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Again 25% New Lows on ABX Index
And now 2 are a hair away from new lows.
The distribution of these indexes is as follows
>90c on the $ = 5 indexes
80 - 89.99c on the $ = 3 indexes
70 - 79.99c on the $ = 1
60 - 60.99c on the $ = 3 , two of these are in the A ratings/ investment grade
50 - 50.99c on the $ = 1
<50c on the $ = 7, one of these is in the A ratings/ investment grade.
This is just ugly.
Shocktober is on the way.
25% New Lows on ABX Index
5 of the 20 ABX indexes formed new lows today. 1 was a hair away. The rest of the second leg of the meltdown continues. Expect more freezes in the debt markets. US treasuries will sell off due to their liquidity.
http://www.markit.com/information/affiliations/abx
SubPrime Debt Plunging Again
These subprime indexes are the lowest of the low. They reversed so hard today that they look like they will easily take out their lows made in August. These indexes are around 35c on the dollar. Next stop will be pennies. What that imploes is investors expect the assets, homes, backing the debt to be worth pennies on the dollar when collateralizing defaulted debt. Now that's DEFLATIONARY!!!
http://www.markit.com/information/affiliations/abx
Hard reversal
ABX-HE-BBB- 06-2
ABX-HE-BBB- 07-1
Worst looking
ABX-HE-BBB 06-2
10 Yr Treasuries Mjor Trend Reversal.
Bonds sold off really hard today. The intraday charts show many degrees of wave 1-2 combinations that the next few days will be a bond bloodbath.
It's not only the threat of the FED pumping more dollars into the system, it's the fixed income funds trying to sell anything of value to cover their expected mortgage losses. The FED knows that if one mor e week of bailouts doesn't work, then just write the FDIC checks. That would be a problem too. Where would people deposit them? In another bank that's about to fail?
http://stockcharts.com/h-sc/ui?s=$tnx&p=D&yr=0&mn=6&dy=0&id=p75635173805
GE Channel Throwover
GE did break the upper trend channel for the ending diagonal which started in July '06. This should prove to be a false breakout. This is the second day the price has closed above the bollinger bands, and should start to pull back. This rally that started in september started from nearly overbought stochastics, and remains overbought. The MACD has pulled away from the signal to be sustainable. Volume was above average, but relatively weak when compared to 6 other price moves over the past year. The volume isn't convincing enough.
GE is ready for a crash.
GE Target Reached.
GE broke the $41 barrier for a 52 week high. It was definitely a post triangle thrust. The upside is limited. The channel made by the tops of ending diagonal waves 1 and 3 are in the $42 area, so there may be a little more advance. The trust may have an opening rally that would fade quickly, finishing a very small degree wave 5. The reverse is unconfirmed. A break below $41 would be a good signal since it is well below the uptrend channels made today.
GE Ending Diagonal Update.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=ge&sid=3377
Today's trading finished a wave 4 (triangle) in c of C of Ending diagonal 5. Expect a very sharp rally tomorrow that will eventually challenge $41.
After that it's CRASH TIME as WAVE C of multi year B is an ending diagonal. Sharp drop to the lower $30's. Since GE has been one of the stronger DOW components, its turn implies the rest of the market should head lower even more agressively.
GE - Ending Diagonal
I was premature calling a truncated wave 5 of the ED in late aug '07.
The ending diagonal started in July '06. Wave 5 of the ED started off the August '07 lows and may be finished. A break below $36 would confirm it. For the Bulls: The duration of wave 5 is very short relative to waves 1 and 3, so there may be another monthlong pullback with one final 3-4 week zig-zag rally. For the Bears: GE has quite a lot of corporate debt coming due this week. The debt markets are still frozen.
Other technical indicators are confirming a turning point for GE in the near future. The Stochastics are in the overbought area. The MACD has slowed its rate of pulling away from the average. The volume is lighter relative to the rallies in May, June and July '07. The first leg of the rally off the Aug '07 lows was much stronger than the Sept '07 rally. GE's engines are losing steam.
http://stockcharts.com/h-sc/ui?s=GE&p=D&yr=1&mn=3&dy=0&id=p14250266484
DOW and SPX Head and Shoulders
http://clearstation.etrade.com/cgi-bin/intra?Symbol=_INDU&cs=&ci=None>yp=Default&g...
The left shoulder topped around Aug 28
The head topped around Sept 4
The right shoulder is topping,
The neckline is a fairly flat 13000. Once this level is broken the Aug lows will be tested.
Hong Kong Market Top
Last night's rally finished off wave 5 of and ending diagonal in the Hang Seng Index. wave 5 of the ED was textbook in that zig = zag.
The Shanghai market extended its 4% loss before consolidating. The consolidation looks like a complete zigzag, but could evolve into something more complex.
The Nikkei finished a zigzag and headed lower. Again there may be more consolidation before the next drop.
Subprime Bond Retest of Lows
At this website:
http://www.markit.com/information/affiliations/abx
CLick on:
ABX-HE-BBB- 07-1
to see a chart of the worst subprime bond prices. Prices bounced and have started lower. We'll see how strong the support is.
Out of curiosity, I looked at several other bond charts. There was a pretty good pattern of higher rated bonds having stronger recoveries off their August '07 lows. This indicates the lower rate bonds are going into default, not bailout.
RCKS- Another Triangle
From the August lows in the SPX another triangle advanced ( ending diagonal e-wave ).
The NDX has an one that has diverging channels, but decreasing rallies.
The lows in the RUT and DJIA yesterday broke the late August pullback lows, but pre trading and after hours don't get recorded in the day's range, so maybe the triangle is still in play. Maybe the bear has started. It's wilting, which is bearish.
Hang Seng Massive Ending Diagonal
Check out the massive ending diagonal that formed out of the Aug '07 lows. wave 5 started last night and looks 1/2 complete. A little more rally tonight and then the index crashes 20% within 2 weeks. The MACD and Stochastics are in overbought territory and rounding over as momentum wanes.
Long term support is 10K, where several degrees of wave 4 terminated. It's also close to a fibonacci 60% of 24K.
http://stockcharts.com/h-sc/ui?s=$HSI&p=D&yr=0&mn=6&dy=0&id=p35513556486
YHOO Stair Stepping Lower
YHOO looks to be stair stepping( ewaves 1 and 2 of multiple degrees), and should then waterfall ( wave 3-3-3-3-3..) to the downside the next couple of days. Short It.
http://clearstation.etrade.com/cgi-bin/intra?Symbol=YHOO&cs=&ci=None>yp=Default&gs...
Chinese Shanghai Market Technical Alert
The ^ssec broke through the lower channel of its 51%, 2 month rally. Global markets are now in synch for a crash.
Nikkei dropped another 2% at the opening.
Market Reversals Unconfirmed.
My last post about US markets was a thrust higher for Friday to complete wave 5 ending diagonal of Wave 2c. There is still a chance this wave will complete early this week. The wave 4 drop Wednesday to Friday in the SPX is larger than the wave 2 drop at the end of August. The ending diagonal is severly distorted.
The wave 4 drop also broke the lower support line made by the beginning of wave 1 and end of wave 2. For the ending diagonal case to be abandonned, the SPX would have to drop below 1432.
So while there is still a chance for wave 5 of the ending diagonal to unfold this week, things don't look promising. wave 5 probably truncated on Friday and the markets are looking at a very strong Wave 3 to begin. The intense fear factor is demonstrated by the sharp rally in the 10 yr treasury on Friday, and gold rally the last couple of days. Equity markets shouldn't be far behind singing the same song.
TNX Crow Tastes BAD!!!
Oh, Boy!!! The yield on the 10 yr treasury went hard the opposite direction of the e-waves I was counting. I'll wait fot another set-up before posting the TNX. Eventually government bonds will be dumped in a major liquidation as investors want out of every mutual fund and savings account.
US Market e-wave update
The wave count was premature. I think wave 2c5 started on Wednesday and should last 2 to 3 days. It still looks like an ending diagonal, except for the NDX which will probably test 52 week highs.. THis also clears up the wave count for the Russell 2000
Targets are
Dow Industrials 13500 to 13600
SPX 1508 to 1513
NDX 2050
RUT 805 to 810
10 yr Treasury Chart
I looked at the long term chart with monthly ticks. The wave count looks clearer with several degrees of wave 1-2 occurring since the 2003 low. The sharp yield rallies strengthen the argument the yields will go higher. Neither starting point of those sharp rallies has been broken. There are higher-highs and higher lows in play. Others on the internet have posted charts of yields since 1980. They've drawn a decade-long channel line that has been broken, another point for a major bottom in 10 treasury yields.
Readers may have to select the timeframe and tick period once they go to this link.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=tnx&time=&freq=
10 Yr Treasury Yield Poised to Rocket
The chart of the 10 yr Treasury Yield from July '06 looks like a flat correction. wave c is in 5 of 5.
The MACD double bottomed and looks to be be reversing. This indicates the yield will start moving up. Moving to 46 would break the upper down channel, ending the yield's downtrend. The stochastics have double bottomed and have been deep in the oversold area for most of the last 5 weeks.
A sharply rising yield will take with it resetting subprime ARMS, corporate debt, and a good chunk of China's US govt portfolio. Bernanke will be asking Volker for advice.
http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=1&mn=6&dy=0&id=p79338901070
andiron - Rates Wager
I can get a 5 month CD at my credit union at 5% APY. That's better that the 4.56% yield on a 10 yr treasury. I interpret this as a reaction to the credit crunch.
When it looks like the little guy is about to win, the trap has been stepped into.
Covered GM short for a little loss.
It looks like the sell off from the June '07 highs was a double zigzag or triangle. If it is a triangle then this rally should be spike to $40.
US Markets' E-Waves
The Dow Industrials, NASDAQ 100, and S&P 500 are in wave 2c5. The corrective pattern is a running flat where wave c is smaller than wave b.
wave 1 Mid July to first three days of August.
wave 2a Ends on August 8th
wave 2b ends on Aug 16th, the day before options expired.
wave 3c may have ended on Aug 31. For all markets this is an ending diagonal.
Flats in a wave 2 position signal a very strong wave 3 ahead, greater than 2x wave 1. The speed with which wave 3 should unfold should be fast as indicated by the ending diagonal in wave 2c5.
The market I'm having the toughest time figuring out is the Russell 2000. wave c does not look motive. Maybe it completed earlier than the other markets.
INTC E-waves: Topping or Topped?
http://stockcharts.com/h-sc/ui?s=INTC&p=D&yr=1&mn=6&dy=0&id=p02671657199
The long e-waves from the October '02 low form a multi-year WAVE B Zigzag.
Wave A (Zig) from Oct '02 to Jan '04 was clearly motive.
Wave B is open for debate.
Case 1 Zigzag from Jan '04 to June '06. I like this one the best because wave a and c are fairly proportional in both price and time.
Case 2 Triangle from Jan '04 to March '07. What I don't like about this is wave e is way too small.
Wave C
Regardless of the case chosen for Wave B, Wave C needs to be a motive wave. Each advance looks more like a bunch of overlapping double zigzags, so an ending diagonal is most likely forming.
wave 1 up Jume '06 to Nov '06
wave 2 down Nov '06 to March '07
wave 3 up March '07 to July '07
wave 4 down July '07 to August '07
The swiftness with which wave 4 struck makes it possible wave 5 topped today and truncated, along with Wave C truncating. Two large degrees of truncation plus an ending diagonal signal a very strong reversal, thus the crash scenario being imminent. Often initial support will be near the beginning of the ending diagonal. This would be the $17 area in INTC's case.
There is an alternate count for wave 5. For this to happen, there would need to be a pullback and one more small zigzag rally. Since wave 3 was larger than wave 1, wave 5 could be larger than wave 3. This would be a very rare expanding ending diagonal. This opens up the alternate count today finished the zig of a double zigzag.
Next week should be generally down regardless of the longer term wave count.
Mr. Tell (INTC) Fairs Well
I have to disagree that INTC will fare well in the coming economic downturn. Capital expenditures have been flat top contracting. As large companies downsize and small ones close their doors, INTC will have fewer customers.
INTC share prices will take a hit along with everyone elses because this is a liquidity crunch. Fund managers will need to sell anything-everything to remain liquid, even a top quality company like INTC.
That said, I believe INTC, along with MSFT, will be extremely undervalued at the bottom of the crash and present an excellent buy and hold opportuninty. I plan to buy a boatload of shares in both companies given the opportunity.
Shorted GM,
There are too many wave 3's to the downside not to take a position.
BLISS - GM ewave
GM had a bad day in a wave 3-3-3...
July '07 Wave 1 down.
Early Aug '07 Wave 2 up
Middle aug '07 wave 1 of 3
Last week wave 2 of 3 ended on Thursday opening
Thursday into Friday wave 1 of 3 of 3 and wave 2 of 3 of 3
TODAY wave 1 of 3 of 3 of 3 and waves 2 of 3 of 3 of 3.
TOMORROW could be a strong gap down of several $$$ as 4 degrees of wave 3's unfold.
GE in Ending Diagonal:
Last Friday's high and this Thursday's low overlap.
Last thursday and Friday could have been a 3 wave segment. The gap is loss of data.
Monday was corrective.
Tuesday thru thursday open is clearly a 3 segment wave.
Thursday morning was corrective.
Thursday afternoon to present looks corrective so far.
Maybe crash on Monday, Aug 27?
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=ge&sid=0&o_symb=ge&x=44&...
GE Reversed
From the opening high to the low of day was a very clear e-wave. The bounce looks like a zigzag. Note how close the ends of waves 1 and 4 in the wave 2c are. It shows momentum was slowing during the advance. Tomorrow should be down initially, whether as a larger zigzag or a wave 3 of 3.
http://finance.yahoo.com/q/bc?s=ge&t=1d&l=on&z=l&q=l&p=&a=&c=
Chris, Sharp Move.
The futures this evening are trading very strong.
This FED induced rally is making it difficult to see the ewaves at the intraday level.
Stock and Bonds 1-2 Punch
The choppiness in the 10 yr treasury yield over the past several years had me extremely confused until today. It appears a WAVE 2 flat will be wrapping up wave 5 0f 5 of C in the next day or so. The size of this flat is impressive as it has taken a little over a year to complete. The next move in yields should be UP as the credit crunch forces everybody to sell everything, including government bonds to pay down debt.
http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=1&mn=8&dy=0&id=p50765379558
That leads me to the stocks. My interpretation of the rally off last Thursday's lows is a wave c of a wave 2 flat for most western markets. This pattern should be wrapping up also in the next day or so.
Not to be left out are the Asian markets where the Nikkei rallied nearly 400 points as I write. This is a Wave c of 2 (zigzag) of 1 of 3. So next week the big wave 3-3 is unleashed. The bubbling Shanghai just broke the psychological 5000 mark in what appears to be a very coppy rally the last 2 days. Could this be an ending diagonal?
This is going to be one ugly crash.
GE Bull Trap?
I'm not familiar with that formation. I've noticed declining volume as the price has gone up, a divergence. The 20 day moving avg closed below the 50 day moving average, near term bearish. The price bounced off this intersection, also bearish. The MACD trajectory is starting to round over, not a good sign
What might happen is an island reversal. Friday was a gap up day. Wave 3 of 3 should have started this afternoon. Gapping lower would confirm a wave 3-3 and reversal.
Shanghai Market-Wave 5-5-5...
The last 4 days show a prominent wave 4 triangle in the Shanghai index. Today's sharp reversal is typical wave 5 behavior following a triangle. The rest of the wave 5 rally usually ends near the beginning of wave 4. The 5000 mark is a little farther above, but not by much, so I think the 5K level gets tagged before THE top is in. That doesn't give the rest opf the global markets time to make new highs, only good selling opportunities.
http://finance.yahoo.com/q/bc?s=000001.SS&t=5d&l=on&z=l&q=l&c=
Bought GE Sept 07 $35 Puts.
The FED was only a minor disruption today. The debt companies hold is so unstable that even the winning side ends up a loser.
Who insures the insurer?
GE - Wave count
Using Elliott waves I get a different forecast for GE. The July hig to end of month low is Wave 1. Wave 2 expanding flat ended around Aug 9. Since then there have been a cascade of waves 1-2, 1-2 of 3. GE and the rest of the market are set to drop sharply as wave 3-3-3 unfolds. Downside target for GE next week is $3 lower.
Headline prediction: GE has subprime/Alt-A/ ARMs in its portfolio.
Maybe I'll buy some puts at the open.
INDU 3PM 340 Point Rally
Don't You Believe It!
The internals got even worse as all exchanges saw declining issues lead advancing issues. The 52 week new highs and lows was a rout. NYSE was 90 to 1 new low to new high. AMEX was around 7.5 to 1 new lows to new highs. and NASDAQ was 9 to 1 new lows to new highs. It's completely divergent that the A/D and new high-lows were a disaster, yet the markets ended mixed.
The rally off today's lows for the SPX, NDX, and INDU could be corrective. All rallies are just shy of their 50% fibonacci retracement since Monday's highs. It looks like a bunch of waves 1-2-1-2 setting up for a dramatic crash.
I sold my Aug 133 and Aug 132 DIA puts for a nice profit. Minutes later the Dow spiked 100 points, so I spent half my available funds on Sept 126 DIA Puts. I'm going to spend the rest on puts tomorrow at the opening.
Many global markets are falling knives. Others are ready to crash.
Nikkei - Falling Samurai Sword
The Nikkei gapped down the last 2 days. This is really ugly. The price is pushing the lower bollinger band so wide it is nearly vertical.
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=%5En225
http://stockcharts.com/h-sc/ui?s=$nikk&p=D&yr=0&mn=6&dy=0&id=p75635173805
AORD - Bombs Away!!!
The AORD in Australia followed a 2% knifing through the 200 DMA with a 3% drop that will probably also slice through the lower bollinger band. This is what Wave 3's are like.
http://finance.yahoo.com/q/bc?s=%5EAORD&t=5d
http://stockcharts.com/h-sc/ui?s=$aord&p=D&yr=0&mn=6&dy=0&id=p75635173805
Futures Are UP.
Tomorrow's opening at what the futures are signalling would ideally complete wave c of a double zigzag wave 2 of 3 of 1 at the opening. The rest of the day wave 3 of 3 should take the market below last week's lows.
Tuesday wave 4 of 3 of 1 consolidation.
Wednesday continued consolidation early and then wave 5 of 3 of 1.
Thursday and Friday wave 4 of 1 could be more consolidation. Buying Aug calls on Thursday or Friday might look pretty gutsy, but could reward the speculator with a 5x return.
Bliss- Triangle
I'm a little more bullish on the intraday triangle. I think its wave b of a zigzag, where wave c wraps up Monday morning. THEN the excitement begins as the NDX wave 1 of 3 was 100 points. 3 of 3 should be 200 points, or 10%. The FED may be lulled into keeping the money taps off if the market looks like it wants to rally Monday morning.