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GE ready to drop
Since the Jan '05 lows, GE has formed higher highs and higher lows. THis appears to be an ending diagonal and should truncate. Ending diagonals and truncations signal strong reversals. When they happen concurrently at larger degrees of wave counts the reversal can be very sharp. I only give the patient 1 or 2 weeks until the turn happens.
http://stockcharts.com/def/servlet/SC.web?c=GE,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12,...
WMT about to fall off a cliff.
The price set a new 5 month low. The bollinger bands are widening as the price hugs the lower band.
The elliott wave count I have is:
Large wave 1 down started in mid November.
Large wave 2 bounce started from the December lows.
Wave 1 of large 3 began March 7.
Wave 3 of large 3 began March 18.
Approaching a wave 3 of 3 of 3 indicates the price is set to gap down a a dollar or two. Intermediate support is in the lower $40s.
http://stockcharts.com/def/servlet/SC.web?c=wmt,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
SPX and NAZ are pulling up and away from their lower bollinger bands. The stochastics are well into oversold. The MACD difference is showing a turn is in the processes. The DAX is turning up even more agressively. These indicators support the idea of a short term rally. Maybe a 2 or 3 week rally.
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
http://stockcharts.com/def/servlet/SC.web?c=$compq,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!L...
SP Midcaps Top Out
The SP Midcap shows the one of the clearest elliott waves of the US indexes. There is a very high probability of THE top occurring earlier this month. I'm looking for confirmation of a top by the index dropping below 629. This would be a complete retracement of the proposed wave 5 of 5 from October 2002.
http://stockcharts.com/def/servlet/SC.web?c=$MID,uu[h,a]dacayyay[dd][pb50!d20,2!f][vc60][iLp14,3,3!L....
In all likelihood the SP500 has topped as well. I'll still consider one more rally to new highs since January 2005 to present may be interpreted as a running flat. One point of view I'm taking is flight from risk. Money moves from mid and small caps to large caps in times of uncertainty. This is what happened with respect to the NASDAQ and DJIA in Y2K. It fits in with concepts in herding that safety is found in size and numbers.
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[h,a]dacayyay[dd][pb50!d20,2][vc60][iLp14,3,3!La1....
Interest Rate Meltup/ SP500 to Rally
Interest rates are now in a wave 3 of 3. Bollinger bands are starting to widen from weeks of being parallel. There is still a lot more yield rally to the upside.
http://stockcharts.com/def/servlet/SC.web?c=$tnx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
SP500
The Elliott wave count for the SP500 looks best as a finishing a wave 4 flat that began in early January '05. With the pressure due to oil, rising interest rates, and tough labor markets, wave 5 may not make a new 52 week high. Stochastics are oversold; a bounce of rally is in the works. Liquidate long and start shorting.
http://stockcharts.com/def/servlet/SC.web?c=$SPX,uu[w,a]dacayyay[dd][pb50!d20,2][vc60][iLp14,3,3!La1...
Gold Folds = Deflation
It looks like wave 2 UP is over and wave 3 DOWN has begun. The price of gold in U$D retraced 78%, which = square root of fibonacci .618. A falling price in gold indicates a deflationary depression and the FED will not drop money from helicopters to stimulate the economy.
http://stockcharts.com/def/servlet/SC.web?c=$gold,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La...
Elliott wave alternate count.
For most of the US Markets, the DAX, and FTSE this week marked a change of wave count under Elliott wave rules. The alternate wave count I now have for the wave 5 from late summer/fall 2004
is wave d of an ending diagonal. The FTSE is probably a wave 4 triangle. This count reduces conflicts of waves of markets with stronger wave implications lagging markets with weaker wave counts. I'm looking for a 2 to 4 week rally as stochastics are in the oversold area.
There is always the possibility the top is in place, and an Elliott wave was too subtle to count.
Critical elliott wave day
SP500 has shown the most resistance to the pullback. The wave count can still be wave d of 5. I'm still anticipating a rally lasting at least a week. The German DAX is the similar.
Since the DOW Industrials broke below the Dec 22 lows I was counting as wave b of 5, I now have to come up with a different wave count. That's going to take some time.
The NASDAQ continues to deteriorate. The wave count is not clear either way.
The FTSE may be finishing a wave 4 triangle.
The charts show too many contradictions for any clear global picture.
German DAX wave d ending diagonal
The DAX is also risking similar fate as the SPX. I expect a rally the next 5 or so days. The stochastics are showing an ending diagonal as well, what a helpful filter.
http://stockcharts.com/def/servlet/SC.web?c=$dax,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
The FTSE looks like it is just finishing a wave 4, setting a new multi week low. If this count is correct, then I would expect it to truncate since the rest of the world markets are near the end of a wave 5.
http://stockcharts.com/def/servlet/SC.web?c=$ftse,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La...
SPX E-waves
The sell off from March 7 to present is looking very worrisome as it challenges the Feb 22 low. If the index falls below, it may mean there are several months of the ending diagonal left, or that a market collapse is looming. I still maintain there is wave e left to complete. The stochastics are near oversold, indicating a rally is is anout to begin.
The NASDAQ is very weak, and yet there is no clear wave count either way. Arguments for and against the next move in the NASDAQ is inconsistent with the SAP and DOW
http://stockcharts.com/def/servlet/SC.web?c=$SPX,uu[w,a]dacayyay[db][pb50!d20,2][vc60][iLp14,3,3!La1...
Any minute now, a 5 day rally
This consolidation has taken a little longer than I expected in the US markets. The FTSE and DAX in Europe look like they started their last rally segment today. This would be a bearish divergence for the US markets.
Gold most likely reversed.
The Stochastics, MACD, and elliott waves are indicating a major turn is in process. The price hit and pulled away from the upper bollinger band. These are all bearish indicators. If the price drops below $429, then any advance is corrective or terminal.
http://stockcharts.com/def/servlet/SC.web?c=$gold,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La...
China Market Head and Shoulders
Take a look at this long term chart of the Hang Seng Index. It looks like a head and shoulder formation. The index is at the top of the right shoulder and about to drop lower. This H & S formation is contrary to great economic expansion reported in the current media. Be on guard if the Hang Seng drops below the neckline.
http://finance.yahoo.com/q/bc?s=%5EHSI&t=my&l=on&z=m&q=l&c=
SPX Wave A
I'm counting the move from late Jan '05 ( the 1162 area) to mid Feb '05 (the 1212 area) as Wave A.
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
REIT Bubble bursting.
REITS are showing an ending diagonal elliott wave. Since wave a is greater than wave c, wave e will be shorter than wave c. This means the high of 231 will be an unorthodox top (truncation). The combination of ending diagonal and truncation implies a very sharp drop is about to happen in the next 2-3 weeks. Give REITS another 4-5 days to rally before shorting. This is going to be a great opportunity to make money as the market falls.
http://stockcharts.com/gallery/?$DJR
Gold shows textbook E-wave
The selloff from the yearly highs in gold shows a classic elliott wave. There are 5 segments. The first and fifth do not overlap. The second segmant is a zigzag and the fourth wave is a flat.
http://stockcharts.com/def/servlet/SC.web?c=$gold,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La....
SPX in an ending diagonal.
Still in wave d of the diagonal. Next Friday is when I think the top will occur.
Wave a = 17 days
Wave c = 9 days, about half of wave a time
Wave e = 5 days estimated.
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
FRE ewave wave count
Freddie Mac rallied much more than I expected. The structure of the waves indicates FRE is finishing wave 2. It could be a running flat, or a stonger bounce as a zigzag. The zigzag count shows a 30%+ retracement. The flat retraces even less. Regardless of the wave interpreted, there is an ending diagonal forming over the last 5 or so days. A sharp reversal is in order tomorrow or early next week.
http://stockcharts.com/def/servlet/SC.web?c=fre,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
SP500
I'm anticipating the SP500 is forming an ending diagonal. Today's selloff could count as a nearly complete wave d. If the ending diagonal scenario is correct, this wave d should not fall below 1285 before the next multiday rally around 1235.
My forecast is a weak opening tomorrow and a general rally with one pullback through next Friday.
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
Early stages of bond meltup.
The Feb 8 marked the beginning of the first five wave sequence of a larger 5 wave sequence. The second wave took fewer than 8 days to "correct" and retraced to the previous wave's wave 4. The explosive move today indicates the yield is now in a wave 3 of the larger wave. I expect more gaps to the upside to take place in the next 4 weeks.
The rise in yields is not from inflationary fear as the popular media presents. It fear of default that is driving yields.
http://stockcharts.com/def/servlet/SC.web?c=$tnx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
"This time it's different"
Electrical Engineering Times ran a story about the euphoria of the engineering market in India. The author makes the direct comparison between the desperation of employers to snap up talent in Silicon Valley in Y2K and Bangalore, India today. The major difference is: the location.
http://www.eetimes.com/showArticle.jhtml?articleID=60405736
Major Market Nonconfirmation.
The 5 year anniversary of the NASDAQ Y2K top is coming up. This may be significant since 5 is a Fibonacci number. The markets are near the end of their rallies. Most, if not all, are in Elliott waves 5 of 5 of 5 that began in October '02. This is a major market top. The turning point is probably within the next 2 weeks. Stochastics are in or near overbought areas. In some cases moneyflow has been decreasing for nearly a year as those indexes climbed, a bearish divergence. RSI (relative strength indicator) is near or at the upper end of the range. The bear market that started in Y2K was only a large WAVE 4, a hint at what is to come. Half of the major indexes are NOT confirming the breakout to new all time highs the other half just made this week. Those indexes not confirming new highs are hovering around the 62% retracement level of the Y2K bear market, a Fibonacci ratio.
Making new highs
AMEX
DJT
DJ Composites
NYSE Composites
Russel 2K
SAP400
SAP600
Value Line Arithmetic Index
Probable truncated highs or WAVE B of their bear markets
NASDAQ
DJU
DJI
Russel 1K
Russel 3K
SAP100
SAP500
Wilshire 5K
Re: Market Mutation
The observer points out an important divergence in the markets. Where I firmly disagree is the conclusion that just because the NASDAQ market goes down, investors will shift money to the NYSE and Dow. When the Naz fell in Y2K, the Dow headed significantly lower.
Diverging stock markets often signal tops forming in all stocks. When significant funding to innovation is cut off, a turn in the overall economy is forthcoming.
Big ending diagonal for Dow.
Wave A of 5 started in November '04 lows. Wave C of 5 started at end of July '05. That means there are two more waves, one down, one up. There is a very good chance of the 11000 level being broken. The last year and a half is forming a nice top.
http://stockcharts.com/def/servlet/SC.web?c=$indu,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La...
10yr T short Term implications
It's just another sign of a market topping.
10yr T yield set for pullback.
Friday and today intraday charts shows a very clear motive wave following a wave 4 triangle.
http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=%5Etnx
The daily charts show the yield overbought and ready to pull back over the next week of so.
http://stockcharts.com/def/servlet/SC.web?c=$tnx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
10 Yields made a wave 4 triangle this week.
http://stockcharts.com/def/servlet/SC.web?c=$tnx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
Next week should be a short pop wave 5 and then pull back in a larger wave 2.
FRE ready for a little bounce.
Daily Stochastic is over sold again. BBands are still opening and the price is about to pullup from the lower band. There is a lower trendline from the January highs. When constructing the upper channel line, you can see how limited the move the next couple of days will be. Elliott wave count shows a 1 of 3 complete. $62.50 would be a good point to start taking short positions.
Next week should be a strong move down since it will be a wave 3 of 3. Happy trading.
http://stockcharts.com/def/servlet/SC.web?c=fre,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
FREefall for Freddie MAC
Today's move is more indicative of a Wave 3 unfolding than a wave b of 2. This is the bouncing ball to watch.
The mechanism of stock fall and bond rise broke as BOTH bonds and stocks sold off.
FRE wave count:
My count for FRE wave 5 ending diagonal.
Wave 1 began June to Aug '03 timeframe.
Wave 2 began Feb '04.
Wave 3 began May '04.
Wave 4 began Sept '04
Wave 5 began Oct '04.
End of wave 5 of 5 Jan '05
The price pattern was very choppy for such a strong multi month rally, supportive of an ending diagonal.
FRE Daily Chart.
http://stockcharts.com/def/servlet/SC.web?c=FRE,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
Bollinger bands are opening a second time. The price is hugging the lower band. Price just bounced off the 20 day moving average. The 50 day average has rolled over. MACD is showing a roll over is deep negative territory. The last week shows price gaps and rapid price drop associated with wave 3 behavior. The stochastics made an attempt to rally to overbought levels, but reversed. The upper trendline of the downtrend from the Jan '05 high has been broken as wave 2 will do.
FRE Weekly Chart.
http://stockcharts.com/def/servlet/SC.web?c=FRE,uu[w,a]wacayyay[df][pb50!d20,2][vc60][iLp14,3,3!La12...
Stochastics are in oversold sold territory. BBands opening wide indicating more price drop. Price went from upper to lower band. MACD has rolled over giving a sell.
I am still open to the possibility of a wave c of 2 carying back to the $67 area.
FRE crash in progress.
Today's price drop below the 1 month low indicates either b of wave 2 has completed, or wave 3 is in full force. A FRE or FNM crash could cause mass bank failure, both equity shorts AND longs would lose if no one can withdraw money from accounts. Gold speculators will fair better as long as they have the physical metal in their possesion. Realestate will become instantly illiquid, but if paid in full, will be of functional value.
FNM set fresh 52 week lows. This in itself is a bad sign.
http://stockcharts.com/def/servlet/SC.web?c=fre,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
I've seen enough of FRE
With the volatility the past couple days (4% swings), FRE looks to have completed wave 2 bounce of the larger wave A down. Since it looks like wave 3 is under way, the next 4 weeks will be a very 20% drop in price to the low $50s. That's the best scenario of wave 3 = 1.618* wave 1. I'm looking for this to be a much larger drop because the ultimate price for FRE will be $0.
Sell all bonds. Cash as well as gold will rally as a safer place to put money.
http://stockcharts.com/def/servlet/SC.web?c=fre,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
Chubbie- Productivity
As much as Prechter's call for the top in the stockmarket has been completely inaccurate, his Socionomic model is solid. Under the Socionomic model, productivity improves when workers feel good about themselves and the company they work for. This slowdown then would not be a true sign that demand side inflation is coming. It fact overproduction (productivity) was one of the 3 reasons the US went into the Great Depression. With so many factories closed as demand fell, the productivity of available assets fell. The discord between employer and employee is one of the symptoms of an impending bear market. Expect productivity to fall much more from these lofty heights.
Instead of factories today, we have Microsoft and WalMart. Microsoft creates software for technical companies to create "business solutions" that increase productivity. WalMart then buys these solutions and reduces the need for employees. Unions form when a sufficient number of employees feel the employer has somehow done them an injustice in pay or working conditions. Productivity is also one of the signs of a "Deflationary Depression".
Jazz: SML index very clear E-waves.
I anticipate the SML will make a new 52 week high early next week and then its longer term trend will change.
Several of the markets are at trailing in this rally to new highs. Nonconfirmation is one of the signs of a topping market.
Initial Jobless Claims
It's been a while since I last posted about the init jobless claims. This week's data broke below the 2004 low, making the wave count a 5 wave sequence. This structure is clearer than the DJI or NASDAQ. What makes sense in the large scope of things is that the DJI is in a Wave 5 from October '02. This wave may have ended on New Year '05. The long term indication is the market continues its topping and rollover.
http://www.bullandbearwise.com/InitialJoblessChart.asp
FRE and FNM are dangerously close to a crash.
The best Elliott wave count for FRE is wave b of 2 happened today, and a bounce is due. The worst wave count is wave 3 has begun. If either of these two go bankrupt, the GLOBAL economy crashes.
FRE
http://stockcharts.com/def/servlet/SC.web?c=fre,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
FNM
http://stockcharts.com/def/servlet/SC.web?c=fnm,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La12...
Q: Why do stocks and bonds rally together?
A: It's part of a major shift in investor sentiment. The population is polarizing much the way the '04 featured Red and Blue states.
There is a good chance the 30 yr bond will make another rally to 10 year price highs. Suppose a multiyear Wave 5 started in 1995. It would be tracing out an ending diagonal.
1995-late 1998 wave a
late 1998-2000 wave b
2000-spring 2003 wave c
spring 2003 to spring 2004 wave d
spring 2004 to present wave e
With the potential of a DOW and Bond top, the reverse should be even more devastating as it shows nobody has any fear investing in stocks or lending money. Borrowers are overconfident they will be able to repay loads.
http://www.financialsense.com/Market/intermarket3.htm
Markets are hanging in the balance.
For the SPX the Ewave count could be Wave 1 down and wave 2 expanding flat (bearish). Or it could be a wave 4 zigzag down and wave 5 UP (bullish). The wave 5 UP may be finished, in which case it truncated at two degrees of trend, a very bearish sign.
Either way, a pullback early next week is in order. Later next week will indicate the larger direction of the market.
FNM getting ready for plunge
Elliott wave count shows several wave 1 and 2 combinations. When all the wave 3's start to take place it should be obvious a systemic crash will ensue.
http://stockcharts.com/def/servlet/SC.web?c=fnm,uu[w,a]wacayyay[df][pb50!d20,2][vc60][iLp14,3,3!La12...
Long term you can see FNM forming a rounded top. It has taken over 5 years for this top to take place, so this is going to be a long term price erosion.
http://bigcharts.marketwatch.com/intchart/frames/frames.asp?symb=DE:1876534&sid=125284&time=
Art makes a top.
I was watching a financial report on CBS this morning about the red hot art sector. An independant firm created a chart much like a stock's price chart. It showed art averaged a 12% annual return where the SAP500 averaged only 8% annual return. The best returns on investment came from items at the lower price range. Hmmm sounds like the same relation between bluechips and penny stocks to me.
Here is the nail in the coffin!!! The Art Chart shows clear elliott waves. This last wave made a new alltime high and has completed. This implies a world market top is in place since the art market is comprised of international investors all participating at the same time.