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Plunge Protection Team At Work
The DAX and FTSE in Europe fell below their support levels by more than 1% from the last 2 weeks, and stayed there.
The US markets are potentially the worst because its the home of the mortgage bomb. The US markets, however, have been inconsistent. The INDU and NDX broke their 2 week support. The SPX and Transports came close. Surprisingly the RUT only fell 50% of the bounce off the 2 week lows.
Several stories have come across the wire quoting the FED as having intervened this week. The Euro Central Banks also intervened. The shocker is the ECB injected more liquidity this week than in the trading days after the 9-11 bombings, and the European markets still are falling.
Nikkei Rejected By 200 Day Moving Avg
Last night the Nikkei tested the 200 day moving average. Tonight the market gapped down more than 2% in the opening minutes. The Nikkei is now in a Wave 3. Wave 1 dropped 1500 points. The fibonacci ratio of 1.618 indicates Wave 3 will drop at least 2400 points.
Peg - Impulsive Close.
When I use a 5 day chart the pattern look more like a bunch of waves 1-2-1-2-1-2 rolling over into a wave 3-3-3-3-3 drop tomorrow. The Transports, RUT and NDX have cleaner counts than the INDU or SPX.
Alternate GOOG E-wave Count.
Deva,
If the March/April '06 to present is viewed as a very long Wave 2, then it would be best counted as a flat, and there is still much more of its wave c to complete to the downside ending between $337 to $475.
The key feature I use in my count is a wave 4 triangle between Jan '06 and Aug '06. From there a series of waves 5's and 4's at larger degrees of trend have unfolded.
Suppose $558 is the end of Wave 1 instead of a larger degree WAVE 5. This implies a range bound trading between $337 and $558 for the better part of a year before the price takes off for the $1000 mark.
The next 2-3 months should be down using either wave count.
http://stockcharts.com/h-sc/ui?s=GOOG&p=D&yr=3&mn=0&dy=0&id=p91278700131
GOOG Wave 2 Nearly Done?
It looks like GOOG is in the late stages of a double zig-zag corrective move off the $490 area. The next move should be down as part a zigzag correction from the all time highs (bullish bearish), more time in wave 2 (mildly bearish), or a wave 3 (bearish) that will drop at least $120.
http://stockcharts.com/h-sc/ui?s=goog&p=D&yr=0&mn=6&dy=0&id=p75635173805
BlissBull:
I've got to agree with your wave count for the US markets. It makes no sense than Bear Sterns could bounce 24% in 3 days with the major credit crunch well under way. More lending companies are getting margin calls and taking no more applications.
Global markets are fairly synchronized too in their wave counts. The Chinese Shanghai is the hold out. While the crud was in a wave 2 rally, the Shanghai is putting on the final touches of its bubble rally. This lagging is typical among stocks within an index near tops, so it should be applicable to a globalized investing world.
Can you say, "MEOW"?
New High New Lows Market Breadth
Market breadth was divergent on the NYSE. Although winners narrowly beat losers the number of new lows dwarfed new highs by a 16 to 1 margin. The huge rally today should have lifted all boats. The internals do not support a strong rally. THis is some sort of corrective bounce.
I'm thinking Wednesday's late day rally began a flat or double zigzag in some markets. Today's rally has the euphoria of a wave c of 2.
Shanghai - Going Higher
The nearly 5% plunge Wednesday and Thursday in the Shanghai Market looks to be corrective wave 4. It hit the lower channel from the early July lows. The rally the second half of Thursday recovered much of the drop. I'm looking for new highs. There is a chance of a wave 5 extension, even though wave 3 extended.
This sets up next week as a global sell-off. By then the US DAX, FTSE, and Nikkei will have finished their Bear market wave 2 condolidations. Wave 3 will be at least 2x wave 1. The Shanghai market has been in a bubble the last 2+years and should retreat very quickly.
Shanghai Index E-wave
The intraday chart for the Chinese Shanghai Index looks like an ending diagonal.
http://finance.yahoo.com/q/bc?s=000001.SS&t=1d&l=on&z=m&q=l&c=
The Wave 5 following the Wave 4 triangle on the daily chart looks complete with good proportions.
The MACD Histogram is rounding over.
The Stochastics have been in the extremely overbought area for the last 7 days.
http://stockcharts.com/h-sc/ui?s=$SSEC&p=D&yr=0&mn=3&dy=0&id=p38559833203
Tonight could be the Shanghai's tipping point.
Bought DIA Puts and QID
I saw the advance-decline better in the NYSE and AMEX than the Nasdaq aruond noon. I also saw more new lows than new highs. The NDX was trading in negative territory as opposed to the positive DOW and SPX. Fibonacci time and price ratios converged to this afternoon.
These divergences told me this was a weak bounce and the selling would resume shortly.
NDX Lagging SPX and Industrials
What I suspect is investors are selling banks, and financials due to mortgage bombs going off, but holding tech because tech does not invest in debt. What these investors deny is that many tech companies relies on brokers to place secondary stock offerings or corporate bonds to remain solvent. With liquiditiy drying up, tech will get pounded pretty soon.
Nikkei Plunges 400 points at opening.
Since the last 5 months have been a choppy advance from the 16K6 area, it is most likely a couple degrees of ending diagonals and maybe a truncation. This drop should find support in the 16K6 area before a suckers rally takes place.
I'm waiting to see what the Shanghai does since it is so close to the top.
Shanghai -Wave 5 of Bubble 5
The late May, early June swoon until mid July was a Wave 4 triangle.
Since then the market has shot up as is characteristic of post triangle action. So far the recent rally has waves 1, 2 and 3 complete. Baring further extensions, wave 4 should complete tonight. wave 5 should start. It is asking too much for wave 5 to complete tonight, but chances are good it will make a new high before a top is in.
http://stockcharts.com/h-sc/ui?s=$ssec&p=D&yr=0&mn=6&dy=0&id=p75635173805
MACD and Stochastics Warn of Turn
The Dow transports, Dow Industrials, SP 500, and NDX have MACD and Stochastics about to issue tandem sell signals. The Russsel 2000 issued sell signals. The e-wave counts indicate one more advance is possible over the next day or two. The Russel 2000 has been so choppy an advance that it is a wave 4 triangle or wave 5 ending diagonal. Either way, a reversal is near.
Frank's Count - I agree.
But I'm mot going to take a trade to the upside with the chance the market truncates and reverses sharply before I can get out. I'll let the premium on put options fade a little more before taking a position to the downside early next week.
Sold my DIA AUG 140 Calls
I got price follow-through for the day. The sideways movement looked like a wave 4 triangle in the Dow. It eventually morphed into a double triangle. The late day rally looked motive, but may prove to have truncated in multiple degrees of trend.
The wave count in the NDX looked like it was completing wave 5 through the middle of the day. A new 52 week high was reached. The price came close to the upper trend line for the last 10 days. Late trading looked like the beginning of a selloff.
The minute to minute waves became too difficult for me to count in the Dow, the wave from late June looked complete, and the NDX was giving a possible sell signal; so I took profits. The futures are slightly down. I may buy puts if the Dow breaks the 13950 line.
My Trade of the Day
When DIA ETF was about 139.00 in the 11 AM hour I scaled in some Aug 07 140 Calls. The selloff was too choppy to be a motive ewave.
At the 2 PM hour I added to my position as I saw the upper trend line had been broken as the price moved side to up.
My TA buy conditions for DIA were corrective down + broken trend channel. I looked at glodal markets for an indication where the US markets were heading. Many global markets look like they have 3 to 5 days of rally left before finishing their ewaves. Several ewaves are ending diagonals (Dax Ftse Nikkei)
By the end of the day I was in the black. hopefully DIA will continue to the 141+ area the next couple of days.
DoubleTake - Faltering Trading Systems
This is a subject I've pondered as I drive home from work or exercise. There are two concepts at work.
As more people use a particular TA system, the frequency of cycles should accelerate as more people try to enter and exit positions before the "official" signal is given. Sort like front running.
The other force is more of a monopoly. As winners continue to win, they become the market. TA such as cycles and e-waves, work best when there are many players at all levels in the market.
10 Yr Yield Wave 4 Triangle
This is a nice picture of what looks to be a Wave 4 triangle in the yield of the 10 yr treasury. There should be a temporary selloff as Bernanke gives "testimoney" this week. Followed by sideways moveoment for a month or two. Then 6%+ is a reality.
http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=0&mn=6&dy=0&id=p11474535515
Shanghai Index finishing Wave 4 Triangle
Wave 4 started in late May '07. It may have ended today. There should be a quick advance over the next couple days. Since the other world markets are near all time highs, and about to finish rallies, it is doubtfull the SSEC will make a 20% gain to new highs in less than 5 days. If it does, that should put investor enthusiasm so high that the bubble has to pop.
http://stockcharts.com/h-sc/ui?s=$ssec&p=D&yr=0&mn=6&dy=0&id=p75635173805
Short RIMM? Not Yet!
Friday looked like a wave 3 of 3. There are two wave 4-5 combinations at a minimum to complete the motive pattern from Wednesdays lows. I give the trend 2 or 3 more days until a top is in place. Maybe even THE bubble top.
Frank Gets 1947 in SPX!!!
I sold my July 152 Calls for a little profit. Sure, it would have been nice to watch the ride up in the afternoon and sell higher, but I had lab experiments to perform. I actually don't feel bad about missing the ride because the SPX formed a complete 5 segment elliott wave. Tomorrow should be a Wave 4 pullback of a larger degree or major trend reversal. I'm seeing many after hour trades to the downside to support a lower opening.
NQ Strongest
With tech the strongest during this selloff, I'm looking for a bounce and rally to new 52 week highs. In the spectrum of risk, tech has more risk than SP 500 and DJIA, and DJTA. It's out of place for Tech to be strong in a general down day.
Long Slow Death of Hope
Great Post!!!
I've thought that if I were to come up with a technical analysis method that constantly beats the marcket I could start a fund. Entry would be limited. Each quarter, profits would be paid out. No reinvestment allowed. That would avoid the problem of becoming the market.
Cycles Shine in Bear Markets?
Ewaves work better in trending markets.
Looks like using both would give the best results.
RIMM
I took a look at RIMM on Stockcharts and immediately saw the start of a 5th wave and an upside target above $175. Then I went to Bigcharts.com to look at the 5 year chart. The after-hours trading was above $190 on half of today's volume.
Technically RIMM is ripe for a pop and drop. WAVE 4 ( Spring '00 to mid '02) was a triangle. I'm still unsure about ewave count from Oct 2 lows since the the consolidation in '05 was disproportionately long. The channeling is good and $190's would just put the stock over the upper channel. Ewaves from October '05 would look complete if RIMM does open above $190.
I'm going to keep an eye on this one as an options play.
Eventually I see RIMM going back below $15, the near the lowest point of WAVE 4
Choppy Close.
The 60 minute charts for the US equity markets show a motive wave off Wednesday's opening low.
The NDX missed setting a new 52 week high by 4 points, but the other markets were not as strong. I don't think all those motive waves truncated. Today's afternoon trading was too choppy for post truncation activity. Post truncation activity would have taken price right back to Wednesday's lows.
As I glance at global markets many need another week to complete patterns. The Shanghai 4% plunge today could very well be wave e of a Wave 4 triangle. I'm looking for a sharp advance, as is typical after triangles.
Tomorrow should be consolidation to UP.
Frank,
It looks like there will be new 52 week highs by next week. The short choppy pullback in the NDX wasn't confirming the deeper selloff in the SPX and DJIA. Once the upper trendlines of the selloff in all three markets were broken with a sharp thrust, I knew the rally would continue into tomorrow.
Tomorrow: Buy the open (intraday wave 3) - sell the close (intraday wave 4).
Slot Machine of Bad TA Indicators
SPX shows entering oversold region next couple of days. It looks horrible that the price broke through the 50 day average, and the bollinger bands are widening as the price hugs the lower band downward. The MACD continues to head lower. Everything is lined up for a big drop.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p75635173805
THe Industrials are a little better off insomuch as the price is still hovering around the 50 day average.
http://stockcharts.com/h-sc/ui?s=$indu&p=D&yr=0&mn=6&dy=0&id=p75635173805
Dow Transports- Clear Wave Count
Wave 1 early June 07
Wave 2 flat into mid June 07
Now in wave 3
Hourly Wave 1 of 3 - Last Friday into Tuesday opening
Hourly Wave 2 flat of 3 - almost finished. target of 5160 is a 50% fibonacci retracement.
Hourly Wave 3 of 3 should start tomorrow morning. It
The Wave 3 should drop quickly as signaled by a Wave 2 flat. Hourly wave 3 of 3 should drop quickly for the same reason.
Spectral analysis SPX:
I just got done applying signal processing techniques to the SPX. My model is based on sinusoids, not lows and highs . The first cycle of interest is the 96 trading day cycle. It topped about 3 weeks ago. The next is the 310 trading day cycle. It topped about 75 days ago. The 340 week cycle topped about 52 weeks ago. All are in the strongest parts of their down trends.
Equities in a wave 5 of 5.
The lows of the day finished a small wave 4. Small wave 4 looks disproportionately long in time compared to small wave 2 monday and tuesday of last week. I was expecting a sharper and stronger small wave 5 rally today. There is still a chance small wave 5 is not done and will equal small wave 1.
I'M BACK!!!
My computer was offline while the house was repaired from the April Flood.
Anyway. Tomorrow and maybe Wednesday are up days for equities before a pullback happens. The transports are in some late stages of an ending diagonal. I'm finding the transports have a cleaner e-wave count than the SP500, NDX, or Dow Industrials. Bond yields are consolidating before a major surge.
I was in awe the 22% sell off and ensuing recovery of the Shanghai market. If that isn't a bubble, I don't know what is!!! Japan is making a very sloppy-choppy advance that is very close to a reversal
The last 2-3 months have been bursting with mergers and acquisitions. After the honeymoon is over there will be massive layoffs to eliminate redundancies and highly paid employees with decades of valuable experience. Some will sell their company's shares to protect their retirement or pay off credit card. That will strain equities. It happened in 2000 and 2001. This time it's different because interest rates will spike.
Ending Diagonal- 2 degrees?
The larger degree ending diagonal in the US markets many e-wavers are calling started off the March lows. The ending diagonal of lesser degree may have only begun last week. The time the proposed completed wave 5 (zigzag) spent advancing is so small compared with waves 1 and 3. The bullish pattern I think may unfold is the ending diagonal, which means a very choppy range-bound advance over the next week as 1Q07 earnings are reported.
The ending diagonal scenario (larger and lesser degree) breaks down if, on the INDU, the index breaches 12805. That would violate the rule of wave 3 not being the smallest wave in the sequence. Be very sensitive to a failure of the INDU to take out the 12795 high from Feb '07. It would be the warning sign of a sharp reversal ahead.
SPX Ratios
The rally out of the March '07 lows looks like an ending diagonal. The ratio of wave 1 to wave 3 is close to 2. Today's high makes the ratio of wave 3 to wave 5 close to 2. It's a thing of beauty.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=2&dy=0&id=p58639316915
Shanghai Top?
I think I see a little wave ending diagonal or a wave 4 running triangle on the intraday chart. This would be in synch with the rest of the global markets showing tops and reversals.
http://finance.yahoo.com/q/bc?s=000001.SS&t=5d&l=on&z=l&q=l&c=
Getting Shanghai'd
The SSEC has got to be in a Wave 5 of a blow off top. The chart shows a text book exponential spike, which is unstable. The 9% crash in February was a Wave 4. The Wave 5 is difficult to count waves on the daily charts. It's possible waves 2 and 4 are so shallow they are actually "running", terminating above the motive wave it corrects. There is a hint of weakness in the long term trend as the slope of Wave 5 is less than that of Wave 3.
Post exponential spikes correct very quickly. The rally has gained more than 200% in 18 months. The correction may only take 3 months to erase all those gains! Pictures of historical bubbles published by Prechter have that kind of ratio.
http://stockcharts.com/h-sc/ui?s=$SSEC&p=D&yr=3&mn=0&dy=0&id=p90409844359
INDU Rolling Over: NDX Triangle
The INDU's bounce off today's lows is way to choppy to be motive. The afternoon rally is either an ending diagonal or a bounce in a larger multiday correction. Tomorrow should be down.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=WMT&time=8&freq=1
Monday and Today the Nasdaq 100 completed a textbook wave 4 triangle and the wave 5 is nearly complete. If the rally the last 10 days is part of a larger uptrend, then the sell off should find support around the 1800 level.
http://clearstation.etrade.com/cgi-bin/intra?Symbol=_NDX.X&Refer=http://clearstation.etrade.com/...
All markets are overbought. SELL
YHOO - SELL IT
Off the Oct 06 lows YHOO formed a zigzag or double zigzag. What makes this wave look corrective is the overlapping congestion in the $28 - $29 area.
The past 7 trading days have formed somewhat of an ending diagonal. The sell off following the day's high was very swift, as typically happens after and ending diagonal.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=yhoo&time=&freq=
Over the last month the zag of the second zigzag has truncated.
http://stockcharts.com/h-sc/ui?s=YHOO&p=D&yr=0&mn=10&dy=0&id=p71579361252
The stochastics have been over sold for a couple weeks. This has been a reliable top indicator. The MACD has not made new highs despite the price rally, and the MACD histogram is falling to indicate waning momentum. This is a divergence with the price trend.
The price should continue falling and find support around $31, the area the the ending diagonal started. The price should bounce a day or two and then continue to drop.
Long term YHOO is in WAVE 3 of C of the DotCom bubble pop. The price should drop hard very soon.
WTIC: Oil double zigzag ewave?
There is a beautiful ewave-fibonacci ratio set up in oil right now. From the 52 week highs a zigzag evolved. Off the bounce, another possible ewave has evolved. The bounce is not a complete ewave. waves 4 and 5 of Wave b zag are due. Fibonacci time and price are converging to the mid April - $68.84694 area.
the time ratio would be Wave b to a = 1/2.
the price ratio would be Wave b to a = 0.618.
The Stochastics, RSI and MACD are all indicating a near term top is being formed.
Wave c has a target in the mid to high $40s due to bottom in mid October '07.
http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&yr=0&mn=11&dy=0&id=p85780965980