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Dow leading the decline.
With more downside ahead.
The Dow is pulling away from 50 and 200 day averages after failing twice to mount a rally above the 200 day average the last 3 months. The MACD started its rounding over before the Dow finished its rally a few weeks ago. This waning momentum is characteristic at reversals.
Bollinger bands continue to point down.
Today's inverted hammer candlestick doesn't look good either. All the good news on earnings were met with selling pressure.
Stochastics indicate an oversold condition, but can remain at extremes for awhile.
http://stockcharts.com/def/servlet/SC.web?c=$INDU,uu[w,a]dacayyay[db][pb200!d20,2!f][vc60][iLp14,3,3...
The NASDAQ has some catching up to do to get to the same relative position of new lows as the Dow. The NAZ too has been repelled by the 200 day avg.
The MACD indicates a turn down.
The upper Bollinger Band is rising to give the appearance of widening bands, indicating a dramatic price change.
Stochastics are midrange from overbought.
http://stockcharts.com/def/servlet/SC.web?c=$compq,uu[w,a]dacayyay[db][pb200!d20,2!f][vc60][iLp14,3,...
Frank, NDX Pops and drops.
It was a flat.
And Friday's highs retraced a 50%, so the likelihood of a turn was there. Turns out the flat was the middle of a B wave of a larger ZiiZag, of yet a larger zigzag. Looking at 1930 as a turing area. It would be a 62% retracement of the move from Wednesday's highs to Friday's lows. The Zig off Friday's lows = Zag off today's lows. 1930 would also hit a line of resistance from highs around October 6.
More ratios are converging so the turn is even more likely. The Downside is still below 1900.
NASDAQ Expanding Flat
The end of Friday began an expanding flat correction. It looks like wave c of teh flat has completed and the next move down is under way. The downside is below the 1900 level.
http://finance.yahoo.com/q/bc?s=^IXIC&t=5d&l=on&z=l&q=l&c=
Uptrend in Initial Jobless Claims
So far the chart of the Initial Jobless Claims shows multimonth Elliott Wave 3 as the best count. Other technical indicators of new uptrend confirmation are broken trendline from the past year's downtrend, and a series of higher highs and higher lows over the last 4 months.
There are just too many technical indicators pointing to a new uptrend in initial jobless claims to go against them.
http://www.bullandbearwise.com/InitialJoblessChart.asp
Pros Vs. Specs
If the pros are wrong, then there should be a market collapse as the pros try to unwind their present long positions and estanblish a new short positions.
REITS near top
KIM looks to be forming two ending diagonals. The larger one started in April '04. The second one began in Sept '04 and is on little wave E. The downside target is $44.50. That's a $7.5 (14%)move.
Similar wave counts in IYR, and RMS.
http://stockcharts.com/def/servlet/SC.web?c=kim,uu[w,a]dacayyay[dd][pb50!d20,2][vc60][iLp14,3,3!La12....
RMBS
The Ewave count for RMBS is either a wave 4 UP or a Larger degree wave 2 UP. Two counts are in play because I can't tell if the larger wave 1 started in January '04 or Feb '04. Prior 5th wave truncation is possible in Feb '04. April '04 was clearly a wave 3.
If the bounce from 9/8/04 lows is a larger wave 2, then a target price in the low $20s is the 38% level. The MACD is showing slowing downside momentum, indicative of the end of a motive wave. Bollinger bands indicates a large price move is likely. Stochastics indicate oversold and a rally is likely.
http://stockcharts.com/def/servlet/SC.web?c=RMBS,uu[w,a]dacayyay[de][pb50!d20,2][vc60][iLp14,3,3!La1...
NASDAQ eWaves
The ewave pattern could be supporting a low into the projected cycle target Thurs - Mon.
The bearish count is today started a wave 3 of 1, then the rest of 3 would happen in a sharp selloff into tommorow. Wave 4 would take a day of sideways movement. Wave 5 of 1 would take about a day.
The bullish wave count could be an ABC pullback of a larger uptrend, then the wave count could finish late today into tomorrow.
US 30 Yr Bonds.
The annotations didn't show up, but that's not surprising since the chart is a Java App.
From an elliott wave view, the March to MAy '04 selloff looks very motive, a clear 5 waves with the 3rd wave extending. The rally that started inMay '04 looks corrective due to a leading zigzag and a bunch of overlapping waves.
Chances are the US investors will follow the advice of "seeking shelter" in bonds once the equities start to move lower again. THat is if Asian investors don't start dumping US treasuries first.
UTX about to roll over
The elliott wave count from May '04 for Unitied Technologies looks like an ending diagonal. Wave e of the diagonal is nearly done or finished Monday this week. The ending diagonal so far looks like it will be a truncated 5th wave. Both these pattern make UTX an attractive short with strong near term profits.
MACD has been rolling over as the price inches higher. This is typical at turning points where momentum fades before the pricce.
Bollinger bands are close and could blossom and day.
http://stockcharts.com/def/servlet/SC.web?c=UTX,uu[w,a]dacayyay[dd][pb50!d20,2][vc60][iLp14,3,3!La12...
China to revalue currency
The shift in dialog on the topic of US-Chinese currency exchange rates leaves me with the feeling the Chinese will do something financially to counter act a market driven exchange rate. My hunch is China will sell US treauries for dollars and then convert dollars to RMB. This will drive up interest rates and make it more costly for the US to import goods. Even with a weaker currency, the US depends on oil imports. US manufactured goods will have a rising energy cost component and falling labor cost component. If energy becomes so expensive to US manufacuring, it won't matter what the cost of labor is.
http://www.chron.com/cs/CDA/ssistory.mpl/business/2824893
Bond Trend Change.
The yield in the 10 year Tsy has been trading in the lower bollinger band for the last two months. Friday the yield closed in the upper Bband, and came very close to the 50 day moving avg. The 50 day moving avg has been strong resistance, so a close above it could accelerate selling. The MACD has given a buy yield/Sell Bond signal. The Stochastics have risen very quickly, so there may be a little consolidation over the next couple days before a much larger yield increase.
http://stockcharts.com/def/servlet/SC.web?c=$tnx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
Diverging Waves
NASDAQ's rally today could be finishing a WYZ wave with a new high from August lows. The Dow has yet to break the highs off August lows. The selloff in bonds is relatively weak compared to the rally in Nasdaq.
Looks like a day of great shift in the risk spectrum. Bonds sold off, bluechips up moderately, Tech is wild. The set up is perfect for a sharp reversal in stocks.
Initial Jobless Claims Trend
At this point technical charting tools indicate an trend reversal of initial jobless claims to the upside.
1.) The number of claims broke the neckline of an inverted head and shoulders formed over the last 3 months.
2.) The resistance trendline from April '03 to June '04 highs has been broken, followed by a failed test as support
3.) Higher highs and higher lows have occurred the last 2 months.
4.) Fibonacci ratios show the low made this year has retraced 78% of the 2000 tech bubble pop.
The only wildcard is the Elliott wave count which indicates there is a remote possibility of another small surge in hiring.
http://www.bullandbearwise.com/InitialJoblessChart.asp
DOW forming Ascending Triangle or ED. eom.
NASDAQ may have already turned.
Bonds are taking a beating.
The yield is threatening to move into the upper bollinger band. The Stochastics are signalling "Buy Yield" = "Sell Bond". MACD is signalling the same thing. This late in the multiweek bond rally the synchronicity of the signals need to be taken seriously.
http://stockcharts.com/def/servlet/SC.web?c=$tnx,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La1...
DAX H&S
The lower neckline has been broken. Lets see how much lower the DAX goes.
http://finance.yahoo.com/q/bc?s=^GDAXI&t=1d
BlackBelt: VXO
Does liquidity dry up while traders are waiting for confirmation? This would accentuate a downside rather than an upside move once a move begins.
Philadelphia Bank Index
The bank index is at an important point in its wave count.
The bullish wave count is wave D of an ending diagonal that started in April '04. Stochastics indicate oversold, so a bounce is due. MACD changed way too fast for a longer term down trend to continue. The 50 day moving avg is supporting price at this moment.
The bearish wave count is a daily wave 1 of weekly wave 3 that started a few days ago. The Bollinger bands have opened up and the price is moving down along the lower band. MACD is still giving a sell signal. The 20 day moving avg (the middle of the Bollinger Band) is now sloping down.
The reason for uncertainty is the price pattern near the 52 week highs. If a truncated teminal wave occurred near the end of March '04, the pullback should have been sharper in respect to time. There was too much time consolidation. A clear downside motive wave started in April. The prices have not gone higher than the start of this motive wave. If the price drops below $92.50, a larger wave 3 is unfolding. If the price breaks above $100, then an ending diagonal is most likely in play, above $102.50 is a definite.
http://stockcharts.com/def/servlet/SC.web?c=$BKX,uu[w,a]dacayyay[dd][pb50!d20,2][vc60][iLp14,3,3!La1...
Frank: Pop and Drop.
The FTSE bounced quite a bit today. The wave structer looks like a 3 wave down before the bounce, so it has more of corrective nature with more upside on the FTSE.
Divergences and non-confirmations using among global markets is making analysis interesting.
Mr Cash: 6-7 day cycle.
Elliott Waves are in harmony with cycles
Deva, that's it in a nutshell.
Popular media and conventional wisdom favor the inverse relationship between stocks and bonds to the point that they believe it to be a law of nature. I created charts of the bond market (A and B bonds) from Fed Reserve yield data for the Great Depression when BOTH stocks and bonds fell. Even with this very real FACT, the general population chooses to dismiss it as an anomoly. Same thing goes for South American markets of the present. The general population wants to believe in the inverse relationship that any blatant contradiction is rationalized away. The best conclusion is the markets are anything but rational.
Lightly put, when both stocks and bonds fall, it represents a contraction in credit. Or even a major loss in confidence.
Bonds turning
Check out the ending diagonal and sharp selloff that followed.
http://charts.barchart.com/chart.asp?sym=tyz4&data=Z10&date=092304&den=HIGH&evnt=ADV...
With STOCKS and BONDS turning, the storm is becoming more obvious.
Short the Close!!!
looks like wave 2 ( a flat) will finished into the close. Flats in the wave 2 position implies a very weak market. Sharp selloff tomorrow.
http://charts.barchart.com/chart.asp?sym=$NASX&data=Z10&date=092304&den=HIGH&evnt=AD...
Initial Jobless Claims chart
The bottom is getting so close to confirmation. The chart looks like an inverted head and shoulders. Breaking above 370,000 in the next 2 or 3 weeks will indicate a much larger downsizing in the workforce in the near future.
http://www.bullandbearwise.com/InitialJoblessChart.asp
Dow giving mixed signals.
Bollinger bands have opened and the price spent the last few days traveling from the upper band to the lower band. This is not good. Expect more downside and the price to hug the lower band.
MACD gave a sell signal a few days ago.
50 Day Moving avg was broken yesterday. This is critical support as computer programs use this as a buy/sell trigger.
The Stochastics are nearing oversold. Limited downside implied.
e-Wave count. Too sloppy. Yesterday was most likely a small wave 3 since it was the longest down day since the relative top.
http://stockcharts.com/def/servlet/SC.web?c=$indu,uu[w,a]dacayyay[dc][pb50!d20,2][vc60][iLp14,3,3!La...
Bonds making Ending Diagonal Too
http://charts.barchart.com/chart.asp?sym=tyz4&data=Z15&date=092204&den=HIGH&evnt=ADV...
Post Ending Diagonal Drop Typical
http://charts.barchart.com/chart.asp?sym=$NASX&data=Z60&date=092204&den=MEDLO&evnt=A...
GM, Ford, Chrysler help create a credit crash.
Last weekend I opened the automobile ads in the Sunday paper and found some bargains to be had. Through rebates and sales incentives prices were dropped 15 to 30%. New car buyers have got to be excited about the new affordability.
The downside to the situation is that everyone who bought cars in the last two years now have a car that has depreciated 15% to 30%. Over the last 4 years the loan to value ratio of new cars was well above 95%. The duration of loans is now longer than 6 years. The result is millions of car owners now owing more than their cars are worth. Lending agencies are at risk of taking big losses even if the car is returned in pristine condition as colateral to satisfy the loan.
Since the automakers' earnings are now coming from financing auto sales, automakers face a dangerous earnings situation. Shorting auto companies may be the way to make money in this situation.
Maybe not a triangle
Alternate count:
Flat ended on august 16th
Everything since then has been ending diagonal (ED).
Today may finish the ED with a smaller ed.
This wave count would be more in line with the german DAX that seems to be wiggling higher.
http://charts.barchart.com/chart.asp?sym=$NASX&data=Z60&date=092104&den=HIGH&evnt=of...
Chuck: Saw same thing yesterday.
The NASDAQ made a new high in the rally from August lows, but the DOW and SPX failed to make new highs. The NASDAQ high is therefore unconfirmed.
NASDAQ triangle ended this morning.
Post-triangle thrust is in play. Target is 1930 based on width of triangle and low of day
FTSE near 52 week high.
The FTSE is so close to breaking the 52 week high. There could be a few more weeks before the trend from the July lows reverses.
http://stockcharts.com/def/servlet/SC.web?c=$FTSE,uu[w,a]dacayyay[dd][pb50!d20,2][vc60][iLp14,3,3!La...
What is contradictory is the British pound is losing value relative to the Euro, so it looks like Brits are driving the prices while the rest of europe is pulling money out of the UK.
http://finance.yahoo.com/q/bc?s=EURGBP=X&t=1y
Bonds and Stocks are Rallying.
A double rally indicates a polarization of risk among investors. Something has to give. It's almost like a hedge.
Naz forms Triangle or ED
It's too tough to call at this point. Either way you look at it, the market is about to reverse.
http://charts.barchart.com/chart.asp?sym=$NASX&data=Z05&date=091404&den=HIGH&evnt=of...
Siffo: Massive Debt, Joblessness, and earning
The labor arbitrage is about to hit the skids. Global markets indicate the coutries the US outsources it's labor to are about to enter a severe recession or even a depression. When neither the US consumers or the rest of the world wants to buy anything, the earnings will slide quickly.
Europe is experiencing worse jobless conditions than the US, and has a debt problem. So that market is quickly drying. Now if US companies try to sell asian built product to asians, the profits will drop too. Asian consumers have a hangover from the Japanese Miracle (Bubble) of 1989. China's economy is overheated and there are structural problems with bad loans Chinese banks hold.
India is about to go through a dramatic social upheaval. The Caste System showed more cracks as common people gained technical training and eventual generated substantial wealth. Salary wars for Indian engineers eat away at the benefits of the outsourcing arbitrage.
The next group of 3rd world countries are so far behind in terms of technical training that the next round of labor arbitrage would not be profitable. The time lag for training new engineers will eat into profits. But if the rest of the world has become so reluctant to buy anything, outsourcing won't matter.
Frank: Good Find
I like that chart too.
NASDAQ Comp near end
Yesterday's rally continued today. So far it looks like waves 1 and 3 have finished. wave 5 may be under way. Since wave 3 was shorter than wave 1, wave 5 should not run much higher. The channels of this 5 wave pattern is triangular, but it is not a triangle due to lack of overlap of waves 1 and 5.
http://finance.yahoo.com/q/bc?s=^IXIC&t=5d&l=on&z=l&q=l&c=
AireDale88: Thanx.
There are signs of weakness showing up. Yesterday's bond auction indicated there were fewer investors participating. This is a tightening of credit. This is offset by businesses reducing borrowing. These forces are balancing each other out.