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Peg, RUT Confirmation
In the afterhours RUT futures fell well below the daily lows of the normal market trading session in concert with the INDU, NDX, and SPX.
From a fibonacci view, only the SPX has made a retracement target. The rest have had difficulties mounting a rally to hit the 33% or 38% fib target. My wave counts for most of the indices have gone from a double zigzag to a possible flat. A rate cut would be sufficient to propell a spike to a fib target, but that makes a great shorting opty.
The underlying trend is very strong to the downside. Watch out for people jumping out of skyscrapers.
Mortgage Index Mixed
The highest priced ABX index looks like it is completing a zigzag correction, but two indexes made new lows. I find it completely amazing the highest priced index held up so well. No need to wonder what comes next with the next wave of ABX selling about to be unleashed.
I agree, Sentiment.
The futures moved to positive territory. ABX mortgage indices rallied hard on Friday despite the equity market falling hard. Junk bonds generally trade like stocks. This is a huge non-conformation. The E-wave count looks like a wave c to the upside will finish out Wave 2 over the next 2-3 days.
I'm getting ready to place a short at that time.
XMAS Selloff Finds Footing
The last 2 days of trading the NDX retraced 30%, the SPX retraced 41% and the INDU has retraced 34% of the XMAS selloff. None of the prices are close enough to call fibonacci matches. The time spent consolidating is disproportionally short. Another 3-4 days of additional consolidation to the 50% fib retracement level would have better balanced chart patterns.
SPX Target Now Fuzzy
It's Flip FLop Season.
Initially I had 1370 as my first downside target. Then I switched it to 1260 based on Tuesday's strong afternoon selloff.
Either are equally probable at this time
Todays trading started with a choppy selloff and ended with a strong rally into the close. This is creating overlapping waves indicating maybe the XMAS selloff may be finding some support. The stochastics indicate the market is oversold. This would be supported by several days trading below the lower bollinger band.
I came up with one e-wave count that says the motive wave has ended and a rally into 1430-1440 is a target for a bear market rally. What makes me uncomfortable with the wave count are the zigzags before and after wave 3. That is highly unusual. I discount complex consolidating waves because they would need more time to develop.
4 ABX Indices New Lows
The selling wave resumes. The two indices at the low 80c level are threatening lower. The only index in the low 90c area consolidated sideways. Once the AAA rate index in the 90c area falls into the 80c area, it will conclude the shift through the subprime index risk spectrum, and signal a general market crash.
Bliss 4.5 yr Low
The 10 and 30 yr bond yields are also in the process of making 4.5 year lows. Then yields head north really fast.
SPX Wave Count and Target Update
Today's trading finished yesterday's consolidation and began another smaller degree wave 3 down. The move down from today's highs was definitely motive.
New target is 1280. based on same approach as before. Letting it ride to the downside.
SPX Wave Count and Target
THursday after Xmas started a convoluted series of drops. It is extremely difficult to try to count the waves 1-2-1-2-1-2... Instead I'm going to look for a very large move to indicate the middle of the selloff and declare it to be waves 3-3-3-3-3-3... Then I'll take the mid point to get the down side target instead of trying to count waves 4-5-4-5-4-5....
For SPX I'm calling the Friday Jan 4 opening to be the midpoint of 1435. The selloff to the midpoint was 1500 - 1435 = 65 points. The downside target is around 1435-65 = 1370. So 50 more points should be sold off in a choppy fashion. A lack of choppiness indicates there is another, larger degree wave 3 unfolding, so stay short.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
ABX Mortgage Indices 2 New Lows
Another interesting observation is the top 3 AAA rated indices fell by at least 1% on Friday. It's still kind of early in the selloff so "blood in the streets" would be an accurate forecast over the next 2-3 weeks. These falling indices imply LIBOR is about to skyrocket as banks intensify their reluctance to lend to each other.
The 10 and 30 year treasuries rallied on Friday, but the 30 year much less so. This imples long term interest rates will have to move up due to inflation fears. A couple weeks ago I posted every 4.5 years over the last 25+ years the yields have made a nice cycle low. We're due for another low at any moment.
German Wedgie
The DAX is in the late stages of an ending diagonal which began off the Aug '07 lows.
Bullish Case: Still in wave 3 of the ending diagonal. Rallies to the 8200 area over the next week and then pulls back a little.
Super Bearish Case: The ending diagonal truncated. wave 5 of the ending diagonal truncated. The downside projection is to the 7200 area in less than a month, a 10% drop yesterday's high.
http://stockcharts.com/h-sc/ui?s=$DAX&p=D&yr=0&mn=10&dy=0&id=p79409428220
ABX Mortgage Indices Turn Lower
No new lows to report.
The last AAA rated index in the 90c range has lost upward momentum. The pattern the last month looks like a triangle at best, or a truncating wave c that is rolling over.
The 2 AAA rated indices in the 80c range have fallen about 1/3 of the consolidation rally, while the lower price AAA rated indices have fallen 1/2 their consolidation rallies,
The AAA rated indices' return to the downside indicates few are hopeful of a bailout.
ABX Mortgage Indices Continue To Edge Lower
Momentum to the downside should strengthen
ABX Mortgage Indices Turn Lower
The rally the ABX Indices have had over the last 2-3 weeks looks like a zigzag and means the bounce is probably over. The next wave should be a 3 of 3, a very sharp drop to new lows. maybe a third of the indices could be completely wiped out in the process. All this e-wave interpretation amounts to the market giving central banks a vote of "no confidence" for the rescue effort.
"...can't keep a crash from happening again!" ;o)
ABX Mortgage Indices Still Consolidating
The best AAA rated index cracked 94c and looks like a zigzag is nearing completion off the lows two weeks ago. The next best AAA rated index is about to climb above the 90c mark.
This is definitely a false rally as LIBOR is now higher than it was in August, DESPITE CENTRAL BANK INTERVENTION. If the banks don't trust each other's IOU's, then why trust the bank, or another debtor, with your money?
I'm looking for the debt markets to get really ugly next week. Treasury yields may actually RISE as they and the stock market are the last sources of liquidity.
NIKKEI: Wave 2 Double Zigzag
THe Nikkei is nearly done forming a double zigzag wave with both price AND time fibonacci ratios targets. Tomorrow night should be the final touches before Godzilla steals Xmas.
http://stockcharts.com/h-sc/ui?s=$NIKK&p=D&yr=0&mn=3&dy=0&id=p08930236338
Gold: A Textbook E-Wave Pattern
The correction in gold since the Novermber '07 highs looks like a Wave 4 triangle. The Wave 5 advance should be an EXPONENTIAL spike according to e-wave guidelines. Gold is a fear driven rally.
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=0&mn=6&dy=0&id=p75635173805
Hang Seng Takes a Hit
The chart below shows a choppy consolidation starting in early November and then a 5 wave pattern rally into December. Last night's 2.4% drop could be the start of a new bear market if the rally into December was a larger degree, truncated 5th wave.
Stochastics are overbought, MACD is running out of steam. RSI is lower now than the October high, a possible divergence.
http://stockcharts.com/h-sc/ui?s=$HSI&p=D&yr=0&mn=6&dy=0&id=p75635173805
NDX Choppiness Since Nov 12
This could be a Wave B triangle, in a corrective wave from 52 week highs. Implies there will be a drop followed by a retest of the 52 week highs. Short term Bear, long term Bull.
It could be a truncating Wave 5 ending diagonal of the long term bull run. Implies the market is in the final stages of topping. Hold then long term bear Bear
It could be a complex wave 2 correction in a new bear market instead of a triangle. Implies the bull market is completely done and a massive wave 3 will plunge the market more than 15% very quickly. Long and short term Bear
No matter how it is viewed, it looks like a turn lower is in order
http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=2&dy=0&id=p54788290076
Triangles Signal Stock Bounce Nearly Done.
The INDU chart below shows is a wave b triangle which ran from 11/30 to 12/4. There is an even smaller triangle on today's chart. Triangles signal there is only one more advance left. Today was the last advance of the 3 day triangle, and today's late day rally is the last advance of the mid-day triangle.
http://clearstation.etrade.com/cgi-bin/intra?Symbol=_INdu&cs=&ci=None>yp=Default&gs=Huge&event=1&gr=3&tic=10-day&int=5&i1=None&i2=None&i3=None&i4=None&e1=0&e2=0&e3=0&olay=None&x=0&y=0
ABX Indices Disconnects From Stock Markets
The ABX indices have been trending with the US stock markets fairly closely the last couple of months. Today was the second down day after the dead cat bounce; howeverstocks rallied hard. This is a disconnect. And it was down BIG. The two down days have slashed in half the relief rally that lasted 3 or 4 days for the AAA rated index.
I think the equity markets will follow very shortly since it is one of the last places of liquidity. Banks could borrow from the gov't and short the stock market. People would panic sell and the banks make enough profit to remain solvent, and in power.
ABX Indices Reverse Lower.
Today things turned lower as the sharp pullback over the last week was unsustainable. This is looking like a wave 3 of 3 is about to begin for the best AAA rated index.
Post Triangle Wave Behavior
One of the guidelines, not rules, using elliott waves is the rally after a wave 4 triangle is a thrust, or sharp move in the larger direction of trend. I'm looking for a sharp reversal (truncation) based on broader social mood that is growing in the negative direction.
Here is an example: WMT. Select 10 yr time and week frequency.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=wmt&time=&freq=
from beginning of 2000 to end of 2003, WMT was in a textbook Wave 4 triangle. The beginning of 2004 WMT rallied in Wave 5 for a month and failed to make new alltime highs. The new bear market small wave 1 nearly retraced Bull Wave 5.
I have a target lower than $25 for WMT based on the trendline of Larger Bear Wave1 using the lows of '04 and '05.
Cycle Question for 10 yr US Treasury Yield
The chart at the link looks like there are 3 cycles of 4.5 years duration. The first 2 are leaf translated and in a downtrend. The first bottomed in 1998. The second bottomed in 2003. The third looks slightly right translated and relativeley flat.
Is this signalling a bottom in yield / top in bond price in the next 90 days?
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=tnx&time=&freq=
This would be the first textbook case of cycles in the market applying the concepts found on this board I've seen.
Bliss- Symmetrical Triangle"
On the larger scale, one e-wave count since the July highs is WAVE 4 Symmetrical Triangles for FTSE, DAX, INDU, and SPX. Wave D is completing and Wave E would then start next week. WAVE 5 would be a spike to test the all-time highs and then retreat quickly. Thats the most bullish count I see.
TeaParty - Sorry, can't post charts with any annotations
ABX Indices at Fib Retracement.
The ABX-HE-AAA 06-1 index retraced 33% of the 5 wave impulsive November selloff. It was a sharp bounce as is characteristic of false rallies.
http://www.markit.com/information/products/abx.html
I think its crash time, and Bernanke will hold rates. With all the $$$ that the FED has lent to banks, and the rising stock markets, it would be the perfect opportunity to orchestrate a massive short sell by troubled banks. The rest of the solvency problems go away when the stock market crashes after Bernanke fails to meet their expectations of rate cuts.
In the end, the banks would be able to buy back their shares very cheaply. This would maintain the dollar, and the power of the banks that have groomed Bernanke.
Ewaves and Fib ratios FTSE
Bear Market Impusle
http://stockcharts.com/h-sc/ui?s=$ftse&p=D&yr=0&mn=2&dy=0&id=p97848143636
Wave 1 = Early November 2007 at 6720 to 6026.9. This wave followed a truncated 5th wave. Lasted 15 days
Wave 2 = Last week's low to present. This looks like a zizag. This has nearly retraced a fibonacci 40% at 6307. Lasted nearly 5 days. Makes a fibonacci time ratio of 3:1 impulse to correction.
There is immediate overhead resistance of the 20 day avg, with the 200 and 50 day avgs very close and pointing DOWN.
Should this signal be accurate, then Wave 3 stands to fall 1400 points to 4900 before a weeklong correction begins.
Ewaves and Fib Ratios NDX
Bear Market Impulse
http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=2&dy=0&id=p97848143636
Wave 1 = 2239 down to 1980.
Wave 2 = 1980 up to 2101. This is close to a Fibonacci ratio of 50% at 2110. Maybe a pop and drop tomorrow?
The index crossed the 20 day avg, but is facing the 50 day avg, about the same distance wave a of Wave 2 was repelled.
If the wave count holds, the index should fall at least 500 points to the low 1600s before the next multi-week consolidation takes place.
ABX Subprime Indices Bounce- Meow
Just like the stock markets. Let's be patient during the consolidation. There is still one AAA index above 90c. I really think that index will tread below 50c before the bear market is over.
Black Friday = Green Monday.
Red Friday = Black Monday.
The worry on Wall Street is becoming a self-fulfilling prophesy tailspin. Investors are willing to risk $$$ in the markets, yet base their trades on how people with little or no $$$ shop. It's an unstable proposition.
ALL 20 ABX INDICES MAKE NEW LOWS!!!
There remains only 1 priced above 90c on the dollar, 90.09 to be exact.
With stats like that the indices must be in a wave 3 of 3 of 3...
18 of 20 New ABX Subprime Index Lows
And the other two were an eyelash away from new lows as well.
The highest AAA rated index is now down to 92c on the $. It's just knifing lower. This index will set the minimum limit every financial institution holding subprime loans will have to mark down their portfolio.
ABX Subprime Mortgage Index Update
The A, AA, and AAA indices are taking a beating. The last index in the 90c range made a sharp drop to a new low. Not much is going on with the B, BB, and BBB indices. My continued view is the higher quality is being sold because it's the only thing investors are willing to buy. The M-LEC super SIV sponsored by Citibank, Bank of America, and JP Morgan is going to be too late to be of any use at this rate.
Transports Going Somewhere, DOWN!!!
Dow Jones Transportation average broke AND closed below the August '07 lows. The wave count from the October '07 highs is probably a bunch of wave 1-2 of many degrees due to the overlap yet downward movement. It also looks like a waterfall as the price hugs the widening lower bollinger band.
http://stockcharts.com/h-sc/ui?s=$tran&p=D&yr=0&mn=6&dy=0&id=p75635173805
Nikkei Rebound Topping?
Keep an eye on the Nikkei. This evening it barely closed the gap from Monday's plunge, and is heading lower. The rally off
Tuesday's low looks like a dounble zigzag. It is in the area of the 1/3 fibonacci ratio of the slide from the beginning of November.
http://finance.yahoo.com/q/bc?s=%5EN225&t=5d&l=on&z=l&q=l&c=
http://stockcharts.com/h-sc/ui?s=$NIKK&p=D&yr=0&mn=2&dy=0&id=p67935116305
All ABX Indexes UP!!!
They are consolidating, probably for another week.
ABX Still Making New Lows.
Around 7 today. This time it was at the low end of the quality range. I'm surprised there were so many new lows since the equity markets were up strongly, and junk bonds trade more like stocks than treasuries.
Nikkei Broke Below Aug Lows.
Well see if the knife is caught. The index was below its lower bollinger band and is making its way back tonight.
http://stockcharts.com/h-sc/ui?s=$nikk&p=D&yr=0&mn=6&dy=0&id=p75635173805
The advance out of yesterday's lows is choppy, so it's probably corrective.
http://finance.yahoo.com/q/bc?s=%5EN225&t=5d&l=on&z=l&q=l&c=