Short Term Trading Member Forum

[techcharter]

Global and US stock markets Near Top.

=== DAX ===

http://stockcharts.com/def/servlet/SC.web?c=$dax,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!L...

The German DAX rallied hard to make another bear market high this week to 4551.89. This is a handfull of points above a perfect Fibonacci retracement of 38.2% to 4523. The Elliott wave count for the bear market rally from March '03 can be counted as two-double zigzags or a triangle. Both wave counts indicate a top; however, the two-double zizags count matches up with Fibonacci ratios. Each double zigzag has taken nearly equal time (10.5 months/ 43 weeks) to complete. The second double zigzag covered a little less than half the move in terms of point as the first double zigzag. Each double zigzag has well formed trend channels. On the daily chart, the stochastics have been in overbought territory for the last 2 weeks. The MACD has shot up. The MACD difference was diverging with price highs, a sign at least the May '05 rally is nearly over. Long term upside is limited. Look for selling pressure to start.


=== FTSE ===

http://stockcharts.com/def/servlet/SC.web?c=$ftse,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!...

The London FTSE made a choppy rally (probably and ending diagonal this week to 5016.6 in an effort to retest bear market highs. There are two Elliott wave counts for the bear market rally from March '03. The first count (Bearish) is the bear market rally ended in Feb '05 at 5077.8. The fibonacci time ratio is 0.5 and price ratio is just short of 0.62 at 0.588. The May '05 rally can be counted as a multiday Wave 2 zigzag that has retraced 80% (78.6% is fibonacci). The second count (Bullish) is two-complex waves joined by a Wave X triangle in mid 2004. Time and price do not form Fibonacci ratios at this time. Fibonacci ratios are approaching 0.786 for time and 0.618 for price. This gives the FTSE another 3-4 weeks to break the Feb '05 high of 5077.8. For this scenario to work out, the FTSE will have to drop sharply and spike to new bear highs. Regardless of the wave count chosen, other technical indicators are signalling a selloff. On the daily chart, the stochastics have been in overbought territory for the last 2 weeks. The MACD is flattening and about to give a sell signal. The MACD difference was diverging with price highs, a sign at least the May '05 rally is nearly over. Long term upside is limited. Look for selling pressure to start. A drop below 4820 would be a strong indicator a new bear market is underway. A drop below 4773 would confirm the new bear market.


=== NIKKEI ===

http://stockcharts.com/def/servlet/SC.web?c=$nikk,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!...

The best Elliott wave count for Nikkei indicates the bear rally from April '03 lows to April '05 highs was a triangle. It took a Fibonacci 3 years to complete. Wave 5 of the triangle was an ending diagonal that truncated. Wave 5 of the ending diagonal also truncated. The swift selloff is a characteristic following an ending diagonal or truncation. The rally from the April '05 lows has been very choppy and retraced a little more than a fibonacci 0.50. Other technical indicators are signalling a selloff. The price bounced off the upper bollinger band and the 50 DMA. Bollinger bands continue to widen in anticipation of a dramatic price move. The Stocastics are overbought and the signal has crossed below the reference (SELL). Both signal and reference are poised to fall below the 80% line, another sell indicator. Tha MACD difference is starting a downtrend, signalling waning momentum even as the MACD is still pointing higher. Look for continued long term selling pressure. First target for wave 3 is 9550, where wave 3 = 1.618 x wave 1. It gets worse from there. The drop from 11975 has signalled a new bear market is underway. A drop below 10700 would confirm the new bear market.

=== Hang Seng ===

http://stockcharts.com/def/servlet/SC.web?c=$hsi,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!L...

The Hang Seng topped out in Mid Y2K. Since then Bear A wave took the HSI down to 8894 after 9/11/01. The bear market rally took shape as an expanding flat. Presently the HSI is finishing the Wave C (ending diagonal) of the expanding flat that started in April '03. The end date of the ending diagonal's wave 4 is debatable. If wave d ended in mid April '05, then wave 5 (zigzag) is close to done with possible truncation at 2 degrees of waves. If wave 4 ended in late May'05, then wave 5 is in the zig of a zigzag with more rally left. Further support of a turning point is a fibonacci time ratio of Bear A = 38.3% Flat. The price ratio is about 400 points short of a fibonacci 62% retracement. MACD is giving a buy signal as the signal crosses above the reference and both are crossing the 0.0 level. MACD difference is still pointing higher to indicate upside potential. The stochastics are in neutral territory, and the signal is about to cross the reference (SELL). A drop below 13541 would be a strong indicator a new bear market is underway.
A drop below 13100 would confirm the new bear market.

=== SPX ===

http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!L...

The SPX has probably wrapped up a Wave B triangle that started in March '03. From the mid April '05 lows it is possible to count a double zigzag. A double zigzag indicates the bear market rally is structurally complete. The bullish wave count is selloff followed by another double zigzag to make new highs. The bearish wave count is the start the second bear market from a truncated rally. This implies a very strong selloff started Friday. Stochastics have been overbought for the last 2 weeks after a false sell signal. MACD has been rallying and is about to roll over. The Volume and MACD difference declined the past two weeks as the price made a choppy advance, a divergence signalling a selloff. I'm looking at every angle to find fibonacci ratios, but am having difficulties. A drop below 1136 would be a strong indicator a new bear market is underway. A drop below 1060 would confirm the new bear market.

=== DJIA ===

http://stockcharts.com/def/servlet/SC.web?c=$indu,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!...

The DJIA is in a slightly different situation as the SPX. It is debatable if the DJIA is in a Wave 5 (ending diagonal Bull mkt count) or Wave B (triangle Bear mkt count) that started in April '03 because the DJIA only fell 38.6% from y2K highs and came relatively close to making a new alltime high with a 78 retracement. A drop below 10000 would be a strong indicator a new bear market is underway. A drop below 9700 would confirm the new bear market.

=== NASDAQ ===

http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3...

The Nasdaq looks like its in a nearly complete Bear rally triangle. The rally off the April '05 low does not look like a zogzag, so there may be a near term pullback for a week and then one last rally. The alternate count is the rally off the April '05 low is a complete wave e zigzag that truncated. A move below 1900 would be a strong signal Bear 2 has begun,

=== AMEX ===

http://stockcharts.com/def/servlet/SC.web?c=$xax,uu[w,a]wacayyay[df][pb50!d20,2!f][vc60][iLp14,3,3!L...

The AMEX was the lone US stock index that has rallied above y2k highs. It netted a whopping 40%!!! Multi month wave 5 started in early '03 and may have ended in March '05. The wave pattern between the March '05 high and April '05 low is difficult to read. The waves out of the April '05 low look like a double zigzag that has retraced 74.4%, nearly a fibonacci 78.6% It doesn't make sense that the only US index that made a post y2k high be the first market to turn. Generally weaker stocks in a rally are the leaders in to the downside.

=== Summary ===

The HSI is exhibiting textbook elliott waves. This gives me great confidence the other world markets are very close to their tops. In several markets fibonacci ratios occur in both price and time. Some markets may be / have truncated, or topped out already. Upside is limited, and the selling pressure is growing.
The FTSE, NIKK, AMEX, SPX, DJIA, HSI are NOT confiming the breakout in the DAX.