triangle thrush behavior.

LMT pullback due.

A motive wave from the late June 2015 / early July lows looks complete. Momentum has hit the brakes as wave 1 was the largest and wave 5 is very small. It could be THE top in LMT. I expect the price to drop by at least 10% in a WAVE 4 corrective move, and 66% to 75% if THE top. $50 and $70 are the areas of less degree wave 4's.

E-Wave on GOLD!

Sunday night when I saw the headline that gold fell 4% I immediately had to see what the wave count was. The big picture is now COMPLETELY obvious. Gold has a week or two before the Wave A bottom is in place, maybe the $900-1000 range. Then a set it and forget it 40-60% Wave B rally over 18 months.

Wave A breaks down as follows:
Wave 1 September 2011 high to September 2011 low.
Wave 2 September 2011 low to November 2011 high.
Wave 3 November 2011 high to November 2014 low. (Extended)
Wave 4 November 2014 low to June 2015 high. Triangle
Wave 5 June 2015 high to in progress.

Note how quickly Wave 1 unfolded. Less than a month. Wave 5 is showing similar speed qualities. For Wave 5 to be proportional to Wave 1 in price, it would have to fall to $965.

SPX Futures down >30 pts on Greece referendum, default and capital controls. This is significant since the price has made a lower low for June and broke below the lower trend channel since February 2015.

Retail Update

WMT continues to accelerate to the downside in Wave 3-3. The price is in the level of previous Wave 4 triangle. With the 50 DMA heading down and crossing the topping 200 DMA it will be interesting to see if WMT finds support or a huge gap down blows away support.

EBAY ending diagonal looks complete and today's sharp selloff definitely fits post ending diagonal behavior.

AMZN can still be counted as a wave 4 triangle complete, but the Bollinger bands are starting to open with the price pushing trough along the lower band, which is bearish. A 4-5% move either way is coming in the next day or two.

TGT is looking less bullish. The April to May sell off can count as a leading diagonal wave 1. The rally off May's lows is choppy, and can be counted as wave 2. The 50 DMA has topped, and the price has tested this resistance for a week before being repelled. Stochastics made a recent high, but the price did not (divergence). MACD gave a sell signal. I'm changing my view to bearish to better align with the rest of the retailers.

Retail Sector E-waves

WMT - Wallymart is leading the retail sector into a bear market. It topped in January 2015 and has shed more than 15%. From the lows in mid April to the highs in May, WMT has failed to rally above the 200 DMA. This failed test has given way to a quick resumption of selling. The chart looks like a waterfall of waves 1-2 of multiple degrees. Look out below cause a whole bunch of wave 3-3-3 are about to show WMT what a real price rollback looks like.

http://stockcharts.com/h-sc/ui?s=WMT&p=D&yr=1&mn=0&dy=0&id=p96336389075




EBAY has very little momentum left. Since October 2014 EBAY has been in an ending diagonal. There may be one or two days left before EBAY completes wave 5 of Wave 5 ending diagonal.

http://stockcharts.com/h-sc/ui?s=EBAY&p=D&yr=1&mn=0&dy=0&id=p56192933195


AMZN - amazingly still has not topped. But that's about to change in the coming days, couple of weeks. Since January 2014 AMZN formed a Wave 4 triangle that ended in January 2015. Over the last 5 months Wave 5 has progressed to wave 4 triangle. So in the next 2-3 weeks AMZN will finish wave 5 of Wave 5, and join the rest of the retail sector in the bear market.

http://stockcharts.com/h-sc/ui?s=AMZN&p=D&yr=1&mn=6&dy=0&id=p66025535987


TGT - may or may not have topped. My favored count is bullish. TGT pushed wide of the latest pullback channels, and is testing the underside of the 50 DMA. The rally off the February 2014 low looks like 4 out of 5 waves have finished, with wave 5 of Wave 5 to complete over the next 2-3 weeks.

http://stockcharts.com/h-sc/ui?s=TGT&p=D&yr=1&mn=8&dy=0&id=p40457978884

SPX Intraday Triangle!

After the price in the afternoon challenged the morning high, I bought SPY Jun 210.0 Puts. A triangle indicates one final wave in the direction of trend. With a triangle bridging Zig and Zag earlier this week, and today's triangle of smaller degree, chances of at least a pullback through next week is in the cards.

Triangle Completed over night.

Post triangle thrust has begun.

Possible SPX Futures E-wave Pattern

http://www.barchart.com/interactive_charts/futures/ESM15

I'm looking for a zigzag or double zigzag off the May 7 lows to complete a multi-month ending diagonal. I think the zig is done, and a triangle may be forming. The timing looks to be an options bonanza as wave e of the triangle could finish late tomorrow. Price action following triangles tend to be very sharp moves. In this case a 30 point move wouldn't be out of the question. Buying call options for pennies may not be such a bad idea heading into expiration on Friday.

I'm seeing cracks.

RUT broke 4+ month support line sharply and closed below the 50 DMA on good volume.

http://stockcharts.com/h-sc/ui?s=%24RUT&p=D&yr=0&mn=10&dy=0&id=p61873957610

INDU failed to make a new high (by 1/2%) with SPX last Friday, and has been trading along the 50 DMA

The SPX has also been trading along the 50 DMA. During the choppy April rally volume on down days was greater than volume on up days.

AAPL looks like it had a post triangle pop and reversal.

WMT has been in decline since it topped in early January 2015. Lately the chart is showing more waterfall characteristics.

LMT has been in waterfall mode the last month, and closed just short of the 200 DMA today.

I'm seeing hints of solvency problems in the banking sector. Yields on Italian and Spanish 10 yr gov't bonds popped ~10% yesterday. Yet their yields are still less than that of US 10 yr bonds. This was after forming a base for a couple of months. In the US, a handful of banks are offering 5 year jumbo CD's yielding more than a 10 yr US gov't bond. You may have seen one of their ads on other financial sites.

IBM E-wave

http://stockcharts.com/h-sc/ui?s=IBM&p=D&yr=0&mn=10&dy=0&id=p80617456423



The wave structure off the top in 2013 is a bit choppy. It's not until April 2014 that a large motive wave to the downside can be counted.



The rally off the January 2015 low has the look of a classic zigzag. Waves a and c are motive. Wave b is a triangle. The triangle signals one more wave in the sequence. Wave c is nearly complete. So IBM is about to head lower.

SPX Roller Coaster.

All that back and forth in the SPX futures turned out to be a little wave 4 triangle of wave 5 of wave 5 ending diagonal that started in October 2014.

http://www.barchart.com/interactive_charts/futures/ESM5

Non-confirmations.

While the NDX and SPX made new high closes, INDU was still 1% below its all time high.

Wave 5 of this ending diagonal in SPX and INDU are playing out a little differently. SPX may be forming another degree of ending diagonal, and INDU may be forming a zigzag.

NDX looks like it needs a little wave 4 and 5 to synchronize a top wit the SPX and INDU.

RUT can keep wiggling up and down to reach the top along with the others.

Gotta send more money to the trading account for an opportunity of a lifetime.

SPX Weeklong Triangle

The intraday charts for the SPX futures show a nearly complete triangle that started on April 15 and may have completed overnight.

This would make the wave count wave b of wave 5 of Wave 5 ending diagonal from October lows. starting wave c of wave 5 any minute. This should make a new high, quite possibly THE top.

http://www.barchart.com/interactive_charts/futures/ESM5

SPX Futures Well Off Friday's Lows. DAX

SPX futures caught support Friday afternoon and have rallied >15 points in a motive wave. looks like there will be another challenge to all-time highs.

The German DAX supports my thesis in that it looks to be completing wave c of a wave 4 flat. Wave 5 should advance through this week to new highs.

US E-Waves

I still have an ending diagonal from the October 2014 lows as my preferred count for SPX, INDU, RUT, NYA, and NDX. The pattern is in the VERY late stages. Truncation may have taken place with Friday's drop, a new bear market has emerged.