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SPX Sell?
The Wave Trader has two counts for the wave 4 correction: a flat and a triangle. Both are still equally valid at this point. Regardless, wave b is a nearly completed zigzag. SPX should drop 1-2% over the next 2-3 days for a nice little swing trade.
AAPL
Elliott Wave International posted a teaser yesterday for one of it's fee based services. The teaser featured AAPL. EWI hid the RSI for the last 3-4 months. With a minimal effort I have posted a chart which includes the most current RSI for AAPL.
What I see is a divergence. AAPL is making new highs on declining strength after a very long and powerful rally. This is a precursor to major trend reversals. The last 5 -6 days of rally have been on declining volume as well, another divergence showing weakness.
http://stockcharts.com/h-sc/ui?s=AAPL&p=D&yr=0&mn=6&dy=0&id=p28319350463
PokerSam - TheWaveTrading
I definitely agree based on their performance. I was counting the initial rally out of the October 2011 lows as a double zigzag corrective move instead of a motive wave of a larger degree zigzag. Printing presses distort wave counts.
OddLot, You Should Be In...
Gold and SPX have independent E-wave counts. Gold is now in a long term corrective move according to E-wave count. This correction is on the same scale as the 12-13 year rally, so a 1 to 5 year correction is possible.
Here is a pretty good idea where the SPX is going:
http://www.safehaven.com/article/24669/weekly-analysis
The only thing in long term rally mode is the boring dollar.
OddLot,
The wave count looks complete, so the bottom should be in. The Gold/SPX ratio should rally and break 1.65.
One word of caution about ratios: There are two components, a numerator (price of gold), and a denominator (SPX index). Either or both can change and the ratio still increase. These are the cases:
Gold can rally faster than the SPX rallies.
Gold rallies and the SPX moves sideways or falls.
Gold moves sideways or falls slower than the SPX falls.
The worst outcome for someone using the Gold/SPX ratio to justify buying gold is when gold falls slower than the SPX falls. And just because there are two cases of gold rallying does not mean the probability of gold rallying is twice that of gold selling off at a very slow rate.
AAPL -Prechter's comments
Bob Prechter, Jr loves to claim "we were the first to say XXX about YYY".
http://www.elliottwave.com/freeupdates/archives/2012/03/09/The-Apple-of-the-Stock-Market-s-Eye-Just-How-High-is-High.aspx
Well this board was first when it came to AAPL.
OddLot - Good Chart
After looking at this chart I have a different perspective on the e-wave count for gold.
Count 1:
2009 high to July 2011 low - wave 4 triangle
July 2011 low to August 2011 hi - wave 5 thrust
August 2011 hi to present - larger wave 4 triangle
Larger wave 5 up to take place
Count 2:
2009 high to August 2009 low - wave a of flat
August 2009 low to August 2011 hi - wave b of flat
August 2011 hi to present - wave c (ending diagonal) of flat triangle.
Larger wave 5 up to take place
Bliss, ger...
After today ther is still a chance, although very small, that THE top is in. From an E-wave standpoint it makes no sense for a long rally to form a multi week ending diagonal just to have a little correction instead of the start of a long term selloff. TRAN and RUT put in highs a month ago. NDX is about to take out the February 2012 high.
This topping process has been long and drawn out, lulling people into the bear trap. Sounds more like fox behavior than bears.
Pop And Drop Underway
The SPX 2 day bounce looks like a corrective zigzag.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
SI E-waves say SHORT
From the May 2011 high to the October 2011 lows Siemens had a motive sell off.
The October 2011 lows to October 2011 highs, SI made a corrective zigzag of a small degree. The rest of the sideways movement is part of a larger correction of the same dgree as the May-October 2011 sell off.
The larger correction breaks down in 3 zigzags. wave c is of particular interest because its zag was an ending diagonal AND the zag truncated with respect to wave a. These wave patterns foretell a strong sell off over the coming months.
Other TA supports the ewave conclusion.
The lower trendline from the October 2011 low was been broken this week. (bearish)
In February 2012 the Stochastics showed a divergence from the rising price. (turn ahead)
Neither wave a nor wave c could break above the 200 day average, which is accelerating to the downside. (weakness)
wave c rallied on declining volume. (turn ahead)
http://stockcharts.com/h-sc/ui?s=SI&p=D&yr=1&mn=4&dy=0&id=p59284916818
Greece Bonds SLIDE.
Yields on 1 yr Greek treasuries is now over 1100%. That means they are selling for 8.5 to 9.0% of face value.
I understand the Greek government is trying to force a "voluntary" exchange of debt into something with a 50 to 75 loss from the original face value of the debt. I understand that those "evil hedge funds" (sarcasm) have insurance policies against those bonds defaulting and see no reason to participate. What I have not read is why don't the bond insurers buy the bonds at these severely distressed levels ( with a present market value well below that of the new bonds) and exchange them for the new ones? Even if a default is declared, bond insurers would minimize their losses. It seems like everyone is playing financial chicken. Those who bought bond insurance are discounting counterparty risk. And those selling bond insurance are hoping for regulators to declare no default, despite an impairment on the value of the bonds.
http://www.bloomberg.com/quote/GGGB1YR:IND
Nice Bounce - SPX
This should be a corrective bounce. I don't know if this is a little wave 4 or a smaller degree wave 2. Retracements after ending diagonals are sharp and retrace most of the ED. So far the shapr criteria has been met, but not the retracement. I do feel comfortable there will be another decline at least to the 1340 area.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
INDU Fell Below Mean Model
SELL
SPX Futures Down 11 Point
This counts as prices falling faster, and a complete Ending Diagonal.
Nikkei Major Divergence
The Relative Strength Index has been the most overbought during this recent rally compared to every rally over the past 3 years despite being 15% away from the 3 yr high. Stochastics are also overbought. MACD is turning lower.
E-wave count: all I'm confident in is the rally off Novermber 2011 lows is a 3 segment correction. wave b looks like a triangle. wave c looks complete. So the next move over the next month should be down.
http://stockcharts.com/h-sc/ui?s=$NIKK&p=D&yr=3&mn=0&dy=0&id=p29315938931
PokerSam - Truncating ED
ED's are bad enough. Throw truncation into the mix and prices should fall even faster.
Is Ending Diagonal Finally Over?
If no rally develops at this point, the ending diagonal is finished.
GS Ending Diagonal Recount
GS' sharp rally on Thursday severely lessened the chances of a multiday ending diagaonal. The recount is still a topping formation.
Through most of February '12 a TRIANGLE formed. wave c of zag is under way and nearly complete.
http://stockcharts.com/h-sc/ui?s=GS&p=D&yr=0&mn=6&dy=0&id=p38242620163
SPX - Neverending Ending Diagonal
A re-count is not yet forced; however, alternate counts should be considered. Looking at the SPX intraday chart, the move off last Thursday's low could constitute the beginning of some degree of ending diagonal. Today would be wave 5. There is also the possibility of more than one degree of ending diagonals in play.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
Nirvana, But This Time It's Different
;) LOL
Let's Pick on GS.
Goldman-Sachs has a textbook double zigzag starting from the beginning of October '11. Wave b is a triangle that ended in late December '11 or early January '12.
Wave a of the zag was strong, ending in early February '12. The really inportant observation is the zag wave c ending diagonal in late February '12. It is nearly complete (little wave 4). GS should drop below $82, the start of this corrective rally.
http://stockcharts.com/h-sc/ui?s=GS&p=D&yr=0&mn=6&dy=0&id=p16334440684
Lexus / AAPL
Retail investors are buying AAPL at these levels. It's too close to a MAJOR top that I would not buy for quik flip.
Bliss, I Agree With a GOLD CRASH
Although I see a slightly different wave count though.
The September '11 low to the November '11 high looks corrective with all the overlapping subwaves.
The November '11 high to December '11 low looks like a double zigzag, a corrective pattern.
The December '11 low to yesterday looks impulsive.
So the entire September '11 low to yesterday's high breaks down into a 3-3-5 structure, which is a corrective flat. In this case it is a running flat since wave b is greater than wave a. The flat retraced 66% of the September '11 motive selloff.
Greek 1 Yr Treasury Yields Above 800%
That's priced 11% of face value. Am I missing something? The Greek govt offered a 50-75% writedown in exchange for new bonds. That would make the new bonds worth 25-50% of the old face value. Old 1 year bonds are trading at 11% face value should have been bid up by arbitragers, more than doubling their present market price. Since this did not happen, I'm concluding the bond market believes the writedown is insufficient and exchanged bonds will default.
Lexus, Same Thoughts on AAPL
Yahoo finance had a headline pumping the stock with a new product release. Technically, AAPL is in wave 5 of 5. The larger degree started at the January '09 lows. The smaller degree has pushed above the channel formed over the last 3 years. If you make a devils pitchfork such that the lower tine hugs the lower channel line, and the upper tine tags the December '07 high, then the price has very little room to rise before the middle tine obstructs it.
A correction back to the $80 level is realistic given that is the beginning of larger degree wave 5. The great non-conformation would be MSFT not even close to making new highs with AAPL. EBAY and GOOG are struggling in choppy advances (most likely a corrective rally).
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=aapl&time=12&startdate=1%2F4%2F1999&enddate=2%2F28%2F2012&freq=2&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=9&x=33&y=16
No ED
Today's rally off the lows went too far. Wave 3 can't be the smallest wave in an advance.
Maybe today was waves 2 and 3 of an ED. One thing I've noticed is waves begin to overlap near tops much more so than in the middle of a motive wave. Waves are starting to overlap more often.
SPX in Another Ending Diagonal
Intraday charts show one started 7-8 days ago, and should be in wave 5 of the ending diagonal. Tomorrow should be a strong down day if the market doesn't selloff hard into the close.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
ABX Mortage Index: Textbook E-wave
So far I count 4 waves up. The 3rd wave is the largest. The 4th is a nearly completed triangle. That means a short rise and sharp drop (risk off) is in the near future.
http://www.markit.com/en/products/data/indices/structured-finance-indices/abx/abx-prices.page?
SPX futures e-waves
Since the lows on February 16, until this evening, the futures have traced 4 waves. Right now wave 4 looks like a nearly completed triangle. This gives plenty of time for wave 5 to complete before the markets open in the morning. Tomorrow will be a very good time to exit long positions.
A rally in the Dow of 100 points would put the mean model error near 3% for the second time in this multiweek rally. The mean model has formed tops every 70-75 days, and the markets are in that window, the mean model error is losing momentum, so another major top is VERY close.
http://charts.insidestocks.com/chart.asp?sym=ESH2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
Sharing Mean Model Data Download
Here is data for the last 250 days of the market and my Mean Model calculations. The 1st column is the market data. The 2nd column is the mean model, a best fit. The 3rd column is the error between the market and the mean model. The 4th column is a best fit projection. Please plot the data in Excel before reading the following comments...
I'm waiting...
OK, Your charts look good...
The error is bounded in an envelop, very much like amplitude modulation. You can see the carrier frequency, a 72-75 day period, inside the envelop is near a top.
Now look at the chart for the mean model. You can see it is also topping, and about to roll over.
Both the error and the model model are calling for near term top and drop lasting at least 3 trading weeks before any bounce can be traded.
Market Mean Error Predictor
0 0 0 12974.71582
0 0 0 12974.44075
0 0 0 12973.61591
0 0 0 12972.24237
0 0 0 12970.32194
0 0 0 12967.85712
0 0 0 12964.85112
0 0 0 12961.30785
0 0 0 12957.23187
0 0 0 12952.62842
0 0 0 12947.50335
0 0 0 12941.86317
0 0 0 12935.71493
0 0 0 12929.06628
0 0 0 12921.9254
0 0 0 12914.30097
0 0 0 12906.20215
0 0 0 12897.63855
0 0 0 12888.62018
0 0 0 12879.15742
0 0 0 12869.26101
0 0 0 12858.94195
0 0 0 12848.21154
0 0 0 12837.08127
12878.28 12587.94517 0.023064514 12825.56285
12874.04 12587.81648 0.022738139 12813.66809
12801.23 12587.42988 0.016985209 12801.40894
12890.46 12586.78368 0.024126602 12788.79742
12883.95 12585.8751 0.023683287 12775.84554
12878.2 12584.7003 0.023321946 12762.56535
12845.13 12583.25433 0.020811442 12748.96882
12862.23 12581.53124 0.022310381 12735.06787
12705.41 12579.52407 0.01000721 12720.87428
12716.46 12577.22489 0.011070416 12706.3997
12632.91 12574.62487 0.004635138 12691.6556
12653.72 12571.71434 0.00652303 12676.65324
12660.46 12568.48278 0.007318084 12661.40365
12734.63 12564.91899 0.013506734 12645.9176
12756.96 12561.01106 0.015599774 12630.20557
12675.75 12556.74652 0.009477255 12614.27776
12708.82 12552.11235 0.012484564 12598.144
12720.48 12547.09513 0.013818726 12581.81384
12623.98 12541.68107 0.006562033 12565.29643
12578.95 12535.85612 0.00343765 12548.60059
12482.07 12529.60607 -0.0037939 12531.73475
12422.06 12522.91662 -0.008053765 12514.70696
12471.02 12515.77352 -0.003575769 12497.52492
12449.45 12508.1626 -0.004693943 12480.19593
12462.47 12500.06995 -0.003007979 12462.7269
12392.69 12491.48194 -0.007908745 12445.1244
12359.92 12482.38539 -0.009811057 12427.39462
12415.7 12472.76763 -0.004575378 12409.54342
12418.42 12462.6166 -0.003546334 12391.57629
12397.38 12451.92096 -0.004380124 12373.49843
12217.56 12440.67019 -0.017933937 12355.31475
12287.04 12428.8547 -0.011410118 12337.02984
12151.41 12416.46587 -0.021347127 12318.64809
12291.35 12403.49621 -0.0090415 12300.17361
12294 12389.93938 -0.00774333 12281.61036
12169.65 12375.79035 -0.016656742 12262.9621
12107.74 12361.0454 -0.020492232 12244.23248
12103.58 12345.70227 -0.019611867 12225.42503
11766.26 12329.76017 -0.045702443 12206.54322
11866.39 12313.21988 -0.03628863 12187.59049
11868.81 12296.08383 -0.034748773 12168.57031
11823.48 12278.3561 -0.037046987 12149.48618
11954.94 12260.04252 -0.024885927 12130.34169
12021.39 12241.1507 -0.017952617 12111.14057
12184.26 12221.69004 -0.003062591 12091.88671
11997.7 12201.67181 -0.01671671 12072.58421
12196.37 12181.10913 0.001252831 12053.23744
12150.13 12160.01703 -0.000813077 12033.85104
12097.83 12138.41241 -0.003343304 12014.42998
12019.42 12116.31407 -0.007996993 11994.97963
12020.03 12093.74274 -0.006095114 11975.50573
12045.68 12070.72098 -0.002074522 11956.01449
11555.63 12047.27326 -0.040809505 11936.51259
11523.01 12023.42585 -0.041620072 11917.00723
11231.78 11999.20685 -0.063956465 11897.50613
11257.55 11974.6461 -0.059884534 11878.01761
11493.72 11949.77518 -0.038164331 11858.55058
11547.31 11924.6273 -0.031641853 11839.11457
11796.16 11899.23728 -0.008662512 11819.71976
11770.73 11873.64146 -0.00866722 11800.377
11905.59 11847.87763 0.004871114 11781.09781
12096.16 11821.98496 0.023191963 11761.89441
12078.98 11796.00387 0.023989152 11742.77971
12153.68 11769.97598 0.032600238 11723.76736
11893.79 11743.94401 0.012759427 11704.87168
11780.94 11717.95163 0.005375374 11686.10773
12170.18 11692.04339 0.040894187 11667.49126
12068.39 11666.26461 0.034469078 11649.03872
11983.24 11640.66122 0.029429495 11630.76724
12044.47 11615.27968 0.036950494 11612.69462
11836.04 11590.16682 0.021213947 11594.83931
11657.96 11565.36974 0.00800582 11577.22037
11955.01 11540.93566 0.03587875 11559.85746
12231.11 11516.91179 0.062012996 11542.77081
12208.55 11493.34522 0.06222773 11525.98117
11869.04 11470.28272 0.034764381 11509.50977
11706.62 11447.77068 0.02261133 11493.3783
11913.62 11425.85492 0.042689591 11477.60884
11808.79 11404.58057 0.035442726 11462.22381
11541.78 11383.99195 0.01386052 11447.24594
11504.62 11364.13239 0.01236237 11432.69818
11577.05 11345.04415 0.020449973 11418.60368
11397 11326.76827 0.006200509 11404.98571
11644.49 11309.34443 0.029634394 11391.86756
11478.13 11292.81083 0.016410367 11379.27254
11518.85 11277.20407 0.021427823 11367.22386
11416.3 11262.55905 0.013650623 11355.7446
11433.18 11248.90884 0.016381248 11344.85759
11103.12 11236.28456 -0.011851299 11334.58536
11123.33 11224.71532 -0.009032329 11324.95009
10939.95 11214.22809 -0.024458044 11315.97349
10808.71 11204.84759 -0.035354126 11307.67675
10655.3 11196.59627 -0.048344716 11300.08047
10913.38 11189.49417 -0.024676197 11293.20454
11153.98 11183.55889 -0.002644854 11287.06813
11010.9 11178.8055 -0.015019986 11281.68956
11190.69 11175.2465 0.001381938 11277.08625
11043.86 11172.89179 -0.011548647 11273.27464
10771.48 11171.74857 -0.035828641 11270.27012
10733.83 11171.82136 -0.03920501 11268.08696
11124.84 11173.11199 -0.004320371 11266.73824
11408.66 11175.61952 0.020852578 11266.23579
11401.01 11179.34029 0.019828514 11266.5901
11509.09 11184.2679 0.029042768 11267.81033
11433.18 11190.39322 0.021696001 11269.90416
11246.73 11197.7044 0.004378183 11272.87781
11105.85 11206.18692 -0.008953708 11276.73595
11061.12 11215.82362 -0.013793335 11281.48167
10992.13 11226.5947 -0.020884757 11287.11644
11295.81 11238.47785 0.005101416 11293.64007
11414.86 11251.44824 0.01452362 11301.05067
11139.3 11265.47861 -0.011200466 11309.34464
11240.26 11280.53937 -0.003570695 11318.51663
11493.57 11296.59862 0.017436344 11328.55953
11613.53 11313.62232 0.026508546 11339.46446
11559.95 11331.57432 0.020153923 11351.22075
11539.25 11350.41649 0.016636704 11363.81597
11284.54 11370.10881 -0.007525769 11377.23589
11149.82 11390.60952 -0.0211393 11391.46452
11320.71 11411.87519 -0.007988625 11406.48413
11176.76 11433.8609 -0.022485921 11422.27523
10854.65 11456.5203 -0.052535175 11438.81667
10817.65 11479.8058 -0.057680052 11456.08558
10990.58 11503.66869 -0.044602179 11474.05747
11410.21 11528.05926 -0.010222819 11492.70628
11405.93 11552.92696 -0.012723785 11512.00437
11482.9 11578.22055 -0.008232746 11531.92262
11269.02 11603.88821 -0.028858276 11552.43051
11143.31 11629.87773 -0.041837734 11573.49609
10719.94 11656.13663 -0.080317919 11595.08617
11239.77 11682.61233 -0.037906105 11617.1663
10809.85 11709.25227 -0.076811247 11639.70087
11444.61 11736.00406 -0.02482907 11662.65325
11383.68 11762.81566 -0.03223171 11685.98576
11896.44 11789.63548 0.009059188 11709.65989
11866.62 11816.41253 0.00424896 11733.63629
12132.49 11843.0966 0.02443562 11757.87492
12143.24 11869.63832 0.023050549 11782.33512
12240.11 11895.98938 0.028927449 11806.97574
12302.55 11922.10256 0.031911102 11831.75523
12501.3 11947.93195 0.046314965 11856.63171
12592.8 11973.43299 0.05172844 11881.56314
12681.16 11998.56263 0.056889929 11906.50738
12724.41 12023.27941 0.058314422 11931.42233
12571.91 12047.54358 0.043524759 11956.26601
12587.42 12071.31718 0.042754474 11980.99668
12385.16 12094.56415 0.02402698 12005.57295
12479.73 12117.25038 0.029914346 12029.95389
12437.12 12139.34381 0.024529842 12054.09914
12491.61 12160.81448 0.027201757 12077.969
12446.88 12181.63459 0.021774205 12101.52454
12505.76 12201.77857 0.024912879 12124.72771
12657.2 12221.22311 0.035673753 12147.54143
12719.49 12239.94719 0.039178503 12169.92969
12626.02 12257.93211 0.030028547 12191.85762
12569.87 12275.16153 0.024008521 12213.29164
12582.77 12291.62144 0.02368675 12234.19946
12414.34 12307.30022 0.00869726 12254.55025
12261.42 12322.18857 -0.004931638 12274.31462
12188.69 12336.27956 -0.011963863 12293.46479
12043.56 12349.56857 -0.024778887 12311.9746
11934.58 12362.05325 -0.03457947 12329.81956
12050 12373.73355 -0.026162965 12346.97697
12109.67 12384.6116 -0.02220026 12363.42589
12190.01 12394.6917 -0.016513658 12379.14726
12080.38 12403.98026 -0.026088421 12394.12388
12004.36 12412.48573 -0.032880258 12408.34048
11961.52 12420.21853 -0.036931599 12421.78375
11897.27 12427.19096 -0.042642055 12434.44231
12076.11 12433.41715 -0.028737647 12446.3068
11952.97 12438.91294 -0.039066351 12457.36983
11951.91 12443.69582 -0.039520881 12467.626
12124.36 12447.78479 -0.025982518 12477.0719
12048.94 12451.20029 -0.032306948 12485.70609
12070.81 12453.96407 -0.030765632 12493.52909
12089.96 12456.09912 -0.029394365 12500.54335
12151.26 12457.62952 -0.024592922 12506.75324
12248.55 12458.58032 -0.016858287 12512.16496
12290.14 12458.97747 -0.013551471 12516.78658
12569.79 12458.84766 0.008904703 12520.62791
12441.58 12458.2182 -0.00133552 12523.7005
12402.76 12457.11691 -0.004363523 12526.01757
12394.66 12455.57202 -0.004890343 12527.59392
12356.21 12453.612 -0.007821185 12528.44591
12381.26 12451.26549 -0.00562236 12528.59134
12512.04 12448.56115 0.005099292 12528.04938
12605.32 12445.52754 0.012839348 12526.84052
12560.18 12442.19303 0.009482812 12524.98645
12479.58 12438.58566 0.00329574 12522.50999
12548.37 12434.73304 0.009138673 12519.43498
12595.75 12430.66226 0.013280687 12515.78619
12695.92 12426.39975 0.021689327 12511.58924
12630.03 12421.9712 0.016749258 12506.87049
12760.36 12417.40148 0.027619186 12501.65691
12684.68 12412.71452 0.021910234 12495.97603
12638.74 12407.93324 0.018601548 12489.85579
12584.17 12403.07947 0.014600449 12483.32446
12723.58 12398.17387 0.026246295 12476.41053
12807.51 12393.23587 0.033427438 12469.14259
12807.36 12388.2836 0.033828448 12461.54926
12810.54 12383.33382 0.034498479 12453.65906
12763.31 12378.4019 0.031095137 12445.50032
12690.96 12373.50175 0.025656298 12437.10106
12595.37 12368.64582 0.018330558 12428.48892
12479.88 12363.845 0.009385025 12419.69105
12505.99 12359.10868 0.011884459 12410.73403
12453.54 12354.44466 0.008021027 12401.64376
12266.75 12349.85922 -0.006729568 12392.4454
12201.59 12345.35703 -0.011645433 12383.16324
12341.83 12340.94121 7.20194E-05 12373.82069
12285.15 12336.61335 -0.004171595 12364.44016
12270.99 12332.37349 -0.004977427 12355.043
12263.58 12328.22015 -0.005243267 12345.64943
12381.11 12324.15039 0.004621788 12336.27851
12380.05 12320.15984 0.004861151 12326.94805
12409.49 12316.24271 0.007571083 12317.67456
12426.75 12312.39187 0.009288051 12308.47327
12393.9 12308.59892 0.006930202 12299.358
12400.03 12304.85421 0.007734817 12290.34119
12376.72 12301.14692 0.00614358 12281.43387
12319.73 12297.46516 0.001810523 12272.64561
12350.61 12293.79598 0.004621357 12263.98455
12279.01 12290.12554 -0.000904428 12255.45735
12197.88 12286.43909 -0.007207873 12247.06922
12220.59 12282.72115 -0.005058419 12238.82389
12170.56 12278.95552 -0.008827748 12230.72368
Top Is In.
SPX shows the ending diagonal, followed by a sharp retracement to its beginning. The move off the morning's lows is a wave 2 flat. Look for Monday to be lower as wave 3 or smaller degree wave 1 begins.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=&freq=
Ending Diagonal, 10% drop ahead.
Over night the futures completed a little wave 4 triangle followed by a wave 5 thrust. More choppy advance is possible, but it won't go far or last long. The market is ready to drop by at least 10% before support is found.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
It's That Close To The Top
One more little advance is all I think there will be to finish the e-wave in the INDU futures.
My mean-reversion model is showing the market being stretched 3.2% above the mean. This is the second time in the last week, so the market is losing momentum. Odds are above average of a near term top.
http://charts.insidestocks.com/chart.asp?sym=esh2&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk
DAX E-Waves Look Complete
From about September 26, I count a nearly completed zigzag.
Zig - Sept 26 to late October high.
Triangle - October high to December 27 low.
Zag - presently finishing up
The US is in a similar, but FED distorted, situation.
http://stockcharts.com/h-sc/ui?s=$DAX&p=D&yr=0&mn=6&dy=0&id=p56632765416
INDU E-waves look a little incomplete.
I think one more push to last week's highs is in order. Mean Model error shows some e-waves. This too would look complete with one more push higher.
Also, are there two 10-day cycles which are very right translated? The second cycle made a proportionately higher high and higer low. Could a push higher could be part of a very left translated 10 day cycle?
Thanks, Uncle.
I saved the webpage for the Least-Square Multiple Regression approach. I actually rack my brain more over the market than this kind of advanced math.
Mean Model is based on Regression Analysis
... but is not a linear regression analysis. I use SSE (sum squared error) to fit the set of curves to the data. I think of curve fitting rather than regression analysis since I have an engineer's point of view, not a mathematician's. I use correlation to validate how reliable the Mean Model and prediction curves fit market data. And x out of y event statistics on the Mean Model for determining market turn points. This is a complex algorithm which uses several mathematical tools and engineering concepts.
I think most people using statisics get in trouble when they try to take raw market data and count how many conditional events occur out of the total data set. Stochastics can give an overbought or oversold signal, yet such a signal can persist quite a while before the market finally makes the turn.
High Probability Drop of 10%-20%
... starting withing a couple days. The Mean Model error for INDU was over 3.5% intraday. This reading has always led to a minimum 10% price drop.
The model also shows an 8 month / 30 week cycle topping. The last top was at these levels so some of the longer cycles have topped about 15 weeks ago.
INDU Mean Model - Top getting closer
The difference between the market and the model was 3.2% yesterday. This is in the higher probability zone of a market turn. Moves after the turn typically are more than 10%.
10 US Treasury Yield E-Wave
Possible truncating, ending diagonal since October 2011 highs. Maybe another 2 weeks of choppy downward movement, then yields should rocket higher.
http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=0&mn=6&dy=0&id=p30332973216